Individuals making over $1 million a year are starting to sweat. People making over $250,000 annually should be.
High earners are sweating because when Mitt Romney wins the nomination, their taxes will go up.
With Romney as the nominee, Democrats will have the stomach to do what they didn’t have the stomach to do this time last year: raise taxes on the wealthy. Democrats will either allow the Bush tax cuts to expire or will vote to raise taxes on just individuals earning over X dollars annually (the question becomes what is X? $250K? $1M?). It will likely be the former. Because of Grover Nordquist’s treasure trove of Republican officeholders’ signatures on his pledge not to raise taxes, the more likely route will be allowing the Bush tax cuts to lapse, which will effect all taxpayers. This gives Republicans an interesting quandary in 2012: Does the GOP support raising taxes on just the wealthy– say individuals earning over $250,000.00, or does the GOP support, by its inaction, a tax increase upon everyone?
Usually, it’s Republicans who are able to box in their brethren from across the aisle into no-win situations they now find themselves in.
Having Mitt Romney as the leader of the Republican charge gives Democrats new opportunity to have the tax debate Barack Obama was unwilling, or afraid, to have last year. And this time the Democrats win. They will point to Mitt Romney’s earnings of over $21 million last year and a tax rate of 14% and say people like Mitt Romney can afford to pay more when Republicans are asking everyone else to pay by cutting government services– including medicaid, medicare and social security.
"When you give me a tax break that I don’t need and the country can’t afford, two things happen: Either the deficit increases or, alternatively, somebody else has to pay the tab– that senior, or that student, or that family who’s struggling to make ends meet," Barack Obama said recently.
Republicans are betting that the country does not want to engage in class warfare. Although that rings hallow when it’s the guy earning $21 million annually telling the family struggling to support itself on $48,000.00 that the family doesn’t want to engage in class warfare. In states like Michigan, people will look at the choice between a man who earns more in one year, doing nothing, than they will in two lifetimes working their tails off, versus the guy from the south side of Chicago, they’re going to go with the guy from the south side. Who better understands the struggle of a middle-class family?
Forbes recently reported the Bush tax cuts saved Mitt Romney an estimated $1.2 million in taxes in 2011. With the plight of the middle-class on everybody’s mind– the question of taxing the wealthy will be front and center. Over the last two years, Republicans have fought to keep the deficit and taxes down. How well Mitt Romney is able to argue that taxes for the wealthy should stay down while the Bush tax cuts increase the deficit (the deficit increased $2.6 trillion due to the Bush tax cuts) will determine whether tax rates for the wealthy will increase in 2013 and whether the band will play "Hail to the Chief" when Mitt Romney walks into a room this time next year.