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Why Obama Dropped His $250,000 Tax Target

Writing for The Wall Street Journal, PPI President Will Marshall explains why Obama should show some flexibility now and set the stage for a more comprehensive tax overhaul in 2013:

Barack Obama is under pressure from his left flank to break House Republicans on the wheel of higher marginal tax rates, but he is showing flexibility in negotiations with Speaker John Boehner. This is wise. By settling for something less than unconditional surrender, the president could get a deal that will avoid plunging the U.S. economy into austerity and set the stage for a historic tax overhaul next year.

So how do we get there from here? The first step is to resolve the dispute that has snagged the fiscal-cliff talks—how to raise taxes on the rich. To the horror of tea party purists, Mr. Boehner has acceded to higher tax rates on millionaires. Obama countered on Monday by proposing higher rates on households making $400,000 or more, and he lowered his overall revenue goal to $1.2 trillion from $1.6 trillion.

The president has the edge here. If Republicans refuse to accept higher rates for any wealthy taxpayers, there will be no deal. Then tax rates will rise for all Americans, and Republicans will be blamed for driving the economy off the cliff.

Read the piece at The Wall Street Journal.


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