Grover Norquist Gives Boehner’s Plan B a Thumb’s Up

Americans for Tax Reform, the Grover Norquist-led lobbying group that asks politicians to sign a pledge not to raise taxes, and then holds them to it, has given its seal of approval to the “Plan B” that House Speaker John Boehner, R-Ohio, has proposed for raising taxes only on millionaires, in case he and President Obama are unable to reach an agreement to avert the fiscal cliff.

Boehner said Tuesday that House Republicans would introduce a bill that would let tax rates go up only on millionaires (see Boehner to Introduce “Plan B” Solution to Fiscal Cliff, Raising Taxes on Millionaires). However, President Obama has threatened to veto the bill if it reaches his desk, and White House spokesman Jay Carney predicted that it would not pass in the Senate.

Obama and Boehner have been negotiating on a deal to avert the fiscal cliff, but have not yet reached agreement on the mix of tax increases and spending cuts that will be included as part of the measure (see Obama Concessions Signal Potential Bipartisan Tax Rate and Budget Deal). A major sticking point is that a majority of Republicans have signed a pledge with Norquist’s group, Americans for Tax Reform, not to raise taxes. However, Norquist has signaled some flexibility on the pledge in the past, especially lately with the expiration of the Bush tax cuts and the current tax rates now looming, saying that any tax reform would have to be revenue neutral, with any tax increases offset by tax cuts.

Norquist’s group released a statement Wednesday that was distributed by the press office of Republicans on the tax-writing House Ways and Means Committee.

“ATR has consistently maintained that individual Members of Congress make a pledge to their constituents to oppose and vote against tax increases,” said the statement from Americans for Tax Reform. “The House this week will vote on a tax bill.  This legislation—popularly known as “Plan B”—permanently prevents a tax increase on families making less than $1 million per year.  Republicans supporting this bill are this week affirming to their constituents in writing that this bill—the sole purpose of which is to prevent tax increases—is consistent with the pledge they made to them.  In ATR’s analysis, it is extremely difficult—if not impossible—to fault these Republicans’ assertion.

“In particular, in this Congress the House has already voted twice to prevent any tax increases on any American," ATR added. "When viewed with this in mind, and considering this tax bill contains no tax increases of any kind—in fact, it permanently prevents them—matters become more clear. Having finally seen actual legislation in writing, ATR is now able to make its determination about a legislative proposal related to the fiscal cliff. ATR will not consider a vote for this measure a violation of the Taxpayer Protection Pledge.”

Boehner's Plan B bill would permanently extend the current marginal tax rates for incomes up to $1 million. It would also permanently repeal the PEP and Pease limitation, make the $1,000 child credit permanent, and provide permanent relief from the so-called "marriage penalty." The bill would also permanently extend the reduced capital gains and dividend tax rates, with a top rate of 15 percent, for incomes up to $1 million.

In addition, the bill would permanently extend the 2012 estate tax rates with a $5 million exemption and a 35 percent top rate. It would also permanently extend the higher small business expensing limits under Section 179 and permanently patch the alternative minimum tax, including the interaction effects between the AMT patch and 2001 and 2003 tax cuts.

The White House, however, argued against the Plan B bill, pointing out that it would still provide those earning over $1 million with an average tax cut of about $50,000. Meanwhile, the bill does not extend the American Opportunity Tax Credit for tuition, nor improvements to the Earned Income Tax Credit and Child Tax Credit, raising taxes on an estimated 25 million working families with children and students, according to the White House.

A vote on the bill is expected Thursday in the House. Boehner is reportedly trying to round up enough votes among Republican lawmakers to pass the legislation despite opposition from some conservative groups such as the Club for Growth.