Last week Lori Montgomery of the Washington Post reported that the White House won’t pursue serious tax reform that takes on the mortgage interest deduction and other problematic provisions in light of the president’s 2008 pledge not to raise the taxes of households earning less than $250,000 a year.
Administration officials said no one should be surprised to learn that Obama is unwilling to backtrack on one of the central tenets of his administration – protecting middle-class Americans from higher taxes – particularly after last month’s tax battle with Congress.
What I found odd is that the article made no mention of PPACA, which contains a number of tax provisions that will presumably impact middle-income households, including the planned excise tax on high-cost health insurance coverage. Assuming the Administration actually intends to implement the excise tax as planned, or rather intends for its successor to implement the excise tax in 2018 as planned, and one would hope so as it is one of the more effective cost containment measures in the new health law, the pledge has already been undermined. So why not jettison it in the name of a fairer, more growth-friendly tax code?
Perhaps the president could propose an “alternative maximum tax” for under-$250,000 households. This is a terrible idea for all kinds of reasons, but it’s certainly in keeping with the 2008 pledge. In keeping with the excise tax, he could call for an alternative maximum tax that would expire in 2018, long after he has left office.