Has John Boehner really agreed to increase taxes on the rich?

Since the election, House Speaker John Boehner (R) has had some conciliatory-sounding words about the need to avoid the 'fiscal cliff.' While he's said 'new revenue' might be part of the solution, it's problematic to assume he means higher taxes on the rich.

J. Scott Applewhite/AP
Speaker of the House John Boehner (R) of Ohio, speaks to reporters after the House Republicans voted for their leadership for the next session of Congress, at the Capitol in Washington, Wednesday. Boehner has said 'new revenue' might be part of the solution needed to avoid 'fiscal cliff, it's problematic to assume he means higher taxes on the rich.

Has speaker of the House John Boehner really agreed to increase taxes on the wealthy in some manner to help strike a fiscal deal with President Obama? That’s a crucial question as congressional Republicans and administration officials get ready for face-to-face negotiations Friday over the so-called “fiscal cliff” crisis facing the US.

Washington’s conventional wisdom is that Speaker Boehner has telegraphed his willingness to give a bit on this issue after years of GOP insistence that it wouldn’t accept higher taxes on anyone, millionaires included. The punditocracy bases this conclusion on the public statements Boehner has made since the election, which have been carefully worded but conciliatory in tone.

Take Boehner’s public statement of Nov. 7, in which he congratulated Mr. Obama on winning a second term, and said that when it came to producing a deficit-reduction package to keep the automatic spending cuts and tax hikes of the fiscal cliff from taking effect, House Republicans would be willing to accept new revenue, under the right conditions.

“What matters is where the increased revenue comes from, and what type of reform comes with it,” Boehner said. “Does the increased revenue come from government taking a larger share of what the American people earn through higher tax rates? Or does it come as the byproduct of a growing economy, energized by a simpler, cleaner, fairer tax code, with fewer loopholes, and lower rates for all?”

Since then, both Boehner and Senate minority leader Mitch McConnell have clarified this a bit by insisting that they are not in favor of letting the Bush-era tax cuts expire for those making $250,000 or more a year, as Obama has proposed. Many people in that tax bracket are small-business owners whose firms would be damaged by such a hike, according to the GOP.

“What we won’t do is raise tax rates, and kiss goodbye more than 700,000 good jobs in the process,” said Senator McConnell in a floor statement on Nov. 15.

Carefully parsed, these statements leave open the possibility that Republicans would agree to increase revenues from the wealthy through a cap on deductions or some other non-marginal-rate-increase means. As we’ve written, this is something GOP presidential nominee Mitt Romney proposed as part of his own tax reform package. That might make it easier for GOP backbenchers to accept.

(Yes, Obama in his press conference Thursday replied that it’s hard to reach his goal of $1.6 trillion in new revenue, as part of a 10-year, $3 trillion deficit-reduction package, without raising rates on top earners. But that $1.6 trillion is his goal, not the GOP’s, so presumably it’s open to negotiation, too.)

Given the results of the election, many in the GOP realize that they might have a tough time resisting new taxes on high-income earners. Some conservatives outside the party, such as the Weekly Standard’s William Kristol, have publicly come out and said Republicans should accept some tax hikes as the price for getting a real deficit-cutting deal.

But the words of the GOP congressional leaders also might be read in another way: that they’d reject any increase in taxes per se, but they’d accept new revenues stemming from what they predict would be the increased economic activity spurred by wide-ranging tax code reform.

That’s how some analysts reacted to Boehner’s postelection remarks. After all, on Nov. 7 he said he'd accept new revenues that were "a byproduct of a growing economy."

“Conservative proponents of tax reform have long wanted to change the budget rules so that they get credit for bigger tax collections from hoped-for changes in economic growth that follows tax reform. The Speaker has merely restated that hope in a conciliatory tone,” wrote federal tax expert Clint Stretch earlier this month on the blog Capital Gains and Games.

Democrats call this “dynamic scoring,” and they say the heck with it. They point out that the Congressional Budget Office has studied this question and concluded that it cannot find a direct correlation between tax reform and economic growth. Obama rejected it at his Wednesday press conference.

“What I will not do is have a process that is vague that says we will sort-of, kind-of raise revenue through dynamic scoring or by closing loopholes that have not been identified,” he said.

So that’s the state of play heading into Friday’s meeting between the two sides at the White House. We’ll have a better idea about the chances of quick fiscal deal after they’ve exchanged initial positions that may provide more detail on this crucial question. Keep in mind that Boehner has to negotiate with his own party's hard-line antitax right wing as well as the Democrats he'll face across the table.

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