The Democratic Tax Plan, Now or Never.

There's a strange debate going on among the Democrats, who are having a hard time deciding whether they want to force a vote on their plan to prevent middle- and lower-income taxes from increasing while putting a modest levy on earners over $250,000. The proposal would also increase capital gains and dividends taxes. As I post this, taking a popular stand on an issue at the heart of their campaign platform is, for the Democrats, a bridge too far.

But I hope they realize that this is their only chance. Reporting for another story, I recently spoke with Ken Kies, a former chief of staff of the Joint Committee on Taxation who now heads the Federal Policy Group, a top-flight tax lobbying firm. He drew out a convincing scenario for how, if Democrats don't pass it now, they won't have a chance to get their priorities across the line in the future.

His argument goes like this: If Democrats don't take action on tax legislation now, they're bound to be in a weaker, and perhaps much weaker, position after the November elections. While much has been made of the potential for Democrats to legislate during a lame-duck session, Kies notes that parties that have recently suffered electoral defeat are skittish, disorganized, and unlikely to bring a fight against what will no doubt be a fired-up GOP opposition, especially after a public reprimand.

Republicans, meanwhile, aren't eager to vote on this issue now. They'd much rather wait to see how the landscape looks after the midterm elections, and make a more advantageous deal with President Obama at the beginning of the next Congress, simply making the tax agreement retroactive (the Bush tax cuts expire on at the beginning of 2011).

So if Democrats want to stop the Bush tax cuts from becoming permanent, the next few weeks represent their best and perhaps only chance to do so. They should act while they can set the agenda and have leverage to lure (or shame) a moderate Senate Republican or two away from the inevitable filibuster of any bill that doesn't include the GOP's top priority of keeping taxes for the wealthy low.

-- Tim Fernholz

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