Top Democrat sees higher tax rates if Republicans won't negotiate

WASHINGTON Tue Jun 26, 2012 7:28pm EDT

U.S. Representative Chris Van Hollen (D-MD), ranking Democrat on the House Budget Committee, takes questions during the Reuters Washington Summit in Washington, June 26, 2012. REUTERS/Jonathan Ernst

U.S. Representative Chris Van Hollen (D-MD), ranking Democrat on the House Budget Committee, takes questions during the Reuters Washington Summit in Washington, June 26, 2012.

Credit: Reuters/Jonathan Ernst

WASHINGTON (Reuters) - Democrats should be willing to let taxes for all Americans go up if Republicans refuse to budge in a fight over tax rates for the wealthy, a top Democrat said on Tuesday.

Rep. Chris Van Hollen of Maryland, a member of the Democratic leadership in the House of Representatives, said that if Republicans continue to demand a tax plan with breaks for the wealthy, Democrats should "take the question to the American people" in January by allowing historically low rates to expire.

"I want to make this really clear; our preference is to act now, today, to extend tax relief for 99 percent of the American people" by extending low tax rates for U.S. households with incomes of less than $1 million, Van Hollen told the Washington Reuters 2012 Summit.

Van Hollen added that "if they refuse, if the Republican position remains as it is today - which is, they are going to insist on holding tax relief for 99 percent of the American people hostage - I think we should just take that debate into next year."

The low tax rates for all individuals, originally enacted in 2001 under Republican President George W. Bush, will expire at the end of the year if Congress fails to act.

President Barack Obama agreed to renew all of the lower rates for two years in 2010, though he and other Democrats complained that Republicans held the low rates for most Americans "hostage" by resisting Democrats' calls to increase tax rates for the wealthy.

Republicans say raising taxes on the wealthiest Americans will hurt small business and jeopardize the fledgling economic recovery.

Lawmakers are expected to wait for the outcome of the November 6 presidential and congressional elections, which pits Obama against presumptive Republican nominee Mitt Romney, before making big decisions on what is known as a "fiscal cliff:" tax cuts expiring at end-year, looming mandatory cuts in the government budget, and the need to increase the government's debt ceiling while forming a plan to trim the debt.

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(Editing by David Lindsey and Eric Walsh)

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