* Big ideas - from Obama, Romney, face challenges
* Popular tax deductions at issue
By Kim Dixon
WASHINGTON, Nov 14 President Barack Obama stuck
to his script on Wednesday that he wants taxes on the richest 2
percent of Americans to rise, but said he was open to new ideas
to raise new revenues.
If Republicans or Democrats "have a great idea for us to
raise revenue, maintain progressively, make sure the middle
class isn't getting hit, reduces our deficit, encourages growth,
I'm not going to just slam the door in their face," Obama said
at his first news conference since his re-election last week.
What could those new ideas be? Probably not new ones at all
at all, but a familiar set of proposals floated by Mitt Romney,
the Republican he defeated in last week's election, and by Obama
himself, in his budget proposals, including the one for fiscal
That document, which sought about $1.5 trillion in new
revenue, was declared "dead on arrival" on Capitol Hill - along
with virtually every other legislative proposal - when it landed
there last winter during election season.
But it is being resurrected by the Obama administration as a
framework for negotiations with Republicans to avoid the "fiscal
cliff" of steep tax increases and indiscriminate budget cuts set
to take effect the beginning of next year.
The long-held Democratic position on individual tax cuts
expiring at the end of the year for all Americans is that the
rates for the top 2 percent - now set at 33 and 35 percent,
should be lifted to their 1990s' levels of 36 and 39.6 percent.
In addition to raising tax rates on the wealthy, Obama's
budget would have curbed their deductions to 28 percent of
income from the current maximum of 35 percent.
It would have raised capital gains tax rates to 20 percent
from 15 percent, and the dividend tax rate to nearly 40 percent
from 15 percent, both for households making more than $250,000 a
He also proposed trimming corporate tax benefits for oil
companies, multinational companies, private equity firms and
The 28 percent cap, along with other ideas, fell flat in
part because of their impact on charitable giving and the
mortgage interest deduction, two of the biggest individual tax
For a list of some of Obama's business tax proposals from
his budget proposal, see:
Romney also at one point suggested capping itemized
deductions at various levels, the highest being $50,000 a year.
That could raise about $800 billion over a decade, according
to the Tax Policy Center.
Eighty percent of the pain of such cuts would hit taxpayers
making more than $1 million.
Such a broad swipe at tax deductions would be a "radical"
proposition for either party to swallow, said Alan Viand, an
economist at the conservative think tank, the American
Still, he said, "Depending how much revenue is desired,
limiting deductions could work."
But while leaving a door ajar at his news conference
Wednesday, Obama was not letting any particular new idea stroll
He generally dismissed Republican suggestions that closing
tax loopholes and other breaks for the rich could solve the
"The math tends not to work," he said.
The challenge of raising revenue on the wealthy to pare the
federal deficit, which has topped $1 trillion in recent years,
was a centerpiece in the presidential campaign.
Obama's remarks came two days before his first post-election
talks with congressional leaders to avoid the fiscal cliff.
If they follow past negotiations, all sorts of ideas from
the past will be open for discussion.
Earlier in the news conference, Obama said he was heartened
by recent Republican pledges to raise new revenue, but also
said, "When it comes to the top 2 percent, what I am not going
to do is extend further a tax cut for folks who don't need it
which could cost close to a $1 trillion."
Last year, some Democrats suggested a threshold of $1
million for raising rates, so such a proposal could conceivably
get bipartisan support.
It might also help Obama to be able to invoke Romney's ideas
- or some variation of them - in support of a tax compromise,
since so many congressional Republicans went on record
supporting them during the election campaign.