WASHINGTON Nov 13 The chief Democratic
tax-writer in the U.S. Senate on Tuesday said the top tax rates
for the richest Americans must rise in any deal reached between
Congress and the White House to steer clear of the fiscal cliff,
but he suggested there is some flexibility in ways to strike a
President Barack Obama has pledged to veto any bill that
keeps the Bush-era tax cuts for American households earning more
than $250,000 a year, the biggest sticking point in talks to
avoid the $600 billion mix of tax hikes and spending cuts known
as the fiscal cliff that looms in early 2013.
Senator Max Baucus, chairman of the Senate Finance Committee
in charge of tax legislation, said Obama's position is a good
starting point but that there is wiggle room for a deal.
"The president has said he would veto any legislation that
doesn't extend the top two rate cuts, and I think that is a good
place for him to be," Baucus said. "Having said that ... there
is a lot of room for negotiation."
The top tax rate now is 35 percent for the wealthiest
Americans. Without action, that will rise to 39.6 percent on
Jan. 1, the rate on this group during the 1990s.
Baucus spoke in a hallway interview on the lawmakers' first
day back in session following Obama's re-election. Senate
Democrats slightly boosted their majority on Nov. 6, and
Republicans kept control of the U.S. House of Representatives.
Baucus said there is space for compromise in how much more
in taxes the wealthy should pay, so that the approach is, as
Democrats put it, balanced between tax cuts and spending cuts.
"I think the top two rates must be part of the solution.
Some variation of the top two rates," Baucus said.
"That could mean ... back up to 39.6 or something less than
39.6 percent. More than 35 percent," Baucus said.
Obama made a centerpiece of his campaign ending the lower
tax rates, originally enacted in 2001 under Republican President
George W. Bush, on some income earned by the wealthy. He has
argued that richer Americans should pay more to help pare the
Republicans want to extend lower rates for all income levels
and on Tuesday top Senate Republican Mitch McConnell dug in his
heels, saying the party would not compromise its principles.