Johanns edges toward tax hike for wealthiest

2012-12-07T20:00:00Z 2013-01-03T10:01:05Z Johanns edges toward tax hike for wealthiestBy DON WALTON / Lincoln Journal Star JournalStar.com

Sen. Mike Johanns edged Friday toward willingness to consider an increase in the tax rate for the wealthiest Americans as part of a fiscal cliff agreement if it also includes "a good-faith down payment" on reducing entitlement spending.

"You know, I think there is an opportunity there," Johanns told Bloomberg TV anchor Al Hunt when he asked whether Republicans could go along with a Democratic plan that would restore the top tax rate to 39.6 percent with a promise that it could be revisited next year.

That, in effect, would restore the top rate to its level during the Clinton administration and end the Bush administration tax rate cut for the wealthiest Americans. 

Rates presumably could be revisited during later efforts to undertake tax reform.

Democrats want the lame-duck Congress to take action this month preventing tax rates for all but the wealthiest Americans from rising, as scheduled, on Jan. 1. The Republican position has been to extend all the Bush era tax cuts and concentrate on spending reductions. 

"I will lean forward on dealing with the revenue picture, that top 2 percent, but that's not sufficient," Johanns said in a transcript of the Bloomberg interview made available by the senator's office.

"They have to lean forward on the need to address what's really driving the spending engine, and it is entitlements," Johanns said.

The interview was scheduled to air on Bloomberg on Friday night.

Johanns told Hunt be believes the chances of reaching a deal to avoid plunging off the so-called fiscal cliff are "still good ... that we'll avoid it, yeah."

"At the end of the day, I think the ingredients are there," Johanns said.

The automatic tax hikes and across-the-board spending cuts scheduled to become effective Jan. 1 if the Congress does not act could plunge the nation back into recession, leading economists have warned.

Johanns is one of the four Republican senators in the so-called Gang of Eight who have been working toward a bipartisan debt reduction plan.

"Work with me on what's driving the higher spending that literally we're struggling with as a nation, our entitlements, and I will work with you on revenue," Johanns said.

"I do think each side is going to have to put a down payment down to get us beyond the end of the year," he said.

"If we could just find the key to unlock this door to a budget agreement, I just think it unleashes economic opportunity for everybody," Johanns said.  "And that's how you create jobs." 

Reach Don Walton at 402-473-7248 or at dwalton@journalstar.com.

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