What counts as a tax hike? Not Boehner 'fallback' plan, says antitax group

The keeper of the GOP’s antitax oath has rendered judgment on House Speaker John Boehner’s fallback "fiscal cliff" plan that would allow Bush-era tax cuts to expire only for millionaires: It is not a tax increase.

So decrees Americans for Tax Reform, the conservative advocacy group led by antitax activist Grover Norquist. With that step, the group gives a measure of political cover to congressional Republicans who back the speaker's plan to retain current low tax rates for all but those with incomes higher than $1 million. 

“Republicans supporting this bill are this week affirming to their constituents in writing that this bill – the sole purpose of which is to prevent tax increases – is consistent with the pledge they made to them,” said Americans for Tax Reform, in a statement. “In ATR’s analysis, it is extremely difficult – if not impossible – to fault these Republicans’ assertion.”

But the statement gives only partial cover, because other conservative groups that throw millions of dollars into political campaigns rattled their sabres on Wednesday, warning Republicans to steer clear of any proposal that does not extend the Bush-era tax rates for all Americans."

If the Republicans support this tax increase, they will lose control of the House in the 2014 elections.... Not only that, but a whole lot of members who thought they were safe and thought they could get away with this will lose in their own districts," says conservative activist and fundraising heavy-hitter Brent Bozell. 

"This is precisely what happened to them six years ago, and they've already forgotten that lesson," he adds. "Republicans were tossed out of the majority when they broke their word on spending. Now they're breaking their word again, and it's not just spending, it's taxes on top of that. Fiscal conservatives just won't stand for this." 

More than two dozen organizations joined Mr. Bozell in opposing any tax increase. Still, the ATR statement is particularly important for Republican lawmakers, who now know that any vote to extend some but not all of the Bush-era tax cuts, which expire at year's end, would not be considered as a violation of Mr. Norquist's Taxpayer Protection Pledge. More than 90 percent of congressional Republicans and a handful of Democratic lawmakers have signed the pledge, an important political symbol for conservative politicians.

“In this Congress the House has already voted twice to prevent any tax increases on any American," notes the ATR statement issued Wednesday. "When viewed with this in mind, and considering this [Boehner] tax bill contains no tax increases of any kind – in fact, it permanently prevents them – matters become more clear. Having finally seen actual legislation in writing, ATR is now able to make its determination about a legislative proposal related to the fiscal cliff. ATR will not consider a vote for this measure a violation of the Taxpayer Protection Pledge.”

Until now, Norquist had said only that whatever deal Congress and the White House struck on taxes should have to pass a “laugh test” from voters in the long run. 

The House is scheduled to take up Boehner's bill on Thursday, say GOP lawmakers. House Democrats oppose it, and Senate Democrats say the bill would be dead on arrival at the Senate. The White House has said it would veto the measure should it somehow clear Congress. 

Liberal Sens. Charles Schumer (D) of New York and Tom Harkin (D) of Iowa argued Wednesday that the measure would actually raise taxes because it would not extend three provisions, part of the 2009 economic stimulus legislation, that benefit lower-income families, college students, and families with more than three children. 

The Boehner bill would retain capital gain and dividend tax rates at 15 percent for those earning less than $1 million in household income, but it would raise those rates to 20 percent for Americans earning more. Without a congressional fix, those rates would reset at year's end to more than 40 percent for all taxpayers.

Though Americans for Tax Reform says the Boehner bill passes the sniff test, several other conservative organizations have savaged it. 

“On the substance, this bill is anti-growth,” read a legislative alert from the fiscally conservative Club for Growth, urging lawmakers to vote against it. “It increases tax rates for those making over $1 million while also raising taxes on capital gains and dividends. We don't buy into the Washington-speak, suggesting that these are actually tax cuts.”

The conservative Americans for Prosperity, too, urged lawmakers to oppose it, saying congressional Republicans had already extended tax rates for all Americans and so needed no further fallback legislation. Boehner has characterized the bill as a fallback measure should talks fail with the White House over devising a broader debt- and deficit-reduction package.

“All this Plan B proposal would do is put Republicans on record embracing the Left’s divisive and arbitrary income threshold,” Americans for Prosperity said Wednesday in a statement. “It would also begin a never-ending quest to move that higher rate down to lower income thresholds, as everyone knows that there is not enough tax revenue in the upper brackets to solve the nation’s runaway spending addiction.”

What do these conservative groups want?As the Club for Growth's Andy Roth put it, they'd rather go over the fiscal cliff – in which case taxes would rise on all American taxpayers and spending reductions decried by both parties would go into effect – and then move on to a fight over the national debt ceiling, which the federal government will reach in the first quarter of 2013. By threatening to refuse to raise the national debt limit, the speaker and congressional Republicans will have enough leverage over Democrats to win the reductions they seek in entitlement programs and spending, believe Mr. Roth and like-minded colleagues such as conservative advocacy group Heritage Action.