No Lip Service: Dems Trade Higher Taxes for Social Programs

Though some recent polls have shown Americans willing to pay higher taxes for new services, Democrats need to handle the issue carefully, said Martin Frost, a former Democratic congressman from Texas.

Specifically, they need to convince voters that a new tax would go for a targeted service instead of funding a growing bureaucracy, Frost said. And candidates who talk about higher taxes must be able to parry inevitable Republican charges that they are "tax-and-spend liberals."

"Selling any type of increase in taxes, even just on the wealthy, is not easy for Democrats," Frost said. "The public wants something done about something like health care, but you have to overcome skepticism that a new tax will be used for a single purpose. It's not clear at this point if the public is willing to pay more taxes. They'd like to examine all other options first."

Some Democrats, including Sen. Hillary Rodham Clinton, D-N.Y., and Gov. Bill Richardson, D-N.M., say their plans would allow more people to have to health care without paying higher taxes.

And the Democrats who are talking about raising taxes are doing so with extreme caution. The Obama campaign is quick to note that many businesses will save money on health care costs, notwithstanding the new tax on those who don't provide health coverage, through federal assistance in high-cost cases.

The Obama campaign has released a fact sheet boasting that the price tag of its proposal -- between $50 billion and $65 billion a year -- can be covered "without new taxes on the overwhelming majority of U.S. taxpayers." According to the Urban Institute, less than 1 percent of taxpayers would be affected if the lower tax rates on the top two income-tax brackets are allowed to return to their previous levels after 2010.

Dodd aides concede that taxpayers may have to pay more for many products under his "carbon tax" plan. But they say such costs will be outweighed by tax cuts on items such as hybrid vehicles and by increased energy efficiency of products the new tax would help develop.

"The cost they would save far outweighs the few cents a gallon extra they may have to pay for gasoline," said Amos Hochstein, the Dodd campaign's policy director. "The point of this tax is to create a pot of money that would directly help consumers."

Edwards, who is running a campaign aimed at eradicating poverty, has been most outspoken in his call for higher taxes, casting his proposal as the only realistic way to reach the uninsured.

"I think for me, as opposed to the additional tax relief for the middle class, what's more important is to give them relief from the extraordinary cost of health care, from gasoline prices, the things that they spend money on every single day that are escalating dramatically," Edwards said in last month in an interview with The Associated Press.

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