GOP Debt Panelists Propose New Tax Cut Windfall for the Wealthy
Without any action by Congress, on January 1, 2013 the Bush tax cuts will expire. That would not only return the top income rate from 35 percent to its Clinton boom-era level of39.6 percent. It would also produce almost $4 trillion in new revenue over the next decade, easily dwarfing the $1.2 trillion target now before the Congressional debt "super committee."
That's why the supposedly "significant" proposal by GOP debt panelists to raise $300 billion in new tax revenue is so cynical. Far from being a major concession and a violation of their oath to Grover Norquist, the Republicans' new gambit would be just their latest Treasury-draining tax cut windfall for the wealthy.
Of course, you'd never know that reading Lori Montgomery's Washington Post article, which Tuesday night reported, "Republicans offer tax deal to break debt impasse; Democrats dismiss it."
Congressional Republicans have for the first time retreated from their hard-line stance against new taxes, offering to raise federal tax collections by nearly $300 billion over the next decade as part of a plan to tame the national debt.
But as Steve Benen, Kevin Drum, Brian Beutler and Greg Sargent (among others) quickly pointed out, the Republicans' proposal to raise "overall tax collections by $250 billion, mainly by limiting the value of itemized deductions such as write-offs for home mortgage interest, state and local taxes and other expenses" comes with a very big catch. As the Washington Monthly's Benen explained:
Way down in the same article, in the 16th paragraph, the piece gets around to mentioning that Republican want to trade nearly $300 billion in new revenue for "permanently extending the George W. Bush-era tax cuts past their 2012 expiration date, a move that would increase deficits by about $4 trillion over the next decade."
That's the kind of detail that more or less debunks the article's headline and lede. Think about it: as part of a debt-reduction deal, Republicans want to increase tax revenue by less than $300 billion and cut tax revenue by roughly $4 trillion.
And what would wealthier taxpayers get in exchange for "capping write-offs on charities, state and local taxes, and mortgage interest payments as a percentage of each tax filer's gross income?" As Sargent explained:
The highest tax rate would be reduced from 35 percent to 28 percent under the emerging GOP tax code overhaul proposal...And the reduction would actually be even bigger than this. After all, if the Bush tax cuts were allowed to expire, as they're set to do, the high end rate would go up to at least 39 percent. In other words, the aide says, under the proposal Republicans are pushing, the drop down to 28 percent would be at least 10 percentage points from what it would be if the cuts are allowed to expire.
Even if the limited deductions would cost (as right-wing talking point regurgitator Stephen Moore claimed in the Wall Street Journal) the gilded-class $560 billion over the next decade, the lower income tax rates would still yield an estimated $670 billion in savings for the upper crust.
As you'll recall, Republicans already rejected a $3 trillion Democratic debt reduction package comprised of roughly even doses of tax increases and spending hikes. Now to secure another payday for plutocrats courtesy of lower and middle income Americans, GOP debt panelists are offering a $300 fig leaf as major "concession." Shaking his head at the Washington Post's representation of the latest GOP giveaway to the rich, Steve Benen could only ask:
In what universe does it make sense to tell news consumers that Republicans have offered a "tax deal to break the debt impasse"? How does this GOP offer represent a "retreat from their hard-line stance" on taxes?
To answer Benen's question, it makes sense in a Republican universe where tax cuts magically produce more revenue for Uncle Sam.
As Lori Montgomery's Washington Post colleagues Paul Kane and Rosalind S. Helderman explained the Republican first response to the Democratic proposal last week, the GOP insisted slashing taxes would raise revenue:
Republicans, instead, have offered more than $2 trillion in savings over 10 years, highlighted by nearly $700 billion in spending reductions to Medicare and Medicaid. According to lawmakers and aides familiar with the GOP proposal, it includes an offer of more than $600 billion in savings from new tax revenue. But the two sides are in deep dispute because Republicans want to count these increased receipts based on the expectation of surging economic growth -- a standard that neutral budget observers have declined to use in the past.
And so it goes.
Reacting to the Republicans' new gold-plated giveaway to the leisure class, one incredulous Democrat responded:
"They either think we're morons or desperate."
Of course, in their perpetual quest to shift the tax burden from the richest people in America, Republicans are counting on one or both. With their tax cuts posing as tax hikes, the GOP is once again relying on its sadly all-too-successful strategy.
You can fool some of the people all the time, and that's our target market.