GOP ponders tax options for debt 'supercommittee'
WASHINGTON (AP) — Capitol Hill Republicans say the GOP members of a deficit-reduction supercommittee are showing flexibility on revenue increases as the panel heads closer to its Thanksgiving deadline.
GOP aides said Tuesday that a plan floated by Republicans, including tea party favorite Sen. Pat Toomey of Pennsylvania, is one that would place sharp limits on the total amount of tax deductions and credits that a person could claim, in exchange for significantly lower income tax rates. At the same time, Republicans are willing to accept an about $300 billion net increase in individual income tax revenues.
The idea, discussed by a bipartisan subgroup of supercommittee lawmakers Monday evening, is similar in concept to a proposal put forward last summer in negotiations between House Speaker John Boehner, R-Ohio, and President Barack Obama. Boehner and Obama discussed a complete overhaul of the tax code that would have garnered some $800 billion in new revenue over a decade.
The plan proposed Monday was more modest, congressional aides said, raising about $250 billion from individual tax reform and another $40 billion from using a new inflation adjustment when updating the income levels for tax brackets. An overhaul of the corporate tax code could raise another $60 billion, the aides said.
The plan also would include about $700 billion in spending cuts, as well as other revenues from proposals such as auctioning broadcast spectrum, raising Medicare premiums and increasing aviation security fees.
Aides to supercommittee Democrats pushed back sharply, saying the GOP plan for a top individual tax rate of 28 percent would give wealthier earners large tax cuts while many middle income taxpayers would lose tax deductions important to them. The GOP assumes that the full menu of Bush-era tax cuts — including a generous cut in the estate tax enacted last year — would be made permanent when calculating the revenue "baseline" from which to start tax reform.
Obama wants to eliminate the Bush tax cuts for upper-income earners, which would generate about $800 billion over the coming decade.
The top tax bracket is presently 35 percent and is set to rise to 39.6 percent when the Bush-era tax cuts expire at the end of next year.
The aides required anonymity because they were not authorized to speak publicly about the negotiations. Democratic aides said the offer was mostly spin, but some Democratic members of the panel weren't as quick to dismiss it.
Asked whether Republicans were negotiating seriously, supercommittee member Sen. Max Baucus, D-Mont., said, "Oh, yes, I think so. On balance, yes."
Toomey was the chief sponsor of the offer but has support from other Republicans on the panel. The supercommittee is charged with producing legislation to cut $1.2 trillion from the deficit over the coming decade. The fact that Toomey, who was elected last year with tea party support, was willing to entertain higher tax revenues was a noteworthy break from an earlier GOP proposal forwarded two weeks ago that assumed revenue would come chiefly from non-tax sources like Medicare premiums and economic growth spurred by a simplified tax code.
"We've made a little bit of progress but it's not enough, in our judgment," said Sen. John Kerry, D-Mass., a member of the deficit panel. "We have some distance to go."
Republicans are asking a high price — cuts to important benefit programs like Medicare and Medicaid — in exchange for potential revenue hikes. Democrats are pressing for more than $1 trillion in revenue over the coming decade.
"I have yet to see a real, credible plan that raises revenue in a significant way to bring use to a fair, balanced proposal," said Sen. Patty Murray, D-Wash., the panel's co-chair.