National Journal breaks the news that Senate Republicans on the deficit-reduction Super Committee have caved on tax increases, and are now prepared to accept $300 billion in a soak-the-rich elimination of deductions:
Senate Republicans are willing to accept up to $300 billion in net tax increases over 10 years as part of a potential super committee deal, aides said on Tuesday. The Republicans called the move a major concession; Democrats said it was a public relations ruse.
A GOP aide to a super committee member said the “centerpiece of the plan” would be Republicans accepting elimination of tax deductions associated with wealthy Americans in exchange for a permanent reduction of reduced marginal tax rates set during the Bush administration.
Republicans said tax deductions for second homes and charitable deductions could be slashed or eliminated as part of the agreement, with Bush tax cuts permanently extended and corporate tax rates possibly reduced. The aide said the deal would likely be worth a total of about $1.2 trillion – the goal the super committee needs to meet to stave off mandatory sequestration under this summer’s Budget Control Act. It includes $700 billion in spending cuts over 10 years, with roughly half from entitlement cuts, the staffer said. The framework would also include savings from increases in government fees – nontax revenue.
(Emphases mine.) Given the way I imagine this news will be received by Republican voters, if it’s a “public relations ruse,” it’s not a very good one.
This will be tough news for charities, which are about to see those big donations from wealthy patrons disappear. Also, note that “a permanent reduction of reduced marginal rates” means “not raising everyone’s taxes by letting the Bush tax rates expire.”
Of course, the Democrats think $300 billion in new taxes isn’t enough:
Democratic aides and committee members dismissed the plan as a bid to pin blame on Democrats if the panel fails to reach a deal in the next few weeks.
A senior Democratic aide said Senate Majority Leader Harry Reid, D-Nev., who is involved in negotiations, “knows what Senator Toomey offered,” and is “highly skeptical” that Republicans are making a real offer.
I wonder if these new tax increases will take effect immediately, while the “spending cuts” are promises that will never be fulfilled? That’s how it usually works.