As you may have heard, Republicans on the supercommittee are privately offering Dems what they’re calling a big concession: They will agree to hundreds of billions in new revenues through an overhaul of the tax code in exchange for making the Bush tax cuts permanent.
I’ve got some more detail on this offer for you. A senior Senate Democratic aide directly familiar with the discussions tells me that as part of that tax rate overhaul, Republicans are also pushing to drop the highest end tax rate down to 28 percent.
Lori Montgomery has some of the key outlines of the emerging GOP proposal:
The offer envisions a tax code rewrite that would lower rates for everyone while raising 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.
In addition, Republicans are offering to use a less generous measure of inflation to adjust formulas government-wide, a proposal that would push people more rapidly into higher tax brackets. That would generate an extra $40 billion over the next decade, according to several people with knowledge the discussions...
However, the tax increases would be offset by 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.
More great stuff on the GOP offer from Brian Beutler.
But in addition to all this, however, the highest tax rate would be reduced from 35 percent to 28 percent under the emerging GOP tax code overhaul proposal, the senior Democratic aide tells me. 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. This, in exchange for around $300 billion in new revenues through the closing of loopholes.
This is why Dems are angrily rejecting the offer, the aide says. “This plan would provide the very wealthiest Americans with one of the largest tax rate cuts ever,” the aide says. “It’s a thinly veiled attempt to appear to put revenue on the table while simultaneously removing far more with massive tax cuts for wealthy Americans.”
I could not determine how formal this latest offer is, or whether it’s the only one on the table. A spokesperson for Senator Pat Toomey, who is said to be spearheading this latest push for Republicans on the supercommittee, didn’t return an email for comment. More when I learn it.