Faced with the fiscal cliff and no hint of a grand bargain to solve the problem, House Speaker John Boehner (R-Ohio) suggested turning to a short-term “down payment” resolution that would combine just enough spending cuts and tax revenue to avoid the cliff and buy time for leaders to come up with a more permanent solution.
But do conservatives have the analysis to back it up?
Since Republicans are (for the moment) holding firm to their opposition to raising tax rates, the only way to increase revenues in a down payment is to close loopholes and limit or eliminate deductions — something Republicans have expressed a willingness to do as part of a larger deal for tax and spending reform.
As the Wall Street Journal recently pointed out, there’s a lot more revenue here than most people realize. According to the liberal Tax Policy Center, capping all itemized deductions at $50,000 a year would yield $749 billion in extra revenue over 10 years — almost as much as the $823 billion that President Obama’s plan to raise tax rates on top earners would yield in the same period. Moreover, such a cap would soak the rich first. The top one-fifth of income earners would pay more than 96 percent of the higher taxes.
It’s striking that Thiessen turned to what he considers a “liberal think tank” to make his point. It’s especially striking given the wrath conservatives heaved upon the Tax Policy Center (TPC) this fall when it released a report that said enacting Mitt Romney’s tax plan would lower taxes for the rich and raise them for the poor and middle class to cover a $5 trillion gap in the plan.
Thiessen’s typical go-to shops are AEI or the Heritage Foundation, but it may well be the case that neither of those think tanks (or a host of other conservative-leaning organizations) even have closing tax loopholes or limiting deductions on their radar, let alone on their publication list.
The Tax Policy Center is a joint venture between the Brookings Institution and the Urban Institute, both of which have individuals who have been affiliated with Republican and Democratic administrations.