Skip to comments.Democrats look for up to $1 trillion in new tax revenues this year
Posted on 01/07/2013 2:38:34 AM PST by Libloather
Democrats say they want to raise as much as $1 trillion in new revenues through tax reform later this year to balance Republican demands to slash mandatory spending.
Democratic leaders have had little time to craft a new position for their party since passing a tax deal Tuesday that will raise $620 billion in revenue over the next ten years.
The emerging consensus, however, is that the next installment of deficit reduction should reach $2 trillion and about half of it should come from higher taxes.
This sets up tax reform as one of the biggest fights of the 113th Congress, which began on Thursday.
Republicans say tax reform should be revenue neutral. Additional revenues collected by eliminating or curbing tax breaks and deductions should be used to lower rates.
Senate Republican Leader Mitch McConnell (R-Ky.) has dismissed the possibility of negotiating additional tax increases.
I'm in favor of doing tax reform but I think tax reform ought to be revenue neutral as it was back during the Reagan years. We've resolved this issue, look we don't have this problem because we tax too little. We have it because we spend way, way too much, McConnell said Sunday on NBCs Meet the Press.
Liberal and centrist Democrats say revenues collected through tax reform should go to deficit reduction.
Weve done about $2 trillion. I thought $4 trillion is the goal we should reach. I think were about half way there. We need another $2 trillion, said Sen. Ben Cardin (D-Md.), a member of the Senate Finance Committee, which has jurisdiction over tax reform.
He said the $917 billion cut under the Budget Control Act passed in the summer of 2011 combined with $620 billion in revenues from Tuesdays tax deal and interest savings adds up to about $2 trillion.
Cardin said the ratio of spending cuts to higher tax revenues should be about even in the next deficit-reduction deal passed by Congress.
Sen. Jon Tester, a centrist Democrat from Montana who won a close re-election in November, set out similar parameters.
He said the broad goal for deficit reduction should be in the $4 trillion to $5 trillion range and we should strive for [a] one for one ratio of spending cuts to additional tax revenues.
The White House also supports a 1:1 ratio of spending cuts to tax increases as Congress seeks to finish the fiscal work left unresolved by the recently completed 112th Congress.
White House officials point to last weeks fiscal-cliff agreement to buy down the sequester for two months. The deal delayed the implementation of automatic across-the-board spending cuts to domestic and defense programs and paid for it with $12 billion in revenues and $12 billion in spending cuts evenly divided between defense and non-defense spending.
Administration officials view that as a template for future deficit-reduction agreements.
But Democrats in Congress are not yet unified on the issue. Sen. Tim Kaine, a Democrat who won his first term in Novembers election, said the spending cut-to-tax increase ratio should be higher.
Obviously that second half of the fiscal cliff is the tough spending decisions, he said. During the course of the campaign I often talked about 2-1 as a total. That would count all the spending reductions that have already been agreed to.
I think if youre looking at a 70-30 ratio, somewhere in between 2 to 1 and 3 to 1 , I think thats a reasonable position, said newly-elected Sen. Chris Murphy (D) of Connecticut, who noted he is from a fiscally responsible state.
Like Kaine, Murphy said, you could factor in the cuts already made.
Congress agreed to cut spending by $917 billion in 2011 and to raise $620 billion in additional tax revenues last week, settling on a ratio of roughly 3 to 2 so far.
Sen. Charles Schumer (D-N.Y.) said Friday the ratio of spending cuts to tax revenues to date has been tilted more heavily toward spending. Counting the 2011 Budget Control Act and the year-end tax deal, he argues the split is closer to $1.1 trillion in spending cuts and $600 billion in revenues but he appears to be counting interest savings from spending cuts and not from tax increases.
The biggest question for Democrats is how much revenue is realistically available through tax reform.
Former Sen. Kent Conrad (D-N.D.), a longtime chairman of the Senate Budget Committee, argues the federal government loses $1.2 trillion a year because of various tax breaks, a large pool for lawmakers to draw from to reduce the deficit.
Through the tax code, we spend more there than we spend through all the appropriated accounts, he said in his Senate farewell speech.
Conrad displayed a chart on the Senate floor Wednesday showing that people in the top 1 percent of income earners collect over $250,000 in after-tax income from tax expenditures. These expenditures are defined as revenue losses due to special exclusions, exemptions or deductions from gross income.
But policy analysts say the amount Congress can raise by eliminating tax expenditures will be constrained by political realities.
President Obamas proposal to limit the value of itemized deductions to 28 percent evoked a backlash from the real estate industry and charitable groups. The mortgage interest and charitable tax deductions are two major drains on federal revenue.
Potential future revenue from limiting exemptions and deductions for wealthy taxpayers is also limited by the personal exemption phase-out and Pease a cap on itemized deductions provisions of the New Years Day tax deal. They account for $152 billion of the projected revenues from the deal.
Jim Kessler, senior vice president for policy at Third Way, a centrist Democratic think tank, thinks the most Democrats can get from tax reform is about $300 billion to $400 billion. He said negotiators can find an additional $100 billion in revenue by switching the chained-CPI formula for calculating cost-of-living increases for Social Security and other federal programs.
I think you get $400 or $500 billion in new revenue because stuff [is] taken off the table, he said.
Of course not. Bringing down a nation is expensive..The cronies who help with that demand big bucks. And, then you have to increase the number of dependents on the government dole so that you can always win elections..Maybe that won't be necessary when we get rid of those pesky elections and just announce that 100% of the people support the present regime. Brace yourselves, folks, without unusual resistance, the worst times in the history of America are coming. Watch LE MISERABLE..That will give you an idea of the good and evil we face.
Pelosi said: "Not to worry......Bernie from Butner called me and assured me he'll make it happen."
"All we have to do is send Bernie a blank check drawn on the US Treasury."
I don’t think this is an answerable question. You can look at a hundred years of history...using fifty different countries, and it just can’t fix much of anything.
LOL. Hilarious typo.
Message to the ‘rats: Go to hades ...
"Are you kidding? One measly trillion? More like two trillion."
"Bernie from Butner assured me, and Nancy, that he is gonna make it happen.
I'm personally cutting a blank Treasury check to Bernie."
" Heck, Bernie's got a tried-and-true formula----he can turn trash into trillions."
Anyone who is actually believes that .gov will cut spending....especially with the dims running the show
is an idiot. Politicians are more addicted to spending
than any heroin/coke/meth addict has EVER been addicted.
No matter how much $$$ they collect it’s NEVER even close to
being enough. It’s high time we returned to a cleaner, purer, simpler time from our past, round up some tar, feathers, torches and some rope and SOLVE AMERICA’S PROBLEM FOR GOOD.
” Heck, Bernie’s got a tried-and-true formula——he can turn trash into trillions.”
Do you mean he can turn trillions of dollars into trash?I’ll believe that.
That’s something this administration’s been very successful with.
This of course makes the most sense.
This of course will never happen.
Here's how to TRY to explain it to one of the low-information voters, if you dare...
There are 425 Billionaires in America today. This is NOT their income, this is their total wealth. Only 10 are above $25B. 390 of them are at $1-4B. Their TOTAL wealth is under a trillion (about $770 B). IF you take EVERY penny from all 425, you don't cover this increase... and you have no more billionaires... and NEXT year, you have the same exact shortfall, with no more billionaires to plunder.
Or, you could tax the 70 million who pay no net taxes today $14,000 each.
Or you could tax every working American $7,000 more each.
Any way you put it, that Trillion is going to cause a LOT of pain to America and Americans and American business.
Which seems to be what they want.
“Former Sen. Kent Conrad (D-N.D.), a longtime chairman of the Senate Budget Committee, argues the federal government loses $1.2 trillion a year because of various tax breaks, a large pool for lawmakers to draw from to reduce the deficit.”
Kent, you are a lying sack!
If the standard deduction was reduced, those paying no taxes would become taxpayers. The amount of revenue generated by reducing the standard deduction would be considerable
Okay, how about this. A new 5% bracket for the 47% that currently don’t pay federal income tax.
LOL——yeah-—the Obamatons are just mini-Madoff’s with a US Treasury checkbook. ROTFLOL.
Amen....... those who don’t pay are the largest potential source.
The tax is coming, a different tax, a trickle down tax called Cap and Trade. The energy producers pay the tax, raise their prices and it l trickles down to all consumers. It is still progressive in the sense that those who consume most pay most.
The Eurocrats know they cannot raise the income tax rates that are used to purchase votes. They must find another way, a subterfuge, a hidden tax.