Democrat leaders are looking to “reform” the tax code so as to allow for an additional $1 trillion in “new revenues” to offset Republicans’ insistence on spending cuts, The Hill reports.
“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 10 years,” the report notes. “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,” the report adds. “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.”
For now, Republican leaders are supposedly holding the line on no new 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,” Senate Minority Leader Mitch McConnell (R-Ky.) said Sunday during an interview on NBC News’ “Meet the Press.”
“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,” he added.
Meanwhile, Democrats say they want tax reform-generated revenues to go toward reducing the deficit.
“We’ve done about $2 trillion. I thought $4 trillion is the goal we should reach. I think we’re about halfway there. We need another $2 trillion,” said Finance Committee member Sen. Ben Cardin (D-Md.).
Sen. Cardin said that the tax-spending cut ratio “should be about even” in the next deficit-reduction deal taken up by Congress, which is good because the so-called “fiscal cliff” deal they passed was anything but. In fact, the final Senate-backed deal which ended up passing both chambers has a 10:1 tax-spending cut ratio.
The White House claims that it’s on board with a 1:1 approach.
“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,” the Hill notes.
“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,” the report adds.
“I think you get $400 [billion] or $500 billion in new revenue because stuff [is] taken off the table,” he said.
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Featured image courtesy the AP.