As lawmakers work on a balanced deal of spending cuts and revenue increases to avoid the coming fiscal cliff, another prominent Republican is publicly rejecting Grover Norquist’s no-tax pledge. Sen. Saxby Chambliss (R-GA) told a local television station in Georgia on Wednesday that he will no longer support the Taxpayer Protection Pledge to never vote for any tax increases under any circumstances.
Admitting the need for higher revenue, Chambliss — who is part of a small group of senators working on a deal to reduce the debt — said, ‘I’m willing to do the right thing and let the political consequences take care of themselves’
Super Committee Republicans are floating a trial balloon that would produce new tax revenue, in apparent contravention of Grover Norquist’s taxpayer protection pledge, according to Wall Street Journal editorialist Stephen Moore.
But as Moore explains that the offer has a catch:
One positive development on taxes taking shape is a deal that could include limiting tax deductions, perhaps by capping write-offs on charities, state and local taxes, and mortgage interest payments as a percentage of each tax filer’s gross income. That idea was introduced on these pages by Harvard economist Martin Feldstein.
In exchange, Democrats would agree to make the Bush income-tax cuts permanent. This would mean preventing top rates from going to 42% from 35% today, and keeping the capital gains and dividend tax rate at 15%, as opposed to plans to raise them to 23.8% or higher after 2013.
Neither Republican nor Democratic aides were immediately available to discuss the proposal. But if accurate as reported, it represents both a significant expansion of the growing rift between Norquist and the GOP, and a bad deal for Democrats.
For months, Republicans have insisted that any tax reforms they agree to be mathematically revenue neutral. If they somehow trigger a burst of economic growth, and thus increase revenue, that’s fine — but effective rate increases were verboten. Likewise, they tried to construe revenues collected in the form of higher fees, copays, etc. as “new revenue” but refused to use the tax code for the same purposes.