Republicans offered a proposal that would have both reformed the current code and produced significant new tax revenue. . . . The essence of the plan was to dramatically reduce the deductions and credits wealthier taxpayers can claim to reduce their tax liability. That would generate enough revenue to both permanently reduce marginal rates for all taxpayers and provide more than $250 billion for deficit reduction.But, see, $250 billion over ten years is not "significant new tax revenue." In exchange for accepting this pittance of a tax increase, the Republicans demanded that all of the Bush tax cuts be made permanent, which is, over ten years, a $3.8 trillion tax cut. Not only that, but their plan did not even specify which deductions and credits were actually going to be curtailed. It is not just a pittance but a mirage of a pittance. And because it reduces tax rates, it would mean a tax cut for billionaires, who are beyond the point where deductions mean anything to them.
According to this piece, the Democrats were insisting on at least $1 trillion in new taxes. The Republicans make this sound like a bad thing, but I think $1 trillion is not nearly enough. The plan Obama campaigned on, and won the election on, was to let the cuts expire for people with incomes over $250,000, and that would raise $1.4 trillion. Like Mayor Bloomberg, I think we should let all the Bush cuts expire. Without trillions in new revenue, there is no way we can move toward a balanced budget and keep the promises we have made to provide for the health care and retirement of older Americans.