Republicans Begin Caving on Taxes

I know, I know. The big shrill-shreeking story on the upcoming "supercommittee" that will work on additional deficit reduction is right now, "ZOMG, Republicans are appointing anti-tax hardliners, and Democrats are appointing Max Baucus - Noooo!" In fact, Cenk Uygur's "The Young Turks" twitter feed claimed yesterday that "the fix was in" since Max Baucus was appointed by Harry Reid. But the entire Republican Congressional delegations are made up of anti-tax hardliners. The goal here is not to get the Republicans not to pick hardliners but to get them to break that hard line.

They may already be starting to do that. The New York Times' Jennifer Steinhauer reported on an interesting townhall meeting by four conservative House Republicans in Virginia:
In a town-hall-style meeting in Virginia on Tuesday night with four Republican House members ... audience members asked what, if any, revenues the representatives would accept...

Of the four, three gave specific examples that they could possibly acquiesce to. Mr. Rigell – who had invited the other three House members to the meeting because it focused on health care and they are medical doctors – said he thought that at least a few forms of tax subsidies provided to oil companies should be on the table...

Mr. Gingrey said he found the question “difficult” and suggested that he had been struggling with the answer himself. Raising the rates on those earning $250,000 a year – a category of beneficiaries under the Bush tax cuts that some Democrats have suggested be taxed more – was a no-go for him, but for those earning over $700,000, he said, “I’m not really sure.”
Keep in mind that the committee has not even gotten started yet. And we already have legislators talking about "comprehensive tax reform that will close loopholes and revise the tax code." Tax reform has been the code-phrase for revenue increases for a while now. And this might just be the first time a Republican member of Congress has sounded open to taxing at least millionaires a bit more. That's something!

And if any liberals doubt that closing tax loopholes can result in significant amounts of additional revenue for the federal government, let me set them straight. The practice of hiding profits offshore alone costs the US treasury between $70 billion and $100 billion every single year, found US PIRG (Public Interest Research Group). Just closing the offshore loophole, as Sen. Carl Levin aims to do in his Stop Tax Haven Abuse Act, alone would result in as much additional revenue over the next decade as letting the Bush tax cuts on the wealthiest 2% of income earners expire. Once again, that is just from closing off the off-shoring of profits alone.

Cutting out the subsidies and domestic tax breaks for the oil and gas industry would result in another $77 billion in additional revenues over the next decade. Taking out another tax break that encourages betting on futures prices - such as trading oil futures would another $2-$3 billion.

And all this doesn't even go close to touching another rather straight-forward idea: reform the tax code to make "capital gains" and dividends - at least for the highest earners (the top 1% of Americans make two-thirds of capital gains and dividend income) - more equitable to ordinary income. Heck, even a Reagan rate of average 28% on capital gains would result in significant revenue increases.

All of these are things the Republicans opened the door to - or more aptly stated - started caving to. And a mix and match of these things can easily comprise half or more of the deficit reduction that the supercommittee would be charged with delivering. Republicans know as well as anyone that the President has won the public debate over whether or not tax revenues have to go up - they do, as well as on where those revenues must come from - the tax welfare system enjoyed by the ultrea wealthy and multinational corporate behemoths. All that is left now is for them to try to find a way to couch the necessary tax increases in terms that the Norquistian Teahadists can be fooled by.