Led by one of the Senate's staunchest budget-cutters, there are new signs that some Republican leaders may be willing to extend an olive branch to Democrats in the form of targeting certain tax breaks for millionaires and considering new net tax revenues.
“All Americans are facing tough times, with many working two jobs just to make ends meet and more families turning to the government for financial assistance,” declared Oklahoma Republican Tom Coburn after releasing a report earlier this week which details how, under the current tax code, the federal government is giving billions of dollars to individuals with incomes of $1 million and higher.
“From tax write-offs for gambling losses, vacation homes, and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous,” said Coburn. “Multimillionaires are even receiving government checks for not working.”
Some political observers are interpreting Coburn’s remarks as a dramatic sign that the GOP may be willing to relax their no-tax stance to reach a deficit-reduction deal with Democrats by next week.
They also point to an apparent offer from GOP members on the supercommittee to raise $30 billion in new net tax revenues while lowering tax rates as a shift from earlier thinking, reports The Hill. Many Democrats view the planned expiration of the Bush-era tax rates in December 2012 as their biggest leverage in the deficit talks.
A senior GOP aide told the publication that Republicans are shifting their position in an attempt to reach common ground with the Democrats who have refused to budge on the question of entitlement spending.
Coburn’s report, “Subsidies of the Rich and Famous,” details more than $9.5 billion in government benefits that have been paid to millionaires since 2003. Additionally, millionaires borrowed $16 million in government-backed education loans to attend college.
On average, the report found that millionaires enjoy benefits from tax giveaways and federal grant programs totaling $30 billion each year. As a result, almost 1,500 millionaires paid no federal income tax in 2009.
The report highlights the following payments to millionaires:
• $74 million of unemployment checks
• $316 million in farm subsidies
• $89 million for preservation of ranches and estates
• $9 billion of retirement checks
• $75.6 million in residential energy tax credits
• $7.5 million to compensate for damages caused by emergencies to property that should have been insured.
“This welfare for the well-off – costing billions of dollars a year – is being paid for with the taxes of the less fortunate, many who are working two jobs just to make ends meet, and IOUs to be paid off by future generations,” said Coburn. “We should never demonize those who are successful. Nor should we pamper them with unnecessary welfare to create an appearance everyone is benefiting from federal programs.”
Democrats are expected to block the extension of low tax rates for the wealthy, capital gains and stock dividends in an attempt to press Republicans for concessions such as last week’s offer to eliminate special tax breaks in exchange for lowering marginal income tax rates, something Democrats will look for again in 2012, according to The Hill.
Grover Norquist, president of Americans for Tax Reform, told the publication that he had been assured by Republican leaders that they won’t agree to raise taxes.
“I’ve talked to the House leadership and the Senate leadership. They’re not going to be passing any tax increases,” he insisted.
Norquist took exception to parts of Coburn’s report, telling The Hill that Coburn appeared to be “trying to get on [President] Obama’s losing class-warfare argument.” He was also critical of some of the “legitimate business expenses” included in the report, such as rental expense deductions.
Senate Democrat and Majority Whip Dick Durbin last week predicted that movement by his Republican colleagues could open the door to a deal.
“The fact that some Republicans have stepped forward to talk about revenue, I think, is an invitation for Democrats to step forward and talk about entitlement reform as well as spending cuts,” Durbin was quoted as saying. “Therein lies the core of an agreement.”
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