The Republicans met Monday to consider a proposal that would raise additional revenue by limiting some income tax deductions that primarily benefit higher-income households.
Republicans cited the proposal as evidence that they were open to ideas that would raise revenue and thus help reduce the federal budget deficit, which has exceeded $1.2 trillion in each of the last three years.
Democrats, however, said the proposal was unlikely to lead to an agreement.
Under the proposal, Republicans would agree to limit certain itemized tax deductions in return for a permanent reduction in marginal tax rates. This would not just extend the 2001 and 2003 tax cuts, but reduce the rates that apply to each additional dollar of a taxpayer’s income.
The 12-member panel, the Joint Select Committee on Deficit Reduction, has a little more than two weeks to present a plan to reduce deficits by a total of $1.2 trillion over 10 years. If it falls short, or if Congress does not approve its plan, the government would make up the difference with automatic cuts, starting in 2013.
A Republican with knowledge of the talks said that limiting tax breaks was a major concession. As an example of such tax breaks, Republicans pointed to the deduction allowed for mortgage interest on a second home.
Republicans said the proposal had been discussed by Senators Patrick J. Toomey, Republican of Pennsylvania, and Max Baucus, Democrat of Montana.
But Democrats said the Republicans had not offered any constructive ideas that would narrow differences. Moreover, they noted, Mr. Baucus, the chairman of the Finance Committee, has said that the 2001 and 2003 tax cuts should be allowed to expire for the most affluent 2 percent of taxpayers, as part of “a balanced solution.”
Article source: http://feeds.nytimes.com/click.phdo?i=a940af43846dcad2de257defc9381d66
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