Finance GOP calls for sweeping tax changes

The senators also specifically suggested that the joint committee use “dynamic” scoring to examine its tax proposals, an idea that Republicans on the supercommittee brought up repeatedly at a September hearing.

Republicans say that dynamic scoring, which tries to ascertain a proposal’s impact on economic growth, is more realistic than the current method of counting revenues. But Democrats have been hesitant to embrace that approach.

The GOP lawmakers also suggested that the supercommittee move to tax only the domestic profits made by U.S. corporations, instead of all worldwide profits – an approach employed by many other industrial countries.

And they proposed scrapping the Alternative Minimum Tax, which was implemented four decades ago to combat wealthy households who weren’t paying federal income taxes but now snares many people who make more of a middle-class living.

The supercommittee is charged with finding $1.5 trillion in deficit cuts; across-the board cuts will ensue if they fail find $1.2 trillion in deficit-reduction.

Some budget hawks have pushed for the supercommittee to “go big,” along the lines of the $4 trillion packages crafted by the bipartisan deficit panels.

The GOP Finance members also pushed for the supercommittee to take on Social Security reforms, even though that program is generally seen to be on sounder financial footing than Medicare and Medicaid.

But the Republicans, noting the credit downgrade Standard & Poor’s gave the U.S. over the summer, said revamping Social Security would send a positive sign to the markets that the federal government is serious about reducing deficits.

“The objectives of reform should be sustainable solvency and integrity of the program for its own sake, and not for deficit reduction,” the Finance recommendations said.

The lawmakers also warned against increasing payroll taxes, which are used to fund Social Security, saying it would lead to higher taxes on small businesses and weigh down economic growth.

On the trade front, the senators suggested implementing a narrower Trade Adjustment Assistance program, which helps workers displaced by global commerce.

The House and the Senate both passed TAA measures this week, along with the trade pacts with South Korea, Colombia and Panama.

Most, but not all, of the Republicans on Senate Finance signed on to the recommendations. Sen. Jon Kyl (R-Ariz.) is on the supercommittee, while Sen. Olympia Snowe (R-Maine) did not add her name to the suggestions.

This post was updated at 5:24 p.m.