Toomey ‘stunned’ that Dems would go over fiscal cliff

Unless Congress acts by the end of the year, a laundry list of tax increases and spending cuts will begin in 2013. Toomey said Democrats have taken a weak negotiating position by threatening to allow those policies to take effect. 

“I don’t think it is a good strategy at all,” he said. “I am surprised that they are willing to do it.”

Toomey, in a speech at the Brookings Institution, outlined a proposal he made during last year’s failed supercommittee talks on the deficit, which Murray chaired. He said that it contained $250 billion in new revenue and that the tax reform plan would have been “more progressive” than current law.

He explained this is because his proposal stipulated that all new net revenue would have to come from ending deductions for the top two income tax brackets. 

“This is why it is objectionable to me that people suggest I was advocating a tax increase on the middle class to pay for a tax cut for the rich,” Toomey said.

Murray in a Senate floor speech Tuesday fired back.

"Just this morning, the Republican Senator from Pennsylvania gave a speech about his plan for even deeper tax cuts for the rich, down to just 28 percent for the wealthiest Americans," she said.

"While Democrats are fighting for tax cuts for the middle class, Republicans are not only holding them hostage to continue the tax cuts for the rich, they are also scheming ways to cut taxes for the wealthiest Americans even more."

Toomey did not fully flesh out all the tax breaks he would end in order to drop each marginal tax rate by 20 percent. His plan from last year did include new taxes on employer-based healthcare, a hard cap on itemized deductions, and a change to the tax status of state and local bonds. He said all of these could be adjusted.

During the speech, Toomey offered a complex explanation of why his proposal does not violate the no-tax-increase pledge from Americans for Tax Reform.

He said that compared to a current law baseline, in which a taxes go up, it was a tax decrease. He conceded that compared to current policy it was $250 billion more in taxes, scored statically.

But Toomey criticized Murray for suggesting last week that after January, the GOP would not be violating the tax pledge by voting for a bill that only lowers middle class taxes, since all the rates would have risen by then. Murray's suggestion uses similar current law logic but Toomey called it "smoke and mirrors."

Toomey was asked how many other Republicans would join him in backing some revenue increases. He said it depends on the context and whether Republicans can get the entitlement reforms they are seeking. He noted all six GOP members of the supercommittee supported his proposal.

“Context matters,” he said. 

Toomey told reporters that his staff is now working on a revised tax reform plan just dealing with the individual code and is looking for the optimum time to release it.

“We are putting the numbers to it. We are in the process of refining it,” he said.  

He said that he is not involved in ongoing efforts like the Gang of Eight to put together a deficit reduction plan.

Asked what can be accomplished in the lame-duck session, Toomey said it is too early to say.

“Everything changes, everything depends on the outcome of the election,” he said.