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“Feelings” Holding Back Tax Reform

By   /   November 30, 2012  /   Comments

Republicans spent their first week back in Washington after Thanksgiving break battling each other as much as taking on Democrats.  The ideological circular firing squad that is customary after losing a national election has spread to the House and Senate.  The path to fixing our deficit and tax policy has been largely conceded to some increase in federal revenues.  But how much of that revenue constitutes a “tax increase” has ignited a now too familiar debate.  At the center, as always, is American’s for Tax Reform’s Grover Norquist.

Georgia’s own Saxby Chambliss ignited this round by telling Macon’s WMAZ that he cared more about the country than a 20 year old pledge” on the day before Thanksgiving.  While subsequent comments had the Senator walking back his statement, many other Republicans – especially members that identify with the TEA Party, have already  moved into customary apoplexy and have determined that the upcoming budget deal will be a failure for movement conservatives.

Members of Georgia’s House delegation were quizzed this week by the Atlanta Journal-Constitution’s Daniel Malloy.  All from the house side who have signed the pledge swore their continued loyalty to it.  The only Republican who didn’t, Freshman Congressman Rob Woodall told Malloy that he didn’t sign the pledge because he was afraid that it would limit his ability to pass a national sales tax to replace the income tax code, commonly called the FairTax, but he also “insisted” to Malloy that he would never vote for a tax increase.  Woodall’s statement illustrates the underlying problem with ATR’s pledge.

The ATR pledge is simple on its surface. Those that sign pledge to their constituents that they won’t vote to raise marginal tax rates nor vote for elimination of deductions or credits that aren’t matched by corresponding rate cuts.  The implementation, however, has generally relied on Norquist issuing a pronouncement of what does or doesn’t constitute a tax increase.

Woodall’s statement of concern is not without basis.  When Georgia’s legislature attempted broad tax reform in 2011, Norquist wasn’t consulted, and determined the plan was a tax increase.  Those that met with him during follow on negotiations weren’t quiet about their feelings for him during those meetings, with many feeling his objection was more about not being consulted on the front end rather than a distinct opposition to the proposal.

In June of 2011, Norquist went so far as to tell Republicans in the US Senate that they couldn’t eliminate subsidies for ethanol because that would constitute a tax increase.  His definitions appear to be more fluid as time goes on, thus ensuring he must be privy to any details, up front, before major changes can be made.

In Malloy’s report, Norquist is quoted as saying the following, “I have job security that most people don’t have…At least the marijuana-legalization people could end up out of a job in a couple years if they win. But we’re always going to feel that our taxes are too high.”

And within that quote is a perhaps larger problem for Republicans than Norquist’s own ego. The battle is no longer over statistics or economic data.  It’s about feelings.

Arthur Laffer was the economic guru that convinced Republicans and eventually a majority of Americans that marginal tax rates in 1980 were too high.  He argued that there was a point that taxes could be lowered that would increase overall revenue, and marginal tax rates were significantly cut.  Conceptually this can be proven to be true, but where these numbers fall is difficult to prove.

Yet to accept Laffer’s concept, we also have to accept the fact that when you move to the left side of the Laffer curve, reducing tax rates also reduces revenue.  This is central to the concept, equally provable as the increase in revenue on the right side of the curve.

Too many Republicans have “learned” the lesson of Reaganomics is that “every time we cut taxes we raise revenues.”  It’s often stated by candidates as unquestionable dogma. It is, unfortunately, not true.

Republicans like to point out the Democrats who have said it doesn’t matter that raising marginal tax rates on the highest income earners won’t raise revenue don’t mind because they claim it’s about fairness.  We’ve now countered by anointing a leader who admits it’s about feelings.

Republicans claim they want fundamental tax reform, but the FairTax’s leading champion worries that the ATR pledge will keep that from happening.  And likely, it will.  Because Republicans continue to cede power to a man who preys upon feelings to stroke his own ego and secure his unelected position of power.

Charlie Harper is the Atlanta based Editor of PeachPundit.com, a conservative-leaning political website. He is also a columnist for Dublin Georgia based Courier Herald Publishing.

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