America's Tax Policy

The New Republic

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SEPTEMBER 10, 2007

America's Tax Policy

This is the fourth part of the debate. To read Part 1, click here; part 2, here; and part 3, here.

Dear Jon,

I read three assertions in your second missive.

One, voters, even Republicans, prefer deficit reduction and/or specific spending programs to lower taxes.

Two, only rich people want lower taxes. And, conversely, others don't mind looting the rich.

Three, Reagan as an elected official lost several political fights and therefore conservatives should follow his one-step-backwards losses and tactical retreats rather than his two-steps-forward stated goals.

The modern Democratic Party and its ideology of liberalism declined from its commanding position as the dominant party and worldview in America to losing thrice to Reagan and twice to Bush and losing the House and Senate for twelve years in a row because tax and spend and elect is no longer a sustainable strategy. Democratic success with Clinton in 1992 and the Congress in 2006 flowed from Republican failures and the Democrats hiding their tax-and-spend goals, not proclaiming them.

If the next several elections are focused on how much of your money the government should take and spend, the Republicans will strengthen. If it is a contest for who should be mayor of Baghdad or who can spend your money better--Republican appropriators or Democratic appropriators--then the Dems are back in the game.

How do Americans feel about having their money ripped from them and spent by others on their behalf?

One can take a peek at Iowa where three larger counties (Dallas, Polk, and Warren) had a vote this summer on a project called "Yes To Destiny" where your team put a sales tax increase of only one percent (from six to seven cents on the dollar) on the ballot. The money was promised twice ... to reduce property taxes and to spend on cool stuff like bike paths. The most "progressive" counties in Iowa voted 85 percent to 15 percent to reject this tax and spend proposal which benefited from some $300,000 in advertising from those who hoped to profit from the new infusions of cash to the government.

Will voters raise taxes to pay for specific goodies? Not in Iowa.

Northern Virginia--read: the nice progressive part of the Old Dominion located near The New Republic's office--had a measure on the ballot in 2002 to raise sales taxes by one half of one percent (4.5 to 5.0 cents on the dollar) to pay for roads. This was voted down 55 percent to 45 percent. The local governments and state governments play a game where they spend tax money as the government wishes, leaving the voters' interests last--and then they tell voters you can only have roads/prisons/fill in the blank if you send in more money in higher taxes. The voters of northern Virginia--who would appreciate wider and better roads--realized that higher taxes would not go to roads, but be spent as all previous offerings to the gods of statism. Northern Virginia has long had a local income tax option to pay for roads. Local elected officials have been afraid to ask voters to use it.

These examples aside, the Tax Foundation recently published a series of polls that suggest why your team will not do well to offer more tax and spend.

Asked if they would be willing to pay their share of the $340 billion deficit--or $2470 per individual tax return, only nine percent said yes; 79 percent said no and 12 percent were unsure.

Of those 9 percent willing to pay, fully 63 percent of those said if Congress got the additional cash they would "mostly increase spending and not pay off the deficit." Only 17 percent believed Congress would use the money to fully pay down the deficit.

And the constituency for higher taxes is not there (and, yes, letting the Bush tax reductions lapse would raise taxes). Between 1996 and 2006 the percentage of Americans who believe their taxes are already too high has fluctuated between 50 and 66 percent. Your target audience that sees their taxes as too low has jumped from one to three percent and back to one percent most recently. Unless you are planning to seize power by grabbing the radio stations and airports and the railway stations in the capital, I think you need more than one percent popular support.

Or maybe hate and envy can come into play. Tax the rich to pay for everything. Asked in 2006 what the maximum percentage of a person's income is that should go to all taxes--federal, state and local ... one percent said 50-59%, one percent said 40-49%, six percent said 30-39%, 22 percent said 20-29%, 43 percent said 10-19%, 24 percent said 1-9 %, and the guys I really want to meet, those suggesting that "zero" was the right amount came in at one percent. The mean percentage Americans feel should be paid is 15%. That, by the way, is my stated goal--reducing the cost of government to half its present percentage of the economy. I am willing to go to the people with the argument that free people should pay less than European serfs in the Middle Ages. Eight percent of the country supports the present tax burden for higher-income taxpayers.

And envy fails again when the American people, fewer than five percent of whom will pay the death tax, are asked if the "estate tax" should be completely eliminated, as they were in 2006 and 2005--68 said percent yes. Only 19 and 17 percent were opposed in those years.

We want freedom. The left cries for envy and leveling. This may work in the failing parts of the world such as Zimbabwe and the sociology departments of major universities. But recovering statist nations in Eastern Europe are enacting marginal tax rates for income that go beyond--i.e. below--what Steve Forbes has suggested here.

As for Reagan, he was a flesh and blood political leader. He made it clear in speeches and writings and action that he wanted a smaller and more limited government. One of the great embarrassments to the left has been to discover that Reagan was a better-read and a more prolific and competent writer than any Democrat politician in modern history. Reagan's goals were and are clear to those who proudly call themselves Reagan Republicans.

Still, we are a movement dedicated to liberty, not the followers of any one man's vision. We worked with and for Reagan because he shared our goal of liberty and limited government. Not the other way around. He was not a great communicator. He communicated great things: liberty and its partner, limited government.

Grover G. Norquist

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