Taxed Enough

Alan Simpson of the Deficit Commission has about had enough of Republican opposition to tax increases (Hat Tip: Outside the Beltway):

Simpson said he confronted anti-tax crusader Grover Norquist when the commission met and they exchanged words over the legacy of Ronald Reagan, claimed by both as their personal hero. When Reagan was president, he raised taxes 11 times, Simpson said, a bit of history that made Norquist squirm.

“I knew Ronald Reagan and you, Grover, are no Ronald Reagan,” Simpson said he told the president of Americans for Tax Reform, who famously said his goal was to make government small enough it could be drowned in a bathtub. Reagan didn’t raise taxes to give Norquist something to complain about, Simpson said. “He probably did it to make the country run.”

“We’ve never had a war with no tax to support it, including the Revolution,” Simpson said, after pointing out that taxes account for an increasingly smaller share of the economy. But the harsh partisan atmosphere in Washington makes any discussion of tax increases dangerous, Simpson said. “People are told in Congress if they raise taxes by a nickel, they’ll be strung up by their heels in the town square.”

There’s good reason for opposition to tax increases.  They are unnecessary. What the Ryan Budget has shown us is that we can move towards a balanced budget without tax increases. The only reason we won’t end up doing so is a lack of political courage and an attempt to minimize political damage from interest groups who demand federal spending and to gain the support of left wingers who depend on government for political power.

Let us face the fact. If we had not passed the Great Society programs, and if we had not so stupidly left Social Security untouched even as demographics showed us it must be changed, we would not have our current fiscal problems.

Of course, the question becomes, “What if a tax increase is politically necessary to gain a deal that will avert fiscal catostrophe?” The problem I see in that sort of situation is that the politicians are about as good at honoring agreements to cut spending as the Palestinians are at honoring agreements not to bomb the Israelis. Back in the 1990s, both George H.W. Bush and Bill Clinton raised taxes to reduce the deficit. However, when the deficits began to subside, Congress went on a spending spree, spending as if the overinflated revenues of the dotcom era would be with us forever. Of course, they weren’t and when 9/11 came we got massive deficits and fiscal crisises across the nation.

I’m of the mind that in theory, I’d be willing to see a tax increase to stave off America’s fiscal crisis. In practice, the increases are not actually necessary and the politicians can’t be trusted. The only way they could be trusted would be the passage of Constitutional legislation restricting spending such as:

1) Limiting federal expenditures to 18% of GDP except in time of declared war.

or

2) A Taxpayer’s Bill of Rights limiting the growth in the size of government to the rate of inflation + the annual rate of population growth.

Until the politicians are ready to check their ability to spend, the idea of a tax increase is little more than a scam. They will increase taxes and then when the deficit goes down, they will raise spending. And then when the economy has a downturn, they’ll want to raise taxes again, and when the deficit falls, they’ll add more spending. And so on.

Read more at Adam’s Blog