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GOP Supporters of Increased Revenue are Motivated by Support for Big Government

By: Daniel Horowitz (Diary)  |  May 30th, 2012 at 02:57 PM  | 

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It’s another week in Washington, and another story is out containing a plethora of quotes from Republicans who are willing to “put revenues on the table.”  Here are some quotes from today’s article in Politico:

“Nobody wants to raise taxes, but the question is can you lower tax rates, lower loopholes and deductions and apply that to debt reduction? I think the answer is yes,” said Sen. Lindsey Graham (R-S.C.). “If our position is every time you eliminated deductions and exemptions, all of it has to go to bring down rates, how do you pay off the debt?” […]

Added Sen. Mike Johanns (R-Neb.): “My impression is if you brought rates down, did real meaningful tax reform, the additional revenue would not be a deal-killer for many.”

Others suggested that it’s time for their party to show more willingness to deal on the tax issue.

“I think it’s the type of platform that we have to look at: It looks at spending; it looks at revenues; it looks at entitlements,” said Sen. Johnny Isakson (R-Ga.).

“I think there are revenues that are available out there that we ought to be taking a look at,” such as tax breaks for oil companies, said Sen. Dean Heller (R-Nev.).

Sen. Susan Collins, the Maine moderate, said she believes “the demands of the deficit require us to look at both sides of the ledger, both the spending side and the revenue side.”

What a heartburn!  With the exception of Susan Collins, these senators are considered to be members in good standing within the Republican conference.

Lindsey Graham wants to know how you pay off the deficit without using the tax code to raise some revenue?  It’s comments like this that reveal just how little many Republicans in the Senate have in common with conservatives.  It’s not about the deficit; it’s about the size of government and its deleterious effects on our freedom and prosperity. The EPA, for example, only eats up about $8.5 billion a year, a paltry sum relative to other major expenditures.  We will not balance the budget by eliminating the EPA alone.  However, that $8.5 billion in direct taxpayer support is used to promulgate laws and regulations that remove hundreds of billions from taxpayers in the form of lower wages, costlier products, and market distortions.  These government agencies, programs, and mandates also destroy hundreds of thousands of jobs.  The same thing applies to the NLRB and many agencies within the Department of Energy and Interior

Nonetheless, if we eliminated all of the harmful and unconstitutional discretionary agencies and programs while enacting free market entitlement reform, the budget would balance.  A number of proposals have been offered to balance the budget within 5-10 years, most recently, the Lee and Paul budget plans.  In fact, they balanced the budget alongside pro-growth tax reform.

Yet, Lindsey Graham is correct in his assertion that we can’t balance the budget without raising revenue – if the budget reflects his governing philosophy.  Obviously, Graham is a strong believer in the current structure of government.  That’s why he (and the others mentioned above) voted against the Lee and Paul budgets.  Yes, we will never balance the budget without raising revenue, if we desire to maintain the welfare and nanny-state. Then again, the ultimate desideratum of conservatism is not to balance the budget; it is to restore government to its constitutional size.  The balanced budgets will naturally follow such reform.

The debate within the party is not reflective of a divergence in opinion over tax policy.  It ultimately boils down to the role of government.  We believe that government needs to be fundamentally downsized.  By extension, we oppose any new revenue because the current level of revenue is sufficient to sustain a constitutional government.  Moreover, an increase in revenues will be used to fuel the growth of government.  Many Republicans support the current structure of government.  They merely desire to terminate “waste, fraud, and abuse.”  It’s no surprise that they are enticed into the “balanced approach” in order to balance a budget that reflects their view of government.

Cross-posted from The Madison Project

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COMMENTS

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  • commonsenseobserver

    But I’d note that base-broadening with lower rates would produce revenue. We can’t have base-broadening without tax cuts, or tax cuts without base-broadening.

    • http://madisonproject.com/ Daniel Horowitz

      no problem with broadening the base. The issue is that these guys feel that it should be used for the purpose of raising revenue and that there is no way to balance the budget without raising revenue. Yet, they also voted against any real effort to balance the budget in a reasonable time frame. That tells you that, over and beyond tax policy, they don’t really share our view of limited government.

      • retrocon87

        “broadening the base” is a term used pretty often in the context of tax reform as a means of “aising revenue but I still have no idea what it’s actually referring to… who exactly is currently excluded from the “base” that would be included if the “base” is “broadened,” ie whose taxes are we proposing to increase via a “broadening of the base?”

        • tnfriendofcoal101368

          of reducing rates and exemptions across all bands, widening the bands themselves. I think this is correct but I’ll let Daniel or commonsense correct me if I am wrong.

          • acat

            An income tax “floor” of 1%.

            No exemptions. No exceptions. You earn $1.00, you pay a minimum of $0.01.

            Tax exemptions, rebates, kickbacks, welfare credits, etc. can lower the rate *to* the floor, but not below it.

            That gets *everybody’s* fur in the game… and gets those who earn very little to further embrace the idea that “Taxes suck”.

            Mew

          • retrocon87

            so “broadening the base” means make the people who don’t pay income taxes finally have to pay income taxes? Personally I agree it’s not fair that half the country doesn’t pay income taxes but if our mantra against the liberals is that “raising taxes on the rich for purposes of ‘fairness’ will hurt the economy” then how would it NOT hurt the economy to raise taxes on the bottom 50% for what we construe to be our own definition of “fairness”? Where I’m going with this is that if this winds up boiling down to a debate about “OK it’s agreed that we’re going to raise taxes, so whose taxes should be raised,” if the liberals say the rich and Republicans say the poor, we will probably lose… The only way we can attack tax increases on the rich is if we stick with the argument that “all tax increases hurt the economy regardless of who they’re on.” That completely breaks down if we start saying “let’s tax the bottom 50% more because we don’t think they’re paying their fair share.” Then we essentially just sound like liberals but we’re targeting the bottom 50% instead of the wealthy which doesn’t exactly seem like a terribly palatable election platform…

          • retrocon87

            furthermore, if “reform” is supposed to be “lowering rates but killing deductions in order to simplify the code,” if the GOP kills my mortgage deduction and cuts my rates but the rates aren’t enough to compensate for killing the deduction so that in the end I wind up paying more, I see zero difference between that and the liberals leaving my deduction alone but raising my rate… the only difference is the semantics in that GOP politicians can try to claim that they didn’t really “raise taxes,” they just “reformed the code.” If the Republican plan is to raise revenues through “reforms” the question then becomes “OK, so both the Dems and Republicans effectively want to raise taxes, but who should get hit?” If our argument right now is that “liberals shouldn’t be able to raise taxes on the rich because tax cuts on the rich hurt everyone due to cost shifting,” then how do we then argue that the better thing to do is to just “reform” which could raise taxes on everyone? Seems like a very slippery slope.

          • aesthete

            that a straightforward, transparent tax code will encourage enterprise, as it reduces compliance costs and puts everyone on the same footing.

            The idea that we will be able to balance the budget purely through non-military discretionary cuts is pure fantasy.

            Is it mathematically possible? Yes.

            Is it politically feasible? Not even close.

            Balancing the budget (or at least getting close enough so that growth+smaller government takes care of problems with too much debt) is going to take cuts to every part of government, and probably more revenue for government (read: tax hikes).

          • Risky

            … at the IRS and in the Tax Filing/Accountancy sectors. If it doesn’t then it isn’t much of a reform..

            Conservatives should look to always move towards the simplest flattest tax system so when the order side want to raise revenue they can’t fool people by claiming someone else is going to pay for it.

          • JSobieski

            Everybody wants to defend their particular government give away, so nothing happens.

            Elimination of the mortgage deduction would be a huge hit on me personally, but I still support it . . . if it happens in the context of real tax reform and real entitlement reform.

          • aesthete

            Cutting affirmative action programs at the federal level would undoubtedly hurt me, ditto for eliminating deductions for the lowest quintile. I support it because a) it is not moral for me to demand my piece of the pie while telling others to give up theirs, and because b) there’s no other solution that would work.

          • acat

            and instead enjoy good music.

            Mew

        • aesthete

          Some corporations get net-zero or negative taxes after deductions.

          The same goes for some individuals.

          “Base broadening” is the idea that we have these groups pay positive rates by eliminating deductions, ideally through a flat tax.

  • YnotNOW

    That is the key point.

  • Flagstaff

    Reduce tax rates.
    Shrink Government.
    Let the economy grow.
    Apply the additional receipts to debt reduction.
    No new programs unless others are cut.
    Cutback on all government salaries by % equal to the decrease in tax rate for that salary.

    One of the failures of the Reagan years came from the lack of a target to reduce government size. Without that, we can’t get a handle on debt until it’s too late.

    • acat

      under Reagan?

      I blame Tip O’Neill’s intransigence far more than Ron for the lack of cuts….

      Mew

      • Flagstaff

        I could be wrong, but what I meant was that there was no goal to actually reduce the size of the government, reduce the payroll, etc. Since it wasn’t a goal, it wasn’t met.

        The emphasis was to change the tax code (done!) including lower rates (done!) and trun around the economy (done!). Unfortunately, the extra revenue that brought in was used to add more programs, rather than pay down the debt and/or reduce the deficit.

        In fairness, at the time it would have been enough to simply stop growing the Gov. If we could go back to what it was then, we’d be very happy now. Then W came along with No Child Left Behind and MedicareRx, which could both have been done without, and now Obie Wants MyMoney is busy lining the pockets of all his contributors with tax receipts.

        I should have listed a government workforce reduction in that list I posted. But I could also suggest that if any new program needs to be put into place, every single one of its government employees should come from another area, not to be replaced, and so should the money. No New Hires!

        • acat

          W has his good points – the political-hot-potatoe tax cuts that *will* force a government shrinkage, Chief Justice Roberts – and bad.

          NCLB, in the hands of a ballsy executive, could really work… I’m optimistic that Romney will let Mitch Daniels (who got School Choice done in Indiana) take a whack at the educrats with it.

          I would like to see an executive tackle the Federal budget with zero-base budgets – i.e. who cares what you got last year, this year you need to ‘splain why you need every dime – and draconian staffing and program cuts. “Why do we have a federal department to tell car manufacturers what to build when the States have the same departments?”

          Mew

          • Flagstaff

            If not for VP, for Sec. of Commerce, with orders to cut it back to the essentials. He’s on record as saying it should be eliminated.

          • acat

            too northeastern, not to mention too squishy on social issues. Second, he has two first names. Can’t trust people like that.

            Mew

          • Flagstaff

            My suggestion was for Commerce and its demise.

          • acat

            I want to know who Romney wants for his cabinet, but I don’t think Romney should announce it until late, though…. why give the Dems any more time to beat on people?

            Mew

          • Flagstaff

            I thought that comes after election, anyway.

          • Flagstaff

            those “Judd” people are among the worst. There’s also Judd Nelson. Ashley Judd. Winona Judd. Naomi Judd. Then there’s Chad Stuart, Jeremy Clyde, Chad Oliver (SF writer), Chad Everett, Paul Simon….

          • Flagstaff

            Nelson Eddy. Eddie Arnold. Edward Arnold. Ozzie Nelson. In fact, everybody last-named Arnold or Nelson. I quit.

          • aesthete

            The awkward moment when Mitch Daniels, Paul Ryan, Rand Paul, Mike Lee, and Chris Christie simultaneously unfriend you on Facebook…

          • acat

            Nor am I on Facebook.

            Mew

          • Melody Warbington (rwm52)

            no text

  • Darin_H

    I’ll just tell Lindsey this, “You demonstrate spending restraint even *once* (and not budgetary cuts to future expenditures, I’m talking about spending less than *last year*) and I’ll think about going along with ‘revenue.’”

    However, I do suspect that you won’t like my idea of revenue raising anyways (aka we’re still on the wrong side of the Laffer Curve).

    Once.

    Good luck with that.

  • GreyCloak

    There is no doubt that spending is out of control. But there is also no doubt that taxes will have to be increased if for no other reason than to pay off the massive debt that we have allowed our politicians to accumulate over the years.

    Putting aside GDP and other measures that can be manipulated, it is simple to compare population (from the census) to debt (from US Treasury data). Here is the debt per person, including every man woman and child:

    1990 $13,000
    2000 $20,163
    2010 $43,925

    We let this happen. We have to pay it off.

    That said, I remember my enthusiasm when President Reagan got rid of many deductions and said “We’re going to tax the rich.” Until I found out that, at $35,000/yr, I was rich!

    Under Reagan, Congress voted for the tax increase and proceeded to spend $1.80 for every new dollar raised.

    Any new budget will have to balance taxes and spending.

    In 2011 (the last year for which actual figures are available), the Federal Government took in about $2.3 Trillion. To balance the budget, spending has to be gotten under control. Since Congress isn’t able to pass a new budget, I suggest they go back to the Budget of 2004 … which spent only $2.3 Trillion.

    Despite massive deficits and massive increases in spending, I do not think we are any better off today than we were eight years ago.

    First, cut spending to balance revenues, THEN raise taxes to pay off all that we have let Congress borrow.

    • aesthete

      It is idiocy to believe that tax cuts are the answer to a ballooning debt. Unfortunately, just about the only halfway decent bit of economic liberalization (besides free trade) that we’ve had over the years has been in terms of tax cuts. Don’t get me wrong: I love tax cuts. They are not, however, an economic cure-all. Idiots and knaves went on a spending binge; now the younger generation will be forced to pay for it. It really is that simple.

      • Flagstaff

        Or that tax rate increases are. Cut the tiers ten percent or so and revenues will go up. We are pretty sure of this from experience–not just a cut, but keep the top rate between 25% and 30%. And back to the 2004 budget is fine, but some items that are out of control will be bigger now. It really isn’t that easy.

        • aesthete

          A growing economy and population means that revenues from year N < revenues from year N + 1, provided that there is growth. Receipts increased under Bush's tax cuts. They increased even more when Clinton raised taxes. Besides some of the Kennedy tax cuts and Reagan's first round of tax cuts, none of the major federal tax initiatives can be credibly stated to have grown government receipts.

          I'm all for tax cuts. I like being able to keep my own money, and I like that less taxes means more growth in the private sector. I agree that tax hikes typically result in less revenues than what their proponents predict, and that the relationship between taxes and revenue is not linear. The data in the US does not support the view that 25% is the rate of revenue maximization, not by a long shot.

      • acat

        that whether you’re right or not depends on the percentage of GDP the government is taking…

        Mew

        • aesthete

          And in most cases, there isn’t enough of an effect short-term to offset the lost revenues from taxation. Most economists agree that the point for the curve is somewhere around 60-70% when you’re talking about the short-term Laffer Curve.

          Long-term, it’s lower — but long-term is too long-term to avoid problems with debts.

          The fact of the matter is, the previous generation screwed over the rest of us — and we’re going to have to pay for it one way or another. There’s no such thing as a free lunch — or as a painless way to resolve the problems with our debt.

          • acat

            I read an interesting observation on the only-tangentially related Greece meltdown the other day … the goals of the Greek government and the Greek citizens are now diametrically opposed.

            The individual Greek in the street wants to convert all his money into hard currency or gold or other inherent-value objects to avoid getting creamed by whatever the government does to address Germany’s demands.

            The Greek government, on the other paw, wants those individuals to keep their money in the banks so they can keep the banks solvent.

            The point you make – someone ran up a big bar tab – is very accurate .. and is very similar. It’ll be interesting to see whether and how prevalent barter and under-the-table gets around here…

            (hint – there are some generational variables at play here…)

            Mew

          • Flagstaff

            I’d say there is plenty of evidence that when you get to 35% top IRS rate you are beyond the Laffer peak (although he drew the curve on a different axis than I would have done). Things worked pretty well at 28%. Obviously, there is no “one” perfect maximum rate that is optimal every year, but over time there is certainly a range that is, and I’d bet it doesn’t include 36%. And obviously the lower bracket rates matter, too.

            However, there is nothing to preclude the existence of other nodes as well–other rates could match or surpass at other times. High rates might do better during boom times.

            Tax theory must include the following:

            Increased income tax rates directly increase the cost of labor.
            Increased income tax rates indirectly increase the cost of everything else.
            Taxes are the price we pay to live where we live.
            Tax dollar costs are directly tied to tax rates on an individual transaction, but aggregate tax dollars paid/collected are not.
            Increased tax rates necessarily result in downward pressure on the economy, while that is not true for increased tax dollar payments.
            Every dollar collected by the government eventually buys less than it would have on the open market.

            There is more, but I’m tired.

            I’d like to see the research that indicates “Most economists agree that the point for the curve is somewhere around 60-70% when you?re talking about the short-term Laffer Curve.”

            I’d question “most economists” and “short-term,” among other things. Yes, a pop up to 60-70% income tax rates might increase revenues for a very short time, but it wouldn’t take long at all to go south. One driver of the economy is aggregate expectations. That’s why most competent economists agree that rapid changes to tax codes are counter productive.

  • AceInTX

    I’me sick of this crap…

    Not only have we let the Demoncrats and the so called “Objective Press” redefine taxes as “Revenues…why in the HELL are Republicans…conservatives and people of high intelligence and reason going along with the redefinition…and here it is on the front page of Red State.

    Hasn’t anyone noticed, now that we’ve capitulated in this redefinition…that “RAISING TAXES” is the same as “RAISING REVENUES” in the new Orwellian use of language…and conversely, we’re agreeing that “Lowering Taxes” is equal “LOWERING REVENUES”

    so…by changing a word used to describe taxes…or by going along with the term change…we are ignoring the fact that when Reagan lowered taxes….Revenues received by the federal government increase….and by constantly increasing taxes, we are currently engaged in an endless cycle of raising taxes hoping to increase revenues only to choke off production in our economy leading to yet another increase in taxes causing another contraction in production and so on ad in finitum…

    But by all means…carry on….down is now up…and up is now down!

    • GreyCloak

      In FY 2011, here’s how “revenue” broke out:

      $1.3 Trillion income taxes (including corporations)

      $0.8 Trillion Social Security contributions

      $0.1 Trillion “ad valorem” taxes

      $0.1 Trillion business and other revenue

      Imagine an American Government that ran on the last two categories alone, no more than 100 years ago … when the Federal “take” was based solely on tariffs, fees, and other charges.

      On any corporate balance sheet, income is stated as “revenue.” At the Treasury, all revenue is basically taxes, because the Government produces nothing; it just taxes everything. The other side of a corporate cash flow balance sheet is “expenditures.” Only on the Treasury balance sheet are there three categories: income, expenses, and deficit.

      The Democrats phrase “spending” as “investment,” but continue to call taxes taxes (the more, the merrier, as long as only “the rich” are taxed).

      EVERY politician says “I will reduce taxes and bring more money to my District.” What is wrong with that statement?

      According to Laffer, reducing tax RATES often results in more REVENUE. That has been true since the Democrat Congresses under Reagan. (Incidentally, only the House can raise taxes.)

      If we are to pretend that Income Taxes should be lowered, we are deluding ourselves. The corollary to “no more taxes” is actually “no less taxes!”

      And, somewhere along the line, our politicians should come clean and admit that Social Security is a tax we owe to our elders.

      Reagan’s Congress adopted an actuarily sound solution to Social Security, establishing a “trust fund” that would keep the program solvent during the years when income exceeded outgo … but Congress has spent all that “trust” money every year since.

      FICA (as it is commonly known) is a tax on paychecks that almost everybody pays. The recent reduction (for which many Republicans voted) simply de-funds Social Security and undoes what Reagan’s Congress achieved.

      You’re right: media and Parties redefine definitions. If we Republicans are to be honest, we must equate taxes and “contributions” and balance them against expenditures

      • commonsenseobserver

        Which should be optional.

        In any case, the Reagan-era solutions have died, and it is time to reduce the unfair payroll tax, which is actually a tax on jobs (employers) and a tax on work (employees), coupled with serious reforms to raise the retirement age and slow the growth in benefits for the better-off in order to ensure Social Security’s sustainability.

        If we have to maintain current FICA revenue levels, raise the threshold, but only according to wage growth as it was meant to be.

        • http://www.hakubi.us/ Neil Stevens

          .

          • commonsenseobserver

            Don’t ask me. I think it’s rather clear, though, that our presidential nominee has already endorsed some reforms, and I suppose Paul Ryan can’t be further to the left than Gov. Romney.

        • GreyCloak

          … is not unreasonable.

          Of course, I once knew a lady who was not eligible for Social Securiy:. she retired in the 1930′s and was dependent on her husband’s fixed $50/mo WWI Veterans’ Pension! That was in the 1970s and 80′s (she died, really old). She was a descendant of Gen. Nathaniel Greene, of the Continental Army. Please rest assured that her family took care of her when the Government could not.

          For many years (before and after Reagan), I paid my “employees’ share” of taxes, often on the maximum amount allowed For the past decade, I’ve had to pay BOTH “employer” and “employee” taxes, because I am independent. Trust me, it sucks to pay about 15% of your income to the Feds even before you pay actual income taxes.

          Incidentally, all those “evil corporations” that pay no income taxes DID pay their share of payroll taxes and even workers’ comp fees.

          GE is often excoriated of late. Despite media reports to the contrary, they paid their share of FICA for over 300,000 employees. They paid taxes.

          I cannot but agree with you youngsters. who will never receive any SSA retirement benefits, courtesy of the politicians that have been elected whether you voted or not.

          Thanks to Congress, I can’t “withdraw” my two-score and change contributions to Social Security for a few more years, if I live that long.

          I might also note that I knew a lady who was “better off,” and devoted most of her school nurse’s salary to pay the 85% tax on her SSA benefits (which come into effect if you actually earn money in retirement). Our Congress takes money wherever they can find it.

          I agree FICA should be optional. Congress took on the obligation, and they should feel obligated to pay what they promised to those who contributed. You should “opt out” and save whatever you can for your own retirement. I have told my children the same. Should you run out of money, please don’t ask “The Government” for a bail-out … it would be your neighbors who might have to pay.

          I ramble. Y’all won’t likely listen. I hope y’all will remember and eventually take heed.

          .

      • AceInTX

        bottom line…tax increases are unpopular so the Democrats change the language and call tax increases revenue increases which tax increases are definitely not.

        and the idea that tax cuts can be revenue increasers predate Reagan by at least 20 years because Kennedy made the same supply side argument in his term circa 1960.

        I just get tired of seeing democrats and their lap dogs in the so called “Objective Press” redfine terms and seeing the Republicans slavishly going along with it.

      • Flagstaff

        Yes, they have, but I’d argue that what they really wasted was the “trust.”

        The new people that are entering Congress should be aware that one big job they have is to restore that trust in them and the system. Talk won’t do it.

  • tea4me

    …before we get to Lugar… Lindsey Graham

    • mikeymike143

      tim scott will be the next senator from south carolina.

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