The War on Taxes
With the constant talk of the 99 percent, the 1 percent, and now, the 47 percent, income tax policy has taken center stage during this campaign cycle. The Republican Party calls on Reagan’s presidency to defend its proposals for lower tax rates, but it has reinvented Reaganomics and taken it to a dangerous extreme. I had a conversation with Bruce Bartlett, a top Treasury official under George H.W. Bush and the domestic policy advisor to Reagan who crafted the Reagan tax plan, to get at the facts behind the GOP’s anti-taxation rhetoric.
“It’s simply selective memory loss,” Bartlett said. “They just forget Reagan didn’t do any of those things,” he added, noting that Reagan raised taxes 11 times between 1982 and 1988, amounting to $133 billion in tax increase as of his last year in office, but that conservatives such as Grover Norquist choose to ignore these facts.
Grover Norquist is the founder and president of Americans for Tax Reform, the group that created the “Taxpayer Protection Pledge.” The majority of Congressmen, including 95% of Republicans, signed this pledge promising to oppose any efforts to increase taxes. Grover Norquist and the Americans for Tax Reform have established the “Ronald Reagan Legacy Project,” which, among other things, has pushed to establish a “Ronald Reagan Day” and to put Reagan’s face on the $10 bill, a place currently held by the first Secretary of the Treasury, Alexander Hamilton.
They have created a myth of Ronald Reagan as a man who followed a strict policy of no-questions-asked tax cuts, and they have used this fictionalized version of the president as a justification for constant opposition to any and all forms of effective tax increase. In Bruce Bartlett’s words, many conservatives “have adopted what I can only describe as an Ayn Randian view that the wealthy have no obligation whatsoever to society or to anybody else other than to make the greatest amount of money they possibly can, and that somehow or other this will trickle down to benefit society as a whole.”
While the Republican Party has made this move from an attitude of national obligation to one of self-obligation, Bruce Bartlett has refused to go along for the ride. He was highly regarded in Conservative circles after his work for Congressman Ron Paul, Senator Roger Jepsen, President Ronald Reagan, and President George H.W. Bush. He drafted the Kemp-Roth Tax Cut, which was then adopted as Reagan’s first tax cut, and helped shape the Tax Reform Act of 1986, Reagan’s second tax cut. In 2006, however, he wrote a book entitled, Impostor: How George W. Bush Bankrupted America and Betrayed Reagan’s Legacy. He was then kicked out of his conservative think tank and alienated from the party that once held him in its inner circles.
Bartlett laments the shift away from the days when “wealthy people used to have an attitude of noblesse oblige, which basically said, those to whom great benefits have been given owe something to the downtrodden.” This is not merely a veteran statesman reminiscing about the good old days, however; the changes he is describing are concrete and visible in both the tax code and the current state of political debate.
Reagan inherited a 50% income tax rate on the top-earning bracket, a number that was steadily declining after hovering near 90% for most of the 1950’s and 60’s. It is currently at 35%, and Romney plans to bring it down to 28%. Bartlett quotes an estimate that states that if the effective rate on the top 1% of earners had stayed where it was under Reagan in 1986, today’s federal debt would be $1.7 trillion lower.
The effective rate on the top income bracket was over 33% in 1986 and is currently below 24% (although the top income tax rate is ostensibly 35%, the effective rate is 24% due to loopholes and subsidies), and Romney wants to decrease the marginal rate by a fifth. He also intends to reduce the corporate tax and eliminate the long-term tax on capital gains; Reagan advocated for capital gains to be taxed as income. The Republican Party has radically departed from Reaganomics, but a group of powerful elites led by Grover Norquist has managed to manipulate Reagan’s legacy to justify an economic shift towards lower rates and opposition to all effective tax increases.
Norquist would simply be a man with a strong opposition to taxation if he did not have a highly influential, radical group of followers. The Club for Growth, a 527 with a mission of “limited government and economic freedom,” has been instrumental in taking down Republicans who do not abide by the strict no-tax pledge. According to Bartlett, “if some candidate, a Republican, either takes the pledge and violates it or refuses to take the pledge, then the Club for Growth will target him for defeat in the primaries.” Bob Bennett, an 18-year veteran Republican senator from Utah who had won his last election with nearly 70% of the vote, was pitted against two far-right conservatives and defeated by both in the Republican State Convention and denied nomination. The Club for Growth targeted him largely because he co-sponsored the “Healthy Americans Act,” an attempt to improve the healthcare system that would require higher taxes.
The Tea Party movement has legitimized and strengthened this hard-line anti-tax movement by giving groups such as Americans for Tax Reform and the Club for Growth the backing they need. Bartlett comments, “in a sense the Tea Party people added troops to the money and ideological advantages that Grover [Norquist] already had, and as a consequence made them pretty much all powerful, at least on the tax issue.”
An “all powerful” anti-tax alliance is very dangerous, especially at a time when the national deficit is at its highest since the end of the Depression. Evidence from the Clinton and Bush Jr. presidencies suggests that higher taxes could be part of the solution, but over half of Congressmen have vowed not to vote for any effective tax increase. In the version intended for state legislators, Grover Norquist’s pledge reads, “I will oppose and vote against any and all efforts to increase taxes.”
It is shockingly irresponsible to shackle the men and women who govern our nation with a pledge that they will not adjust their views on taxation, whether it be for the purpose of deficit reduction, health reform, or anything else they view as beneficial to the American people.
Bruce Bartlett was on the political front lines when Reagan and Bush encouraged legislators to violate the Taxpayer Protection Pledge, originally drafted in 1986. Their administrations raised taxes because they wanted to increase government revenue. The Party that deifies Reagan has moved so far in the direction of fiscal stubbornness, however, that the man who drafted Reagan’s tax cuts can no longer call himself a Republican.
In 1990, while Bruce Bartlett was an acting Treasury official, George H.W. Bush sponsored a tax increase that included a raise in the top income tax level from 28% to 31% in order to help raise revenue and reduce the deficit. Bartlett says, “The defeat of George H.W. Bush in 1992 was extremely important politically because it basically said if you raise taxes and you’re a Republican, you’re going to be defeated. The fact that this was not true for Reagan is sort of irrelevant. They just ignore that.”
Ezra Ritchin is a sophomore in Ezra Stiles College.