No new taxes, so promised President George Bush the senior. Many believe that he failed to win re-election largely as a result of breaking that promise. Lots of Republican law makers made the same promise as a way of getting elected. They did it one better that the former president by putting their promise of no tax increases in writing; thank you Mr. Norquist. And now, as they face the so called fiscal cliff many of these fair weather fiscal conservatives are already making it known that they are ready to jump on the liberal tax and spend band wagon. After all, they say, we are only raising taxes on the wealthy.
What about the fiscal cliff? If Congress does nothing an across the board spending cut will be imposed and taxes will go up on just about everyone. The CBO says that the spending cuts will be in the neighborhood of $511 billion. That means that rather than borrowing $1.2 trillion in 2013 the United States would only have to borrow $1.1 trillion. If I’m doing the math right that is about a 3% cut. That doesn’t seem like a draconian cut to me.
The tax increase is another matter. It’s really going to hurt. This tax increase, if it happens, will be the largest single tax increase in the history of the Republic. If the Bush tax cuts are allowed to sunset then virtually everyone that pays taxes will pay a lot more. According to an October 2012 analysis by the Urban Institute and Urban-Brookings Tax Policy Center, the average tax increase per household would amount to $3,500, with the average middle class household seeing about a $2,000 increase. Many working people will start paying federal income taxes again for the first time in years. Some younger workers will pay income taxes for the first time in their lives. It will be terrible.
What to do? I say . . . Let the people have what they voted for. Democrats have railed against the Bush tax cuts for years. The electorate bought the Democratic line on taxes when they re-elected the president. I say let President Obama and his collectivist allies go over the fiscal cliff. The fiscal conservatives should stand on principle and vote against any increase in taxes for anyone.
When we go over Mr. Obama’s cliff the tax rates will skyrocket. Everybody will be mad. Voters and special interest groups will pressure Congress to lower taxes on the middle class and lower income workers. The Democrats will bring bills to the floor to lower taxes for some while keeping taxes high for higher income earners and corporations. Liberals will push the fiscal conservatives to vote for targeted lower taxes. The fiscal conservatives should then say, “read my lips,” no more stop gaps. No one-offs. No more tweaking a hopelessly broken tax code. NO DEAL! Here’s our plan to reform the entire tax code. Here’s our plan to eliminate the current tax mess and replace it with a low and simple flat tax for individuals and for corporations.
Of course the liberals will reject any plan that does away with their “progressive” tax code. So be it. Tax reform could then become the rallying point for fiscal conservatives in the 2014 and 2016 elections. How does this sound? The liberals stuck you with the record high taxes that have created economic stagnation. Fiscal conservatives will bring you very low taxes and the growth and prosperity that will ensue.