Commentary

Do GOP Voters Have a Choice When It Comes to Taxes?

This article appeared in the Washington Times, February 11, 2000.
With John McCain’s big victory in New Hampshire, a genuine race seems to be developing for the Republican nomination. Not that there’s much reason to care who wins.

The most basic issue is taxes. How much private wealth should Uncle Sam be allowed to seize?

Today, Americans turn more money over to government than they spend on shelter, food, clothing and transportation combined. People face the highest peacetime tax burden ever.

Washington alone takes 40 percent of the nation’s economic wealth for its own use. Revenues have been growing 7.6 per cent annually since Bill Clinton’s election in 1992, two and a half times the rate of inflation.

A burden that would shock the average medieval serf would be more bearable if Americans were getting good value for their money. But the budget today reflects organized looting on a vast scale.

Profitable businesses collect subsidies to invest overseas. Prosperous elderly cash checks from the young. Populous foreign nations receive military protection; international wastrels take foreign aid.

Farmers bank subsidies to grow crops no one needs. Interest groups get grants to advance their partisan agendas. Voters enjoy the best pork their representatives can deliver.

In contrast, programs of genuine national need are few and far between. Even those with worthy intentions, such as poverty relief, often backfire.

The only serious tax cutter on the Republican side was Steve Forbes. A proponent of a 17 percent flat tax rate, he would have both lowered the tax burden and restructured the tax system.

The five-year cut would have totaled $648 billion. The capital gains and estate taxes would go; the Bush-Clinton tax hikes of 1990 and 1993 would die. The IRS as we know it would disappear. It was a worthy agenda, but one that failed to capture voters’ imaginations, causing Forbes to withdraw.

Which leaves the empty George W. Bush and the awful John McCain.

Bush offers a modest cut of $483 billion over five years. The top rate would fall from 39.6 percent to 33 percent.

No tax would end. No intrusive IRS regulation would disappear. It’s better than Clinton’s approach, of course, but what wouldn’t be better than Clinton’s approach?

Supporting the Bush agenda also requires believing George W.

Perhaps it isn’t fair to visit the sins of the father on the son. Nevertheless, there is nothing in George W.’s record to suggest greater commitment than that exhibited by his father of ”Read my lips” fame.

Indeed, George W.’s vaunted state tax cut program, whereby property taxes fell in 378 school districts, actually saw hikes in another 378 districts and no change in 278 others. The average statewide rate cut was .004 percent.

In the meantime, he backed higher sales taxes. When confronted with his 1994 campaign pledge not to hike taxes, he claimed that some aide must have traced his signature on the statement. One could lose a lot of money relying on his word.

Alas, McCain is worse. Why is he running as a Republican?

McCain has proposed a five-year, $237 billion tax cut, not much more than the potpourri of special interest tax preferences being pushed by Clinton. McCain would leave intact today’s confiscatory top rates. He wouldn’t eliminate any taxes. He wouldn’t simplify the IRS regime.

That McCain isn’t particularly interested in relieving people’s tax burden is bad enough. But his specific attacks on his more serious tax-cutting opponents are shameless.

McCain, supposed man of courage, has turned into McCain, dishonest demagogue. He’s criticized the Bush program for being ”fiscally irresponsible,” giving most of its benefits to the wealthy, and threatening the solvency of Social Security. Clinton couldn’t put it better.

However, with estimates of the government’s gross overcharges growing almost daily the estimated surplus over the next decade is now up to $1 trillion there’s obviously room for big tax reductions. Refusing to cut taxes, thereby leaving the money for Congress to waste, is truly ”fiscally irresponsible.”

McCain also forgets that tax cuts should go to people who pay taxes. Guess who is paying taxes today?

The wealthiest 10 percent bear 62 percent of the tax burden. So, yes, it is only fair that they get a penny or two more back than the poorest 10 percent.

McCain’s demagoguery regarding Social Security is equally misguided. Tax cuts don’t threaten the system’s solvency. Changing demography does.

The answer is not to continue squeezing taxpayers. It is to allow young workers to set up their own retirement accounts and leave the system.

Having narrowed down the field to George W. Bush and John McCain, Republican voters will get precisely what they deserve in November. A choice not worth making.

Doug Bandow is a senior fellow at the Cato Institute.