By Tom Quiner
The heat is on.
The liberal power structure is screaming for Republicans to go along with tax increases on the rich.
There are two practical reasons they should demur:
1. George H.W. Bush.
2. Higher deficits.
Recall President Bush I. The essence of his first campaign in 1988 was “Read my lips, no new taxes.” In other words, this is a fundamental principle of being a Republican, he suggested. Of course, Mr. Bush famously caved and lost his re-election bid.
The first practical lesson for Republicans to oppose tax increases is because it undermines their credibility. They have run for years as the party of low taxes. Why would current Republicans fare any better than Bush I? A hypocrite is a hypocrite.
There is an even more compelling reason to oppose an increase in the tax rate on America’s most productive workers. Tax increases lead to increases in spending, which is exactly what we do NOT need in light of unsustainable deficits and debt.
The consequence of tax increases was carefully studied by Stephen Moore and Richard Vedder. Mr. Moore is the senior economics writer for the Wall Street Journal opinion page. Mr. Vedder is an economics professor at the Ohio University and an adjunct scholar at the American Enterprise Institute. Their findings:
“Using standard statistical analyses that introduce variables to control for business-cycle fluctuations, wars and inflation, we found that over the entire post World War II era through 2009 each dollar of new tax revenue was associated with $1.17 of new spending. Politicians spend the money as fast as it comes in—and a little bit more.”
Democrats who want to increase taxes on America’s top producers are once again trying to con us. Their history is abysmal. If we give them more money, they will simply go out and spend even more than we gave them. The numbers presented above are damning.
Even more, a tax increase in a weak economy is a prescription for a recession, as Barack Obama himself admitted just two years ago. If the Obama tax increases occur, they would only fund the government for 8.5 days.
That’s it. The president has to stop playing politics and become a team player to help cure the structural problems in our big government.
For the sake of their party and the economic well-being of America, Republicans should stick to their guns and avoid increasing tax rates on the productive.
On the other hand, they should champion tax simplification which involves lower rates and eliminating deductions. This can be done in a revenue-neutral fashion and actually help stimulate the economy.