Tax cuts have become the signature Republican policy. Conservative Republicans think that cutting taxes is both good policy and good politics––because Democrats are forced to explain why they want Americans to pay more taxes.
While reducing income tax rates and ending the estate tax have been the primary targets, the working assumption is that any tax cut is a good tax cut.
President Bush has done his part in implementing that vision by passing a tax cut every year. The president’s critics claim the cuts have been counterproductive because they reduce federal revenues at a time when the country is facing very large budget deficits.
Republicans generally dispute that claim, but even if it’s true, they don’t think it’s much of a problem. Most see the federal government as spending too much money anyway. Policies that reduce revenues simply “starve the beast” and force Congress to spend less money––or at least that was the way it’s supposed to work.
What neither party has done effectively is provide a vision for the way the tax code should be structured.
That’s one reason why the president has appointed an all-star, bipartisan commission to examine the tax code and report back by July 31. Their goal is to provide a blueprint for reform that minimizes taxes and maximizes economic growth.
That’s important. Not all tax cuts produce the same economic bang for the buck. So you want the biggest reductions in––if not outright elimination of––taxes that stunt economic growth.
For a decade or more the Republican tax mantra has been cut, cut, cut. The Democratic mantra has been don’t cut–or at least not that much–or maybe even raise taxes.
Neither party has laid out a vision for a tax system that will maximize economic growth andfederal revenues. It’s a tall order, but that’s the challenge facing the country and the president’s new commission.