Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Republican National Convention — Tampa, Florida
As the late Robert Novak once put it, “God put the Republican Party on earth to cut taxes. If they don’t do that, they have no useful function.”
And since 1980, the tax issue has been a key driver — perhaps the key driver — of electoral success for the GOP. But during his speech last night, Paul Ryan mentioned the word “tax,” one way or the other, seven times.
– “What did the taxpayers get out of the Obama stimulus? More debt. That money wasn’t just spent and wasted – it was borrowed, spent, and wasted.”
– Obamacare comes to more than two thousand pages of rules, mandates, taxes, fees, and fines that have no place in a free country.
– You see, even with all the hidden taxes to pay for the health care takeover, even with new taxes on nearly a million small businesses, the planners in Washington still didn’t have enough money.
– With tax fairness and regulatory reform, we’ll put government back on the side of the men and women who create jobs, and the men and women who need jobs.
– I learned a good deal about economics, and about America, from the author of the Reagan tax reforms – the great Jack Kemp. What gave Jack that incredible enthusiasm was his belief in the possibilities of free people, in the power of free enterprise and strong communities to overcome poverty and despair. We need that same optimism right now.
– He was the Republican governor of a state where almost nine in ten legislators are Democrats, and yet he balanced the budget without raising taxes. Unemployment went down, household incomes went up, and Massachusetts, under Mitt Romney, saw its credit rating upgraded.
But no where did supply-sider Ryan talk about cutting taxes, even though his new boss, Mitt Romney, says he wants to cut everyone’s tax rates by 20 percent. Ryan didn’t even use the phrase “tax cuts” when talking about Reagan. Instead, the speech went with the wonkier, softer “tax reform.”
On Twitter today, CNBC's Larry Kudlow expressed his dismay: "@RepPaulRyan talked "tax fairness." This is not pro-growth reform. And no mention of tax cuts. Very disappointing."
Now here is Ryan in his Path to Prosperity budget:
A world-‐class tax system should be simple, fair and pro-‐growth. The U.S. tax code fails on all three counts. The tax code is notoriously complex: Individuals, families and employers spend over six billion hours and over $160 billion a year trying to negotiate a labyrinth of deductions. The tax code is patently unfair: Many of the deductions and preferences in the system – which serve to narrow the tax base – were lobbied for and are mainly used by a relatively small group of mostly higher-‐income individuals. And the tax code creates a drag on growth, because it is highly inefficient, uncompetitive and unpredictable
In fact, Ryan spends nine pages attacking the current tax code and Obama’s tax hikes while making the persuasive case for pro-growth tax reform, including cutting the top marginal rate to 25%. And fairness is defined in terms of crony capitalism rather than liberal notions of equity. Why wasn’t some of that stuff in his speech? Good question.
And who knows, maybe Romney himself will really hammer the tax issue tonight.
In his 1980 nomination acceptance speech, Reagan mentioned taxes some 20 times and aggressively pushed for tax cuts:
I will not accept the excuse that the federal government has grown so big and powerful that it is beyond the control of any president, any administration or Congress. We are going to put an end to the notion that the American taxpayer exists to fund the federal government. The federal government exists to serve the American people. On January 20th, we are going to re-establish that truth.
Also on that date we are going to initiate action to get substantial relief for our taxpaying citizens and action to put people back to work. None of this will be based on any new form of monetary tinkering or fiscal sleight-of-hand. We will simply apply to government the common sense we all use in our daily lives.
Work and family are at the center of our lives; the foundation of our dignity as a free people. When we deprive people of what they have earned, or take away their jobs, we destroy their dignity and undermine their families. We cannot support our families unless there are jobs; and we cannot have jobs unless people have both money to invest and the faith to invest it.
There are concepts that stem from an economic system that for more than 200 years has helped us master a continent, create a previously undreamed of prosperity for our people and has fed millions of others around the globe. That system will continue to serve us in the future if our government will stop ignoring the basic values on which it was built and stop betraying the trust and good will of the American workers who keep it going.
The American people are carrying the heaviest peacetime tax burden in our nation’s history — and it will grow even heavier, under present law, next January. We are taxing ourselves into economic exhaustion and stagnation, crushing our ability and incentive to save, invest and produce.
This must stop. We must halt this fiscal self-destruction and restore sanity to our economic system.
I have long advocated a 30 percent reduction in income tax rates over a period of three years. This phased tax reduction would begin with a 10 percent “down payment” tax cut in 1981, which the Republicans and Congress and I have already proposed.
A phased reduction of tax rates would go a long way toward easing the heavy burden on the American people.
Now that is how you sell “tax reform.”
Of course, that was then, this is now. The tax code is vastly more pro-growth in 2012, even with all its imperfections, than it was in 1980. Regulatory reform, immigration reform, and cutting spending are also important pro-growth issues.
But tax reform — including tax rate cuts — is just as imperative. A reformed tax code that is pro-investment — including lower rates, fewer distorting deductions — would boost economic growth, create jobs, raise incomes, and make it easier to pay down our debt.
Fundamental tax reform should be fundamental to reform conservatism and to any political campaign selling pro-growth economics.
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Comments:
Apr '11
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Isn't the problem with tax reform that by necessity we must make our tax system less progressive, which will mean higher over all taxes to middle class? A more efficient tax system would be nice and I am all for it. But, as person who right now pays something like 8.5% in Federal taxes ( I think that is with SS and medicare included). I don't see how my taxes won't go up, as I don't recall any new tax plan having an overall tax rate of less than 8.5%.
Don't get me wrong I all for fixing the budget, but I don't have any delusions about my taxes going down. Maybe my parents taxes will go down. After all they are getting awfully close to that vile 250K mark in joint income.
Oct '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Jim, it isn't possible for Republicans to give a net reduction in the tax burden. It's important we not feed expectations that are impossible to fulfill; remember Obama's lofty promises in 2008?
Oct '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
I think another problem is that the rates were much higher under Reagan. We're probably on the other side of the Laeffer curve today.
P.S.-maybe a better question is what problem are we trying to solve with tax reform? I don't think it's going to solve the entitlement spending problem.
Edited on August 30, 2012 at 10:47pmOct '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Tax reform need not change the progressivity of the tax code. The elite (left, right, and center) all agree that the middle class pays too little in taxes, but politically it would be poison.
Apr '11
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
I think that we need to heartily refute the "Tax Cuts Benefit the Rich" idea that the left ALWAYS trots out when Republicans say the Tax Cut words.
Taxes are on INCOME not WEALTH.
People in the top 1% of INCOME normally do not stay there for any length of time; they sell a business and reap the short term income, then settle back to the lower, sustainable income levels.
But its going to be a hard sell to the 48% or so of Americans who have a net gain between taxes and largess. They get to vote that other people have to pay for them. That's a tough row to hoe.
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
It did seem like an odd omission. Every Republican platform since...since I was a child, actually, has made tax cuts a front-and-center issue.
What they seem to be doing is focusing the convention -- and the campaign -- on a single message of "reform," and making sure that disaffected Obama voters feel like it's an easy choice to vote for them.
I'm not sure it's the best strategy, but, well, it's going to be a competitive election.
Dec '11
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
If Ryan had been any more specific, the convention would have turned into a circular firing squad. The best we can hope for at this point is tax reform that includes marginal rate reductions, but is revenue neutral, statically measured. Dynamically measured, there should be some growth that will raise overall revenue.
But this means that some group's sacred tax deductions have to go away, or that the rate structure becomes less progressive. Some people's taxes are going to go up, while other people's taxes go down. Unfortunately most Republican politicians seem to believe that if even one person's taxes go up, or if any credit or deduction goes away, it is a tax increase, making meaningful tax reform all but impossible.
Dec '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Tax cuts are the "what;" Ryan, Rice, and others seem to be focused more on the "why." They're laying a foundation on which to build the structural reforms (which may very well include tax cuts) that are required to restore our nation. I don't know if it's a politically winning strategy, but winning without it would be somewhat pointless.
Aug '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
I don't think Ryan wants to open a two front war with the Left and their media allies right now. He is focused on successfully defending the "Ryan will take away your Medicare" attack and probably doesn't want to fuel the "They're raising your taxes to give money to their rich buddies" nonsense the Left spews.
Perhaps Romney will fight on the tax front, although probably not tonight...
Edited on August 30, 2012 at 11:04pmOct '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Rob Long: It did seem like an odd omission. Every Republican platform since...since I was a child, actually, has made tax cuts a front-and-center issue.
What they seem to be doing is focusing the convention -- and the campaign -- on a single message of "reform," and making sure that disaffected Obama voters feel like it's an easy choice to vote for them.
I'm not sure it's the best strategy, but, well, it's going to be a competitive election. · 8 minutes ago
We can't afford them. The Republican target for tax revenue is 18-19% of GDP (and will require massive spending cuts to achieve by itself). Right now, due to temporary stimulative tax cuts it's below that by a couple of percentage points. Thus it is mathematically impossible for us to lower the total tax burden, and it's important we not gin up expectations we can't meet.
Apr '11
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Joseph Eagar
Tax reform need not change the progressivity of the tax code. The elite (left, right, and center) all agree that the middle class pays too little in taxes, but politically it would be poison. · 1 hour ago
But that is my point. To fix our budget wows we will have to probably raise taxes on the middle class which is under taxed. If the debate focuses to much on taxes the whole game is up. Tax reform will be a useful screen to hide what is really going to happen when Romney goes to fix the budget. I can live with it because I know that our budget exploding is more important than me jiggering for the lowest tax rate possible. Most people though I think would not be pleased, and Democrats will have no problem demagogic the issue.
Mar '11
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
The people who want tax cuts are already going to vote for R&R - they are the 40% who *pay* income taxes.
Edited on August 31, 2012 at 1:14amOct '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Why are tax cuts no longer a winning issue? Three words: George W Bush.The tax burden is reflected in how much the government spends. People get that now.
May '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
I look at this issue in much the same fashion as I do illegal immigration. First limit size of govt. to below 20% sustainably (immigration - control the borders), preferably in a way the next administration can not tear apart. Then we can talk about how we are going to repair the tremendous damage we have done to our national balance sheet.
The much promoted concept of comprehensive reform requires trust. I don't trust our politicians.
However if we could actually come up with a passable plan hat would limit or stop the skyrocketing growth in crony capitalism, using tax reform as the correcting initiative - I would listen seriously.
Nov '10
Re: Are Romney and Ryan Forgetting About Tax Cuts as a Winning Issue?
Reagan cut the top tax rate from 70 to around 25% and got a huge uptick in productivity. Bush's cuts took us from 40 to 35% and he expected Reaganesque gains.
One point I think needs to be stated is I don't think the Laffer curve is static. I think if the government makes a serious, good faith effort to cut spending as much as they can without disrupting peoples' lives too much, then people (both rich and middle class) will respond less destructively to tax hikes. Things will go a lot better if politicians can honestly say, "We did what we could, but we need a little more help," as opposed to just saying, "Fork it over."