Republicans Should Abandon Their Opposition To All Tax Increases
Having a position of rejecting all tax increases on the national level is foolish economic policy, especially since the party won't push for spending increases
At the risk of excommunication from conservative, libertarian, and Republican circles, I’m about to state something that is viewed as heresy. The Republican Party should abandon its opposition to all tax increases on the national level.
Why should the Republican Party abandon its no-tax position? For many reasons.
The first reason is that it is not a credible position anymore. The previous Republican administration, while cutting corporate and income taxes, imposed tariffs on numerous imported items. American consumers were the ones who paid for those tariffs, many of whom paid more in tariffs than they got back in tax cuts. The Republican Party’s embrace of tariffs eliminates its credibility as the tax-cutting party.
The second reason is that it is based on myths. The way the myth goes is that President Ronald Reagan cut taxes (which he did) and he never rose taxes. But Reagan did raise taxes. The way Reagan raised taxes was the broaden the tax base and made it more difficult for people to evade taxes.
The third reason is that tax cuts must require cuts in spending. Republicans have gained a reputation as the small-government party. But the record doesn’t match the rhetoric. Even before COVID-19, President Donald Trump has signed budgets that increased spending. If you’re going to cut taxes, you must cut spending to offset or it will increase the deficit and debt.
The fourth reason is that as a nation we have priorities that require increased taxes to pay for. We need pro-family policies to encourage an increase in the birth rate and to replenish a declining population. We also need to rebuild and upgrade our nation’s infrastructure for the 21st century. We also need to rebuild our manufacturing base.
Finally, we need to rebuild our military to compete with China and Russia in order to protect our way of life. China’s navy is already larger than ours. Many things we take for granted such as the dollar’s dominance rely on our military strength to maintain.
The fifth reason is that our nation’s fiscal situation requires tax increases. Social Security could run out of money by as soon as 2028, forcing automatic benefit cuts. The Medicare Trust Fund, which pays for Medicare Part A, could run out of money by 2026, forcing automatic benefit cuts. These entitlement programs, along with Medicaid, will continue to consume an ever-growing part of the budget unless they are reformed. Unfortunately, tax increases will have to be a part of the reform of these programs because we have waited so long to address them.
The sixth reason is that it portrays the Republican Party as an unserious party. By taking tax increases off the table, especially since it also refuses to cut spending, it denies the ability to address the problems the nation is facing. If the American people feel their problems are not being addressed, they will turn to Democrats.
Does this mean Republicans should endorse all tax increases? No. Many if not most tax increases are still bad policy. But a part of good governance requires that you keep the revenue option available. Personally, I tend to favor efforts to expand the tax base and close loopholes than increasing tax rates.
If given the choice between cutting spending and increasing taxes, I would favor cutting spending. But realistically that is not on the menu because no one is fighting for them. Taking tax increases off the menu is simply terrible governance in a pluralistic country.