Refinancing America: The Republican Antitax Agenda

Preface

ix Preface The subject of this book is the Republican party’s long-time obsession with tax cuts. This obsession has been expressed in the countless proposals for tax cuts introduced by Republicans in Congress during past decades, as well as the successful campaign by the administration of President George W. Bush for a $1.35 trillion tax cut. Since the 1920s, regardless of whether the country is in recession or anticipating trillion-dollar budget surpluses, Republicans have prescribed tax cuts as the panacea for whatever ails the nation. My own obsession with federal tax policy began in 1986 when I left the quiet world of the academy and entered the tumultuous world of the legal profession to practice tax law. Ironically, that was the same year Congress decided to rewrite the tax code pursuant to the Tax Reform Act of 1986. It proved a difficult, yet fascinating time to enter the profession. With Congress making so much new law, tax professionals were thrown into a tizzy trying to keep up with the multitude of changes. The rest of the decade proved no less exhausting for tax professionals, as Congress kept up the pace, churning out massive tax bills every year or two and using the federal tax code to implement a wide range of public policies and social programs, as well as to achieve numerous political goals. This overtly political use of the tax laws has rendered the income tax a very complicated body of law and turned the practice of tax law into an arduous enterprise. To be sure, practicing tax law has its benefits—most specifically, financial. In addition, there is some satisfaction to be had in deciphering the complicated problems that commonly arise under the tax laws. However, I soon found that the study of tax policy (as opposed to the practice of tax law) offered greater personal satisfaction, and so I eventually returned to the academy to pursue scholarly interests. Since then, thanks to the many opportunities and freedoms afforded by academic life, I have devoted much of my time to studying the politics and limitations of contemporary tax policymaking. This, along with teaching my students some of the basics of business and tax law, has provided a rewarding alternative to private legal practice. My studies ultimately culminated in the publication of The Failure of U.S. Tax Policy: Revenue and Politics in October 1996. That book was a critical assessment of the political process that produces the income tax laws of the United States, with special focus on developments in tax policy during the 1980s. With respect to the latter, the conclusion was that U.S. tax policy in the 1980s was Preface x “erratic,” “unstable and internally inconsistent,” “extraordinarily complex,” and “highly partisan.” It turned out that in assessing how unsettled tax policy had become in the 1980s, I did not realize how bad things could get. Indeed, things got considerably worse in the 1990s. In the 1990s, the politics of the income tax became even more contentious, erratic, partisan, and at times, downright vicious. With its unexpected victory in the 1994 congressional elections, the Republican party took control of both houses of Congress for the first time in forty years. However, the White House remained occupied by a Democrat, William Jefferson Clinton. The result was divided government, and most of the time, political deadlock over tax policy for the rest of the decade. House Republicans were fixated on reducing taxes, but the major tax-reduction legislation that they passed was invariably unpalatable to the Democrat in the White House. Many times even their own more moderate Republican compatriots in the Senate opposed their antitax policies. But in the end, it was Bill Clinton who thwarted the most aggressive antitax Republicans in the House of Representatives. Throughout his eight-year tenure in office, Clinton repeatedly vetoed Republican tax reduction proposals, and the Republican leadership of the House repeatedly proposed new tax cuts. Tax legislation was occasionally enacted into law in the 1990s, but it was never what the antitax Republicans really wanted. Nor was it indicative of what policies Democrats would have enacted if given the opportunity. On the other hand, the tax code was in many ways better off for divided government. The level of acrimony and partisanship increased as the decade wore on. The high point of partisan combat was the impeachment of the Democratic president by the Republican House. Notwithstanding this bold exercise in legislative authority...