Refinancing America: The Republican Antitax Agenda

Introduction

1 Introduction No Capitation, or other direct, tax shall be laid, unless in Proportion to the Census. —Article I, Section 9 of the U.S. Constitution (1787) Congress shall have the power to lay and collect taxes on income, from whatever source derived. . . . —Sixteenth Amendment to the U.S. Constitution (1913) During the 1980s, tax policy emerged as one of the most prominent issues on the agenda of the Republican party. In the 1990s, tax policy (or more properly, “antitax” policy, by which I mean a public policy of opposition to federal taxation) became the outright obsession of the Grand Old Party.1 If anything, the infatuation is even stronger today, following the successful Republican campaign for major tax reduction in 2001. How did it come about that the core issue, the apparent riason d’être of the Republican party, became something so mundane as reducing taxes? The “party of Lincoln,” once dedicated to Liberty, the Constitution , preserving the Union, abolishing slavery, and other grand principles of national government, committed itself to nothing more inspiring than cutting taxes. Of course, there are times when reducing the tax burden of the citizenry is the appropriate and prudent course of action. Furthermore, Democrats in Congress and the White House have repeatedly increased the tax burden on the wealthy whenever they have had the chance, leaving it to Republicans to push in the opposite direction. Nevertheless, it must be asked even by those within the Republican fold whether a program of tax cuts really makes for a domestic policy agenda worthy of a major national political party? In the 1990s, the conservative leadership of the Republican party consciously and intentionally placed tax cuts at the top of the party’s policy agenda. Throughout the decade, the GOP displayed a fixation on tax cuts nearly to the exclusion of all other concerns. The many other familiar themes of Republican candidates from the 1950s, 1960s, and 1970s (opposition to the Communist bloc, “law and order,” hostility to the “liberal ” policies of the U.S. Supreme Court) faded into oblivion as the antitax Introduction 2 message took hold of the party. Ironically, notwithstanding this commitment to the antitax liturgy, the GOP was neither successful in enacting a major tax cut in the 1990s nor in exciting the electorate with its antitax message.2 As both a legislative program and an electoral strategy, the antitax message played distinctly off-key to a good portion of the electorate. Yet the band played on, repeating the same tune over and over throughout the 1990s. It was not until May 2001 that the GOP finally succeeded in enacting a major tax cut—the first in twenty years. The question of how and why the Republican party (led by its conservative wing) became fixated on tax policy is the central concern of this book. Of course, this focus leaves out a good deal about contemporary U.S. tax policy, which reflects much more than just the dynamics of the party system. The income tax is used for a wide variety of purposes. The diverse, and often conflicting, uses of the income tax by politicians and state officials was the subject of my previous study of federal tax policy.3 Most important, the income tax serves an important revenue function. The income tax is used by state officials as one of the principal means of raising the vast sums required to finance the activities of the modern American state. The individual income tax alone now raises over $1 trillion annually, and the individual and corporate income taxes collectively raise about 55 percent of the total revenue of the federal government. Beyond this revenue function, the income tax is used by officials as an instrument for making social policy. It also is used to implement national economic policy. Finally, the tax code is commonly employed by elected politicians as a nonpartisan tool for constituency service. Republicans and Democrats alike use the tax laws to shelter, and in many cases, bestow favors upon constituents and powerful economic interests in their home states and districts. As I argued in my previous study, this nonpartisan use of the income tax is most directly at odds with its use as a tool for raising revenue and directing national economic policy, and generally distorts and undermines the coherence and integrity of U.S. tax policy. On top of these uses of the federal income tax, the two major political parties have long...