Beyond the Tax Pledge

Robert P. Beschel, Jr.

Current Issue

For nearly 40 years, the Republican Party has been wedded to a promise not to raise taxes. More formally known as the "Taxpayer Protection Pledge," this vow has played a prominent role in shaping the party's fiscal policy and politics. Given that the vast majority of GOP lawmakers have committed to the pledge, it's no coincidence that the only significant legislative accomplishment of the most recent Republican administration was a tax cut.

Yet the promise — an artifact of the Reagan revolution — has grown increasingly irrelevant given changed economic circumstances and new governance challenges. Not only is America's fiscal situation much grimmer than it was — and its upper-income tax rates much lower than they were — nearly four decades ago, the pledge now serves as a straitjacket that rules out even popular and sensible reforms to close loopholes and broaden the tax base.

While the GOP has traditionally been viewed as the party of fiscal restraint, its members' willingness to tolerate large deficits in service of tax cuts has weakened the party's credibility as a responsible steward of the nation's finances. Democrats, meanwhile, are pushing a series of popular but expensive programs that propose sustained budget deficits of about $1.3 trillion annually over the next decade. Rather than simply calling for lower taxes and looking the other way while the national debt continues to soar, Republicans need to start thinking about how they can contribute constructively to debates over how the federal government and its programs are financed. To do so, the party needs to have a serious debate about the continued efficacy of its anti-tax promise.

Historically, the broader conservative movement has cared about more than just tax cuts. Promoting strong families and safe communities, supporting internal improvements, and helping the nation's working men and women achieve the American Dream are all conservative values. By rethinking their tax agenda, Republicans can prove they are more than just anti-tax zealots. Such a re-evaluation would place our country on a firmer financial footing while guaranteeing more economic opportunity and social stability for all.

THE ORIGINS OF THE PLEDGE

The Taxpayer Protection Pledge was created in 1986 by Americans for Tax Reform (ATR), a non-profit 501(c)(4) that was established the previous year. The pledge is relatively simple. At the federal level, candidates for office are asked to make two basic promises: first, that they will oppose efforts to raise marginal income-tax rates for individuals or businesses, and second, that they will oppose net reductions or eliminations of tax deductions or credits (unless the reductions are matched dollar for dollar by decreases in tax rates). At the state level, candidates for governor and legislative office are asked to oppose, vote against, or veto any efforts to increase taxes. The rationale behind the pledge is straightforward: Public officials can limit the expansion of government by controlling its access to resources.

The pledge itself is legally unenforceable. And yet its power is undeniable. It draws upon deep reservoirs of libertarian and anti-government sentiment within the Republican Party, encapsulated most succinctly in Ronald Reagan's 1981 inaugural address when he famously declared, "in this present crisis, government is not the solution to our problem; government is the problem." (Reagan, of course, went on to provide more nuance, noting "it is not my intention to do away with government. It is, rather, to make it work — work with us, not over us; to stand by our side, not ride on our back.") The pledge also benefits from the fact that it caters to the interests of those who seek to minimize their tax burden — particularly wealthy individuals and corporations, who pay the bulk of federal taxes. It provides an elegantly simple and straightforward metric for evaluating candidates during the primary process, when they are most vulnerable to challenges from anti-tax conservatives. And it is tracked and "enforced" by several well-resourced organizations and operatives who are willing to swing their support behind candidates and officials who reflect their preferences, and punish those who do not.

The anti-tax pledge is most directly associated with Grover Norquist, founder and president of ATR and one of the most influential political advocates in the Republican firmament. Norquist was one of the co-authors of the "Contract with America," put forward by then-House minority whip Newt Gingrich in 1994, and has written several books and dozens of articles on a variety of conservative themes and topics. He has a penchant for taking strong positions and a gift for issuing provocative bumper-sticker statements that resonate with the anti-tax crowd — perhaps the most famous example comes from a 2001 interview on NPR's "Morning Edition," when he stated that he did not want to abolish government, he merely wanted "to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub."

By any metric, Norquist has wielded enormous sway over the Republican Party. His influence reached its apogee in the wake of the 2010 midterm elections, when the country was still seething over the federal bailouts of Wall Street. That year, Republicans seized control of the House of Representatives, Tea Party candidates poured into Washington, and all but 13 of the 288 GOP lawmakers on Capitol Hill signed Norquist's pledge not to raise taxes.

What followed were a series of tense confrontations over the budget and the federal debt ceiling between Republican leaders in the House and the Democratic-controlled White House and Senate. Though these clashes came with some political costs for Republicans in the short term, the party managed to win back the White House in 2016 while retaining control of the Senate, which it had wrested from Democrats during the 2014 midterms. In 2017, Norquist again emerged as a prominent player in passing the Tax Cuts and Jobs Act (TCJA), which he supported with the qualification that some parts did not go far enough. Though his influence has waxed and waned over the years, it still remains quite high: As of 2021, around 88% of Republican senators had signed his pledge, as had 84% of Republican representatives and 48% of Republican governors.

SIGNS OF DISSENT

Plenty of blame can be apportioned to both parties for America's dire fiscal situation. Deficits are climbing to rates unprecedented in peacetime, while America's debt-to-GDP ratio has reached levels not seen since World War II. Any successful effort to tackle red ink of this magnitude will involve addressing both sides of the ledger; the alternative would be akin to cutting paper using only one blade of a pair of scissors.

Most Republicans in Congress don't appear to have grappled with this reality. Consider the recent House Republican Study Committee (RSC) budget, released in May 2021. It calls for deficit reductions of nearly $12.5 trillion over the next decade without raising taxes — in fact, the RSC proposes another $1.9 trillion in tax cuts. According to the committee's projections, these proposals would balance the budget by 2026 and bring government debt down to 75% of GDP by 2031.

While some of the RSC's budgetary suggestions are sensible and merit serious consideration, the budget as a whole amounts to a GOP wish list that fails to account for the political headwinds the proposed package would inevitably face. It features deep cuts to discretionary programs; changes to eligibility requirements for programs like Medicare, Medicaid, Social Security, and the Children's Health Insurance Program; and repeals of significant portions of the Affordable Care Act. Conservative commentators like Henry Olsen have noted that such proposals would not only be unpopular, they would also drive a wedge between the libertarian and populist wings of the party. Progressive commentators, for their part, see such proposals as a political gift to the Democratic Party.

Republicans who have demonstrated a willingness to dissent from GOP orthodoxy on taxes to pursue goals like deficit reduction have achieved success. The experience of Mitch Daniels on this matter is instructive. Daniels served as the director of the Office of Management and Budget (OMB) under President George W. Bush and went on to become governor of Indiana from 2005 to 2013, garnering a reputation as one of the most effective and fiscally responsible governors in the country. When he assumed office, Indiana's budget had a projected two-year deficit of $800 million. The state had borrowed more than $700 million from local governments, schools, and public universities, and had even raided the teachers' pension fund. But during his tenure, Daniels helped enact a series of balanced budgets, reduced Indiana's debt, increased the state's reserve fund to a high point of $1.3 billion, and earned the state AAA ratings from the major credit-rating agencies.

Daniels's approach combined a focus on reducing Indiana's government spending with reforms that made state operations more efficient, such as public-private partnerships and the creation of a state-level OMB. He also recognized that tax increases needed to be a part of the mix. "One of the things I resolved is that we would balance the budget in the first year, without any accounting tricks," Daniels told the New York Times in a 2005 interview, "and we simply could not find a way to get there through spending cuts alone." So while Daniels implemented tax cuts in some areas (e.g., property taxes), he also supported a variety of tax increases during his tenure (e.g., sales taxes).

Other Republicans with extensive experience in managing government budgets have reached similar conclusions. Discussing the federal budget deficit in 2011, David Stockman, Reagan's former budget director, noted that "the biggest problem [for the deficit] is revenues." Likewise, Bruce Bartlett — a senior economic advisor to Reagan and one of the authors of the original 1981 Kemp-Roth tax cut — disputed some of the historical claims advanced by advocates of the Trump administration's TCJA. Bartlett maintained that while Reagan's tax policies had a positive impact on the economy, other factors — such as a sharp reduction in interest rates by the Federal Reserve — played an important role as well. He also noted that the economy grew after President Bill Clinton raised taxes in the 1990s, suggesting that robust growth and modest tax increases are not mutually exclusive.

Such observations should encourage today's GOP to rethink its assumptions about how the anti-tax pledge relates to its policy and political goals. Ultimately, such a rigid tax agenda leaves the party without much room for flexibility or creativity in responding to America's economic and social challenges.

AN OUTDATED APPROACH

The budget process is a dynamic one that should evolve to meet the needs of the moment, and it's clear that America's fiscal and economic environment has changed dramatically since the anti-tax pledge was first formulated in the mid-1980s. In 1986, when the anti-tax pledge was rolled out, net outlays as a percentage of GDP were 21.6%, federal receipts had reached 16.8%, and America's debt-to-GDP ratio stood at 45.3%. By the end of 2020, federal net outlays had risen to 31.4% of GDP; revenues as a percentage of GDP remained roughly the same, at 16.4%; and the debt-to-GDP ratio had nearly tripled, to 125%. The fiscal year 2020 deficit amounted to a massive $3.1 trillion, or 15.2% of GDP — the largest since World War II. And while the deficit for fiscal year 2021 dropped relative to what it was in 2020, it remained high, at $2.8 trillion.

During the debates surrounding the 2017 tax cuts, President Donald Trump claimed repeatedly that America is "the highest taxed nation in the world." To be sure, marginal corporate-tax rates in the United States were higher than those of many other countries in the Organization for Economic Cooperation and Development (OECD). But when viewed relative to GDP, the United States ranks 32nd among 37 OECD countries in terms of its overall tax-to-GDP ratio.

A similar picture appears when considering average tax rates. In 2019, the average tax rate across OECD economies was 33.8%, with traditional dirigiste countries like France having rates as high as 45%. The American rate stood at 24.5% that year, down from 26.7% in 2017. In fact, with the exception of Ireland, the share of U.S. GDP being put toward government revenues was lower than that of any other advanced industrial democracy.

Other analyses of the tax rates that various individuals pay have concluded that Americans' personal tax burdens are below — and in some cases, well below — the OECD average. In 2017, when Congress passed the TCJA, the United States was already running sustained deficits at rates much higher than the OECD norm. The gap between U.S. deficits and the OECD average had widened by 2019, as shown in Figure 1 below.

Another important feature of the U.S. fiscal environment is the tax burden on the wealthiest Americans. In 1986, before the Reagan tax cuts were signed into law, the marginal tax rate for the top income bracket was 50%. (Marginal tax rates on high-income individuals peaked at 94% during the latter years of World War II.) The top marginal tax rate today is 37% for single filers earning $518,400 or more. The effective tax rate — the rate actually paid after deductions and adjustments — for the top 1% has actually decreased over time, from about 40% in 1945 to around 25% today. These rate reductions have taken place at a time when the share of national income going to well-off individuals and families has grown much more rapidly than it has for other classes in American society. In 1975, American households in the top quintile of the income distribution earned 10.3 times as much income as the average household in the bottom fifth. By 2019, this gap had expanded to 16.6 times as much. As incomes have soared for the well-to-do, both their marginal and effective tax rates have declined.

The anti-tax pledge diverts attention away from how America's debt burden and tax rates on the affluent have changed over time. It substitutes a crude yardstick for a richer and more honest discussion about issues like the deficit, interest payments, discretionary-spending levels, economic inequality, and the mix of desired government services. At the same time, the ability of the federal government to borrow at historically low rates has blunted the traditionally agonizing spending tradeoffs between guns and butter. Through the magic of debt, the American public — and the politicians who represent them — do not have to confront the stark choice of cutting a given level of services or paying for them through higher taxes; they can simply enjoy the benefits now and pass the costs on to future generations.

The anti-tax pledge also creates complications for a party ostensibly committed to constitutional government of, by, and for the people. There is frequently room for flexibility in interpreting where the anti-tax pledge applies, particularly with regard to whether closing a given loophole involves broadening the tax base or imposing additional costs on individuals or businesses. Yet negotiations over such matters are largely left to unelected political operators, who can interpret the pledge in ways that favor their interests. As a result, the U.S. tax code is rife with carve-outs and special exceptions catering to corporations and affluent individuals, leaving Republicans open to charges of advancing the interests of the wealthy and the well-connected over those of working Americans.

In recent decades, Republicans have tended to poll well on questions related to the economy. Yet the public has grown increasingly skeptical of Republicans' taxing and spending policies over time. Americans' opinions of the TCJA offer a case in point. Many of its supporters' claims — that the act would result in the massive repatriation of income from overseas, that it would lead to a significant expansion in domestic investment, that it would pay for itself in terms of higher revenues for the U.S. Treasury, and that it would lead to substantial growth in domestic employment — were clearly exaggerated. The GOP may have billed the TCJA as a middle-class tax cut, but some studies found that the benefits skewed toward corporations and the wealthy.

Perhaps not surprisingly, the act has never been particularly popular. Before it passed, 29% of the American public viewed the bill favorably, while 56% disapproved — a margin of nearly two-to-one against. Over time, some of the initial opposition abated. But even two years after its passage, the public still viewed the TCJA unfavorably: In April 2019, only 21% of Americans believed the tax cuts had improved their personal financial situation, compared to 42% who felt that their situation had stayed the same or become worse (the rest were either unsure or failed to provide an answer).

The Covid-19 pandemic has forced the Republican Party to reckon with the contradictions and unpopularity of its fiscal policy. While reductions in government spending will ultimately be required to curtail the federal deficit, such cuts have never been popular or politically easy to accomplish. Republicans have opposed many of the Biden administration's spending proposals, but the public tends to view programs like pandemic relief and infrastructure spending as both laudable and necessary. In March, the Pew Research Center noted that Americans supported the $1.9 trillion pandemic-relief package by a margin of 70% to 28%. Even among Republicans, 41% supported the package while 57% did not. Moderate to liberal Republicans supported it by a margin of 61% to 38%.

Higher taxes on the wealthy and corporations, long resisted by Republicans, are also broadly popular. Majorities of Americans tend to believe that both corporations (69%) and upper-income individuals (62%) are paying too little in taxes, whereas only 6% and 9%, respectively, would argue that these groups are paying too much. Even among Republicans, significant numbers believe that corporations (46%) and upper-income individuals (36%) are not paying enough in taxes. Unlike members of the party establishment, who are hyper-focused on the tax issue, fewer than 1% of Americans consistently rank taxes as the most important problem facing the country.

Instead, most Americans are far more concerned with issues that hit closer to home: the rising costs of education, housing, and raising children; the recent uptick in crime; and their stagnant wages compared to the ever-rising fortunes of the wealthy. A new Republican tax agenda would not only help restore some discipline to the nation's finances and begin to tackle the long-term challenge of the debt and deficits, it would also give the GOP something to stand for with regard to these kitchen-table issues. After all, higher revenues not only mean lower deficits, but also more money to address the priorities of Americans struggling to get ahead.

A NEW TAX AGENDA

The anti-tax pledge has become a dead end for the Republican Party. In October 2019, just five months before the Covid-19 pandemic truly began to bite, the Trump administration became concerned about signs that the economy was slowing and that factory closures and farm bankruptcies were increasing. Rather than reflecting carefully on the successes and failures of the 2017 tax cuts and the deficits they contributed to, the White House began working with Republican lawmakers on "tax cuts 2.0" without considering any corresponding revenue enhancements. After the pandemic struck and millions of service workers in the travel, restaurant, entertainment, and hospitality industries were hit hard by forced closures, reduced hours, and layoffs, the administration sought to advance a temporary holiday on capital-gains taxes. This move would have disproportionately benefited the top 10% of earners, who own 70% of the stock market, and particularly the top 1%, who receive three-quarters of all long-term capital gains. Any fair-minded observer of these decisions would conclude that tax cuts are increasingly serving as the GOP's go-to cure for every economic malady regardless of circumstances.

Thanks in part to the anti-tax pledge, Republican lawmakers are refusing to grapple with the significant economic and social challenges confronting the nation today. America needs a viable center-right party whose members are free to make tough decisions and advance creative solutions that promote fiscal responsibility, strong families, safe communities, dependable infrastructure, and expanded opportunities for workers to pursue the American Dream. It cannot do so when its members are held captive to a promise made when the country was facing a dramatically different set of circumstances.

How should Republicans go about crafting a new tax agenda? Below are several proposals for consideration. They are not comprehensive, and they would not necessarily eliminate current or projected deficits. But they would produce a more realistic approach to fiscal policy in light of the massive challenges currently confronting the country, financial and otherwise. They would also result in a tax code and tax-enforcement regime that is less tilted in favor of the wealthy and more beneficial to all working Americans.

First, Republicans should turn the anti-tax pledge into a balanced-budget pledge, and focus subsequent monitoring efforts on the contributions of individual lawmakers toward achieving that objective. Such an effort could be implemented immediately and would not require a constitutional amendment. While it would lack the force of law, the current anti-tax pledge also lacks any legal mechanisms for enforcement. Yet thanks to incentives gradually built into the political process, it has proven highly effective.

Second, the GOP should seek to strengthen the capacity of the IRS to enforce the existing tax code. The IRS is obviously one of the most significant agencies when it comes to U.S. fiscal policy (it generates 95% of the funding for federal-government operations), but given that Republican attitudes toward the agency have long fallen somewhere between mistrust and outright hatred, this will likely be a tough sell. Back in 1995, House speaker Newt Gingrich proposed abolishing the agency, as did Senator Ted Cruz when he ran for president in 2016. In 2013, Republicans negotiated a $725 million cut to the IRS's budget; they then reduced its funding by a further $275 million in 2014 and another $350 million in 2015. That same year, Norquist published his book End the IRS before It Ends Us, and members of the conservative Freedom Caucus filed a resolution to impeach IRS commissioner John Koskinen over his alleged cover-up of accusations that the agency improperly targeted conservative organizations. (The effort was not supported by either House Democrats or Republican House leadership, and it ultimately failed.)

While some money for customer services was eventually restored, overall IRS funding declined by 20% between 2010 and 2020. The agency lost more than 22% of its staff, including a third of its auditors. Funding for enforcement was depleted. Any government agency would be hard-pressed to maintain existing service levels when confronted with budget cuts of this magnitude, and the IRS was no exception. Audits fell, particularly for upper-income individuals, who comprise the majority of the agency's compliance cases. Efforts to go after those who did not file returns, did not pay taxes, or underreported their income were significantly curtailed. Even programs to collect taxes from foreign corporations were shut down due to the lack of resources.

The predictable result has been an increase in non-compliance, most often by high-income individuals. The number of non-filers increased from about 7 million in 2010 to more than 10 million in 2016. The Treasury Department's inspector general calculated the revenue lost to non-compliance by high-income earners between 2014 and 2016 to be $45.7 billion. Estimates of how much more revenue the IRS could gather through better enforcement programs vary widely: Some assessments indicate that it could collect an additional $1.1 trillion in the next decade through technological upgrades and aggressive efforts to go after non-filers, while others envision more modest gains in the range of $61 to $103 billion.

In April, the Biden administration announced plans to restore tax-enforcement funding and will be looking to raise the agency's budget by $1.2 billion for 2022, amounting to a 10.4% increase. The bulk of these resources will go toward tax enforcement, with the goal of shrinking the difference in revenues between what is owed and what is actually collected (formal estimates place this "tax gap" at about 16%, or around $600 billion, although recent IRS testimony indicates that it could be as high as $1 trillion). Better financial reporting enforcement targeting partnerships, proprietorships, and rental income — areas where non-compliance could be as high as 55% — would make a major contribution to curbing tax evasion by high-income earners. A true litmus test for how serious Republicans are about trimming the deficit will involve the extent to which they are willing to line up behind these proposals, which do not entail any new taxes; they simply enforce the existing tax code.

Third, Republicans should oppose tax shelters for the ultra-wealthy, particularly with regard to the estate tax, perpetual trusts, and the carried-interest provision of the tax code. Republican lawmakers have long hated the federal estate tax — which they've gone as far as christening the "death tax" — and have continued to champion its abolition even after the 2017 reforms that raised the minimum threshold from $5.6 million to $11.2 million. Before this change, the estate tax affected only a sliver of the wealthiest households — two in every thousand estates nationally. It now affects less than one per every thousand estates. After the change in 2018, only 1,900 estates owed tax, of which over 90% came from the top 10% of earners and nearly 40% came from the top 0.1%. Individuals inheriting more than $1 million bear almost the entire burden of the tax. The Republican mythology that the estate tax is a burden on family farms and small businesses has no solid empirical basis: Analysis by the Tax Policy Center indicates that only around 80 small farms and family businesses owed estate taxes in 2017, and that after the higher threshold was implemented in 2018, the number fell to zero. As these numbers show, the GOP has successfully limited the estate tax to all but the wealthiest households.

At a minimum, the party should stand down on eliminating the estate tax and focus on addressing more pressing matters. A more proactive stance would address emerging issues like the creation of permanent trusts, which, as the recent Pandora Papers demonstrate, typically lack transparency, create opportunities for hiding "dark money," and can be used by the ultra-wealthy to shelter assets from taxation in perpetuity. Efforts to crack down on tax avoidance among the wealthy would build credibility among the party's populist wing.

As for the carried-interest provision, Republicans have yet to line up behind its abolition despite the benefits of doing so. This provision allows wealthy hedge-fund owners and private-equity firms to report income at the rate for capital gains instead of treating it as ordinary income, which would be taxed at much higher rates. According to some estimates, eliminating the provision could raise an additional $180 billion. Gary Cohn, Trump's economic advisor, flagged it as the one change he would have made to the TCJA. "We probably tried 25 times," Cohn told reporters in December 2017, but "we hit opposition in that big white building with the dome at the other end of Pennsylvania Avenue every time we tried." The Biden administration has indicated its intent to go after the provision to help pay for the infrastructure bill, and Republicans would be wise to support this effort. Eliminating the provision would not only help reduce the deficit, it would also create a fairer tax system.

Fourth, the GOP should retain the cap on the state and local tax (SALT) deduction. The 2017 tax reforms capped the SALT deduction at $10,000. The move has resulted in a strange inversion of political roles, whereby Republicans backed a tax increase while some Democrats have been pushing to reinstate the full deduction. Though some have argued that the 2017 cap was a Republican jab at blue states with relatively high state and local taxes, it represents sound tax policy: The revised SALT deduction will generate around $100 billion in revenue in 2022, and any re-instatement of the full deduction would be quite regressive, with 70% of the benefits flowing to those making $500,000 or more.

More broadly, the SALT deduction raises questions as to why the federal government should subsidize home ownership over renting, debt finance over equity, and high-tax states and municipalities over a more revenue-neutral approach. Given the strength of residential real-estate interests and the long tradition of federal support for home ownership, it would be difficult to eliminate the SALT deduction entirely. But Republicans can argue that the deduction should be retained at its current level in the interests of progressive taxation — a position that many in the party, including Senate Minority Leader Mitch McConnell, have adopted.

Fifth, Republicans should continue to champion a combination of user fees, gas and mileage taxes, and other alternatives to major tax increases and federal spending as means of financing infrastructure. Senate Republicans' $568 billion infrastructure plan, which they proposed in April as a counter to the Biden administration's infrastructure package, relied on user fees on electric vehicles to offset some of the costs. While it did not increase the gasoline tax, which has been frozen at 18 cents per gallon since 1993, the animating principle behind the effort was sound. It sought to better link the financing of various public goods and services with their immediate beneficiaries, and to incentivize other parties, such as state and local governments and the private sector, to fund infrastructure improvements.

Transportation secretary Pete Buttigieg has signaled that he is open to such approaches as gas and mileage taxes, but the White House seems to generally prefer funding infrastructure improvements using general tax revenues — particularly through higher taxes on the wealthy and corporations. The administration's primary rationale is that user fees are inherently regressive, disproportionately affecting lower-income Americans. Yet some examples of bipartisan compromise on infrastructure in the recent past provide a hopeful model for the future: For example, the Senate recently passed the Drinking Water and Wastewater Infrastructure Act of 2021 by a margin of 89-2. Republicans would do well to continue developing new ways to fund infrastructure and pursue a menu of different approaches, including public-private partnerships and user fees, that can complement more traditional means of finance.

Sixth, and finally, Republicans should demonstrate some flexibility on corporate taxation. Corporate-tax collections in the United States are at historic lows. And, as a percentage of GDP, they fall below the tax take of all OECD countries save Hungary, Latvia, and Greece. Republicans should consider supporting some of Biden's proposals, including strengthening the global minimum tax for U.S. multinational corporations, eliminating profit-shifting, reducing incentives for offshore tax havens, and ensuring that intangible assets are properly taxed. All of these measures would promote a fairer tax system by preventing the wealthy and corporations from evading taxes while working Americans dutifully pay theirs.

The proposals mentioned above — instituting a balanced-budget pledge, enforcing the existing tax code, opposing tax shelters for the wealthy, retaining the SALT deduction cap, pursuing alternative means of infrastructure financing, and taxing corporate profits at a higher rate — would help boost revenues and reduce the deficit. But implementing them would enable Republicans to do more than just tout their record of fiscal discipline: A fairer tax system that yields higher revenues would allow the GOP to invest in its other policy priorities, such as an expanded child tax credit, paid parental leave to help working families, the hiring and proper training of more police officers, and greater investments in infrastructure and supply-chain capacity. Republicans would be free to debate the details of these proposals, of course. Such discussions would give voters the impression that members of the GOP belong to a serious party — one that is committed not to simply saying "no" to tax increases, but to giving all Americans a leg up.

AN ASPIRATIONAL PARTY

After years of championing a reflexive anti-tax position, any re-orientation will not come easily or naturally to Republicans. An array of powerful and well-connected interest groups will immediately swing into opposition. Heated rhetoric about the dangers of dragging down the economy or compromising job creators — arguments that draw more from the pages of Ayn Rand than any serious fiscal or economic analysis — will inevitably follow.

Yet a failure to start grappling with the county's major challenges, fiscal and otherwise, will increasingly doom the GOP to the margins of American politics. Suburban moderates and independents will view the party as bereft of serious solutions and increasingly out of touch with their contemporary needs. Working-class voters will consider Republicans to be more interested in serving the preferences of moneyed donors than in standing up for "the little guy."

The anti-tax right lionizes Ronald Reagan; Grover Norquist has even proposed putting his face on the $10 bill. But this Reagan is somewhat of a caricature. Reagan raised taxes 11 times between 1982 and 1988, amounting to $133 billion in tax increases during his presidency. As Henry Olsen recently noted, "[t]he real Reagan raised taxes when he needed to, both as governor and as president. He valued compromise over principled defeat."

He also had a profound sense of the inherent purpose and worth of every human being, and an aspirational view of what America could achieve. Recovering that sense will benefit both the party and the country. It will require the GOP to embrace the sort of tactical flexibility that the real Reagan demonstrated, rather than the doctrinaire construct created by the anti-tax right. The place to begin this shift is with a serious debate on the efficacy of the Taxpayer Protection Pledge for the coming decade.

Robert P. Beschel, Jr., is a non-resident senior fellow with the Brookings Institution’s Doha Center.


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