Tax Analysts Blog

The Rich Will Pay for Our Sins

Posted on Dec 6, 2012

More and more Republicans in Congress are distancing themselves from their promise never to raise taxes. In fact, it's been "Throw Grover Under the Bus Week" in Washington.

I am no fan of the pledge never to raise taxes. It's not that I have a philosophical desire for higher taxes. Liberals have long opposed the pledge because it violates their core belief system. I don't feel that way. Nor do I have an intense hatred for Grover Norquist and Americans for Tax Reform. Lefties have always hated those who want people to be able to keep their money in their pockets. I don't. I actually think that Norquist's goal of smaller government is virtuous.

Rather, I oppose the pledge because it does not work. Since its inception nearly 30 years ago, American governments have grown almost without pause. That has occurred despite an overwhelming number of Republicans promising never to raise taxes. One would think that without additional tax revenue, the government would have been starved by now. But Norquist, his sympathizers, and many of the pledge takers miscalculated. They thought that never raising taxes would put government in a straitjacket. What they failed to realize is that Americans want more government than they are willing to pay for. And American politicians are willing to give them more government without raising taxes.

At the federal level, the debate used to be between guns and butter because we couldn't afford both. But now we have brought prosperity to the armories and handed out government money to just about everyone who asks for it. The government has grown exponentially since the pledge began. We have a $16 trillion debt to prove that.

In the states, the idea of legally binding balanced budgets used to mean something. But we want more from our state governments than we are willing to pay for, too. Despite thousands of politicians who promised never to raise taxes, state governments have grown. The growth has been helped by public sector unions and construction companies that prosper by public largesse. But that largesse increasingly comes from accounting tricks, budget gimmicks, gambling, and pretending that excise taxes aren't really taxes. State government has also been paid for by unfunded pension liabilities and endless borrowing for capital projects.

Whether it's shopping with credit cards, no-money-down financing, or eating samples at Costco, Americans like free stuff. And they like free government a lot. If the goal was limited government, Norquist should have had politicians promise to vote for a balanced budget. If people want more government services, they would have to pay for them with real taxes. If we make people pay for their government, they will insist on less of it. The liberals assert that balanced budget requirements are crazy. But deficit spending didn't get the United States out of the recession. It merely added to the debt that your children and grandchildren will have to pay.

As Republican pledge takers waver on their commitment never to raise taxes, something interesting is happening. Those Republicans realize that by sacrificing some really rich folks -- and Norquist -- they can still provide a lot of government without the political inconvenience of paying for it. After all, everyone, including the president, is talking about taxing a small sliver of the economy. Even Warren Buffett, who pretends that he cares about you and me, says that the threshold of higher taxes should be much higher than the $250,000 pushed by the president. Other tax advocates have called for taxes being raised on those who earn more than $500,000 or even $1 million. They will go after the rich so that everyone else can keep getting more government. It's a small price to pay.

Everyone knows that taxing the very rich will have no perceptible effect on the deficit. It's all for show. The president and Democrats in Congress can say they stuck it to the millionaires and billionaires. Fairness will abound. The Republicans can tell the world that they are reasonable people willing to compromise on issues as important as taxes. But Americans will still get more government than they are willing to pay for.

Some liberals have called for us to go over the cliff and to raise taxes across the board. Like Norquist, they are miscalculating. If everybody had to start paying more, there would be a lot more questioning of massive defense spending, egregious subsidies for industries, and entitlements run amok. But for now, we must be content with the rich paying more so we can get more than we deserve from our government.

Read Comments (2)

Jonathan ThomasDec 6, 2012

Why do you say Warren Buffet "pretends" to care about us? I think I have a
hunch, but want to hear your take...

David BrunoriDec 12, 2012

Jonathon, I say Warren Buffet pretends to care about you and me because 1) he
says he does and 2) I don't believe him. I do not blame him. I do not care
about him. You do not care about me. He does not care about us -- at least not
on a personal level. If Buffet really cared about me he might share some of his
billion dollars. But he won't even be paying the higher tax rates he wants.

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