Pethokoukis

Is Romney afraid to talk about tax cuts?

My old pal Tim Noah of The New Republic speculates as to why Romney doesn’t talk more about cutting taxes since, you know, he has this huge tax cut plan:

The most tantalizing possibility of all, however, is that tax cutting, as an organizing principle for governance, no longer holds much allure for the voting public, which is surely aware by now of two things:

a.) the multiple tax cuts for the rich under Ronald Reagan and George W. Bush did not boost prosperity for the middle class, particularly during the past dozen years, when median income actually declined even as productivity increased;

b.) the main effect of tax cuts has been to increase the federal deficit. Even if you believe—as I do not—that government needs to be smaller, it’s been pretty well demonstrated that the “starve the beast” Republican strategy of cutting taxes to force budget cuts doesn’t work. It only increases the deficit. Indeed, the late libertarian economist William Niskanen argued persuasively that “starve the beast” actually increased government spending by discounting its cost, at least in the near term, which is the only thing voters usually pay attention to.

While I totally disagree with Tim’s analysis of the economic impact of tax cuts, I think Team Romney might well agree that tax cuts are a spent political force outside of Republican primaries. The 1980s are a long time ago to many Americans. The more recent economic episodes in the public mind are the booming 1990s when Clinton raised taxes and the 2000s when Bush cut taxes. The tax cut brand might be tarnished, even though such a perception reflects a total misreading of recent economic history.

Which is too bad. America desperately needs pro-growth tax reform to create jobs, raise incomes, and better handle the debt. In fact, we need to completely replace the income tax.

I would offer two pieces of advice: a) Romney should spend some time talking about why lower tax rates boost growth, and b) Romney should spend some time talking about why the Obama spending agenda would result in Carter-era tax rates.

2 thoughts on “Is Romney afraid to talk about tax cuts?

  1. Baloney. Americans always want tax cuts, smaller government, less borrowing, and they think all those things are good for the economy. They are correct.

    Next Slate will try telling us the sun sets in the east.

  2. I looked at the link represented by “In fact, we completely need to replace the income tax.” It claims to be a consumption tax, but by the plain meaning of the term as I understand it, it is no such thing.

    A sales tax or a VAT is a true consumption tax. It is levied only at the time of actual purchase, and only on money actually used for consumption. The type of tax proposed in the link is levied on wages when earned, before the earner gets any chance to decide how much of it to save and how much to consume. A trust fund baby might spend every penny of earnings from the trust and even go into debt, yet pay only the local sales tax.

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