Tax Increase is Radioactive

[RoninLB]

WSJ
GOP Tax Dilemma
By STEPHEN MOORE
October 5, 2007; Page A16

A few weeks ago Republican leaders gathered on Capitol Hill to hear from their top pollsters and pundits about how they can win back the votes of independent voters. Some of the attendees are still in a state of cardiac arrest over what they learned.

America's swing voters, especially the suburban "security moms," who abandoned the GOP in droves in 2006 still hold Republicans in very low regard. What has party tacticians especially spooked is that these independents are apparently not much attracted to what the Republicans are saying about taxes. That's a bitter pill for party leaders to swallow, because for 25 years the anti-tax banner has been a political trump card for conservative candidates. A top strategist at the Republican National Committee who attended the meeting told me: "Our tax message has worn thin."

Well, that's not exactly true. It is true that the GOP message on taxes needs a makeover, perhaps a radical one -- and the party's congressional leaders had better figure this out soon: The big tax fight starts as early as next week when House Ways and Means Committee Chairman Charlie Rangle unveils his multibillion dollar soak-the-rich tax hike plan to pay for middle-class Alternative Minimum Tax relief. So let's review some of the key attitudinal shifts of voters on taxes as revealed in recent polls and focus-group findings.

First, the not-so-good news for the GOP. Most voters are unpersuaded by the Republican message that the Bush tax cuts were a resounding success that pumped the economy back to life. Worse, the key independent voters are actually repelled by that message. "It crashes like the Hindenburg," says Richard Thau, who has been monitoring swing voter sentiments across the nation. Why? Because politicians who boast about the rosy economy seem out of touch, even delusional, given the rising costs of gasoline, health insurance and college tuition.

The reality, of course, is that the investment tax cuts did help create seven million jobs and did steer the economy out of recession. That doesn't matter to these "stressed out" voters, as Mr. Thau calls them. The Bush tax cuts are a bridge to the past, not the future, to borrow a Clintonite term. Moreover, because local property and school taxes have been skyrocketing, many independent voters scratch their heads and wonder: What tax cuts?

There is more deflating news. Unlike in the 1980s and '90s, voters are today less attracted to talk of new tax cuts, which they think are pie-in-the-sky, given the current war costs and budget-deficit. Nor are they averse to raising taxes on "the wealthy," a group they are persuaded is taking advantage of tax loopholes to avoid paying their fair share. That the richest 10% already pay two-thirds of the income taxes isn't well understood. One strong defense mechanism against the left's class warfare tax policy is that roughly half of voters are convinced that when politicians say they are only going to soak the rich, they fear their own tax bills will go up.

There is another silver lining for the GOP: The Democrat's tax-happy policies are an even less palatable message to voters. Sen. Jon Kyl of Arizona, who has sat in the GOP tax strategy sessions tells me that "an overriding concern of economically anxious voters today is that they don't see their own taxes rise."

Pollster David Winston, who's been testing the tax issue for Republicans, agrees with that assessment. When Mr. Winston asked a national sample of registered voters last month, "Do you believe or not believe this statement: Given the cost of living these days, now is not the time to raise taxes," 65% believe now isn't the time to raise taxes, while only 31% believe it is.

There is another GOP imperative: The anti-tax message must be linked to wasteful government spending. "There's no question that for seven out of 10 American voters, wasteful government spending is one of the largest problems in Washington," says pollster Tony Fabrizio. "For many of these voters it's a bigger issue than taxes." All of the polling consistently finds that voters believe about 40 cents of every dollar spent by Washington is wasted. So this widespread aversion to the way government mishandles money may be the best shield against tax hikes -- at all levels of government.

In Mr. Winston's survey, 75% of respondents agreed that, "Taxes should not be increased as long as Congress continues to waste the tax money it already receives." Only 23% did not.

Perhaps the most encouraging poll finding is that Americans fully understand the link between a strong economy and deficits. In 2006 federal revenues increased by a world record $250 billion, because of surging employment, corporate profits, and stock values. No Hillary Clinton tax hike could have possibly raised that kind of money.

This is a nation that instinctively gets the supply-side message that putting people to work yields more tax revenues than a strategy of weighing down businesses and workers with tax hikes, which explains this stunning finding: When Mr. Winston's poll asked, "Which approach is more likely to increase federal revenues?" 81% said "increasing economic growth" while only 13% said "increasing taxes."

So the tax issue is still radioactive with most voters, and the GOP would be foolhardy to run and hide from it. That's especially true because if the economy slows down in the coming months due to the housing credit crunch, aversion to higher taxes is likely to intensify.

"Voters' biggest economic concern is whether they will have enough money to meet their own needs," says Sen. Kyl. He says that if Republicans are going to win in 2008, they have to persuade voters that Democratic tax hikes "will make things worse" for the economy and their own personal finances. Fortunately, this message has the added attraction that it's not just pollster-driven spin. It's the truth.

Author: Mr. Moore is senior economics writer for the Wall Street Journal editorial page.

[pwd72s]

"America's swing voters, especially the suburban "security moms," who abandoned the GOP in droves in 2006 still hold Republicans in very low regard. What has party tacticians especially spooked is that these independents are apparently not much attracted to what the Republicans are saying about taxes. That's a bitter pill for party leaders to swallow, because for 25 years the anti-tax banner has been a political trump card for conservative candidates. A top strategist at the Republican National Committee who attended the meeting told me: "Our tax message has worn thin.""

And why not? Bush lied like a rug, pretending to be a fiscal conservative. I should believe any GOP candidate this time around? At least I know that Hillary! plans to completely screw me, tax and spending wise.

(Ron, just playing devil's advocate here.)

[red-beard]

The economy is in great shape, just no one except the Wall Street Journal seems to be reporting it.

[Rick Lee]

"In Mr. Winston's survey, 75% of respondents agreed that, 'Taxes should not be increased as long as Congress continues to waste the tax money it already receives.' Only 23% did not."

While I totally agree with this, it's indicative of the loaded questions in these polls. They are worded to get the answers desired by the pollsters. "When did you stop beating your wife" is the kind of questions on these polls. "Will you stand strong with Pres. Bush for a better America?" Or "Will you support Democrats in their efforts to get our boys home from Iraq?"

[74-911]

Originally Posted by Rick Lee

"In Mr. Winston's survey, 75% of respondents agreed that, 'Taxes should not be increased as long as Congress continues to waste the tax money it already receives.' Only 23% did not."

While I totally agree with this, it's indicative of the loaded questions in these polls. They are worded to get the answers desired by the pollsters. "When did you stop beating your wife" is the kind of questions on these polls. "Will you stand strong with Pres. Bush for a better America?" Or "Will you support Democrats in their efforts to get our boys home from Iraq?"

+1

I have been called several times re: polls and generally refuse to answer about 1/2 the questions because of the way they are worded. I assume the pollster usually records my response they way they want it to be answered anyway.

[Rick Lee]

I used to write some of these polls for the RNC, NRSC and some candidates. I did one for Giuliani when he was running for Senate against Hillary Clinton. Believe me, these polls are to appeal to the very lowest common denominator and all of them have a credit card pledge form attached at the bottom.

[hardflex]

so you guys would be part of the 23% that thinks Washington ISN'T wasting 40% of what it spends? That's a switch...

[berettafan]

Originally Posted by Rick Lee

"In Mr. Winston's survey, 75% of respondents agreed that, 'Taxes should not be increased as long as Congress continues to waste the tax money it already receives.' Only 23% did not."

While I totally agree with this, it's indicative of the loaded questions in these polls. They are worded to get the answers desired by the pollsters. "When did you stop beating your wife" is the kind of questions on these polls. "Will you stand strong with Pres. Bush for a better America?" Or "Will you support Democrats in their efforts to get our boys home from Iraq?"

and a +2 from me.

[Shaun @ Tru6]

Tax cuts are a myth and just a move the money around shell game.

Physics has conservation of mass and energy.

Economics has conservation of costs. There's no free ride boys.

Taxes
Municipal fees
International Value of the Dollar
Cost of Energy
Tariffs
Unemployment
Job growth (quantity and quality)
Social Spending
Military Adventures
Housing
International Borrowing

to name just a few of the factors that go into a complex world economy.

lowering taxes is just another Walmart, feel-good, 5-minute view of the future designed to scam you out of your vote. Put another way, next time you get an email from Nigeria, just substitute "lower taxes" for $13,000,000.

I'd like to see "Conservatives" get equally mad at our rate of borrowing from Communist China as they do at Liberals for raising taxes.

At least in raising taxes, it's a U.S. issue. Borrowing from China? We're subjugating our Foreign Policy to a Communist government. Nice.

[Rick Lee]

I would get mad, but China is far more capitalist than we are and with much lower taxes.

[Porsche-O-Phile]

I have to agree. It used to be that greed was the biggest enemy to growth in this country, now it's socialism.

Instead of pushing a "soak-the-rich tax hike plan to pay for middle-class Alternative Minimum Tax relief", these idiots should be looking to eliminate the AMT completely and CUTTING services proportionately. When are these jackasses going to figure out that's what the American public WANTS?!?! I could care less about fully 3/4 of government bureaucracy. Cut it and the taxes that go along with it. Simple finances.

When you or I see a desire to save money or to stave off financial trouble or bankruptcy, what do we do? Either earn more or spend less. Those are your choices - pretty simple. Fiscal responsibility is actually VERY easy. Simply spend less than you take in. Yet these "experts" somehow obfuscate the idiotic simplicity of the situation EVERY TIME it comes up by only seeing one side of the equation. They constantly revert to "raise more money" (which means "raise taxes"). They don't realize for every dollar sucked out of the public through higher taxes, they could get the SAME result by cutting one dollar of government waste - and there are untold BILLIONS sitting there being wasted by unnecessary programs and fat-cat bureaucrats that do nothing we actually need.

How many times does this need to be said - CUT, CUT, CUT, CUT, C-U-T!!!

I honestly say you set the benchmark goal at a government 10% the size of today and start hacking. Even if you're off by 100% as far as what's necessary and required in order to hold our nation together and provide the MOST BASIC of services, you'll have slashed government and the taxes required to fund it by 80%. Not too bad. Not too bad at all. All them out-of-work bureaucrats can then go open businesses or work in the private sector as consultants or whatever - doing something VALUED by our economy. If it isn't valued, it won't support them. Simple free-market.

I have very bleak predictions for the future, given the nation of lazy, "get-rich-quick" pussies we've become. When people start getting their asses handed to them again and realize that the way to get ahead in this world is to work hard and contribute in a way that's valued, maybe we'll find ourselves collectively on the right track again. However I have serious doubts that we're heading back to such "outdated" or "old fashioned" thinking anytime soon. Mostly I expect the idiot masses to keep vapidly tuning in to "American Idol XVII" and pretending they can make millions by doing nothing - like flipping houses or whatever.

The Day of Reckoning is coming for the stupid, and it ain't going to be pretty - because there are a LOT of them out there. . . more than most people think.

[Rick Lee]

The AMT is such a ridiculous creation. Only our government could come up with it. IIRC, it was created around 35 yrs. ago because around 100 or so rich folks, whose income was mostly from tax free municipal bonds and whose deductions made them owe nothing, got noticed by the class warriors in Congress. Of course, it was only supposed to affect those tiny handful of taxpayers, so they never bothered to index it. Now it's affecting millions and Congress is going for a two-fer by demanding more tax hikes to pay for AMT relief. Such chutzpah. Only in America.

[Superman]

The Dems are in the driver's seat, and here's why:

* Like the WSJ points out, tax cuts are irresponsible straw-man promises that won't continue working for the Reps.

* The Dems can easily stay away from talk of tax hikes, since Americans know there is plenty of money to go around, if it can be handled properly.

* This is the best part. As I mentioned nearly seven years ago, the Republicans hate government and don't know how to run it. Don't intend to run it. The agenda is to tear it down, and they have reminded the American people why we almost never, ever let them run ours. The party that likes government, has optimism for government and knows how to operate one is.....the Democrats.

At this point, the Dems should be doing nothing. Next year might be a cake-walk, particularly with the fractured conservative vote that's almost certain to occur. Indeed, the Reps have done a wonderful job of marketing the Democratic platform.

[Tobra]

Originally Posted by Shaun 84 Targa

I'd like to see "Conservatives" get equally mad at our rate of borrowing from Communist China as they do at Liberals for raising taxes.

At least in raising taxes, it's a U.S. issue. Borrowing from China? We're subjugating our Foreign Policy to a Communist government. Nice.

True fiscal conservatives are against borrowing and profligate spending. One of the first things Ronald Reagan did when he became governor was to raise taxes. The taxing is not the problem, the spending is where they get in trouble, ie, Wayne's Alaskan Bridge to Nowhere, courtesy of some Republican dillhole hailing from the there.

The party that likes government and feels it knows what is best for The People than they do themselves is more like it Superman. Exactly how are they going to pay for all the stuff they promise us as our right to have?


Adding spending programs is a lot easier than dropping them or raising taxes. This simple fact is going to get us deeper into the red with the Democrats than a war ever could.

Seems to me Lord Algore of the Libs was personally in the back pocket of the Chinese with the shady donations from them and loss of highly sensitive information to them

[CRH911S]

So how do we get from where we are now to where we should be with respect to taxation? I live in a very red state that thrives on federal taxes and calls this economic development.

[Superman]

Tobra, there are those who are vulnerable to factually incorrect marketing stereotypes, and those who are not. I wish we were all savvy about that, but I guess somebody's got to buy into the fallacy that Republicans might be decent public policy makers, otherwise we'd have only one party. Fact is, and I would appreciate any data you have to the contrary, that Republican administrations have been much bigger spenders in recent decades than Democratic ones. The current guy is the all-time heavyweight champion of government spending.

[berettafan]

Originally Posted by Tobra

The taxing is not the problem, the spending is where they get in trouble, ie, Wayne's Alaskan Bridge to Nowhere, courtesy of some Republican dillhole hailing from the there.

Yet the commoners keep arguing amongst themselves about who should pay what share to feed the monster. Nobody wants to talk about putting the monster on a diet because it's a difficult subject and the information that would be used to do so is provided at the pleasure of the monster itself.

[74-911]

Originally Posted by Rick Lee

The AMT is such a ridiculous creation. Only our government could come up with it. IIRC, it was created around 35 yrs. ago because around 100 or so rich folks, whose income was mostly from tax free municipal bonds and whose deductions made them owe nothing, got noticed by the class warriors in Congress. Of course, it was only supposed to affect those tiny handful of taxpayers, so they never bothered to index it. Now it's affecting millions and Congress is going for a two-fer by demanding more tax hikes to pay for AMT relief. Such chutzpah. Only in America.

If you think AMT is a big ripoff, you will just love the tax on Social Security benefits passed in the early 80's IIRC. Just as the AMT wasn't indexed and now catches taxpayers it was never intended to get, the earnings limit for falling under SS benefits being taxed wasn't either. It's perhaps even worse than the AMT.

[Rick Lee]

But I thought the max. SS income was around $90k and you only pay SS up to that amount.

[berettafan]

wage earners pay SS tax on the first 97.5k in wages in 2007.

recipients of ss income pay tax on that income IF their other income reaches a certain level (fairly low #'s like $35k-$50k IIRC).