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Ferguson on Tax Reform

Lots of people took note of Andrew Ferguson's Weekly Standard cover story about the Indian lobbying scandals, but Nexising around for something else I just now came across his January 2005 article "What a Tangled Web We Weave" on the GOP's embrace of tax complification. I can't find an online copy, but it's really a wonderful piece. Excerpts below the fold:

In all the excitement generated by the unveiling of so ambitious an agenda (you knew it was ambitious because the commentators kept telling us it was ambitious) a few things were overlooked. For example, one paragraph before he promised to simplify the tax code, the president had promised to make our country "less dependent on foreign sources of energy." And two paragraphs after that, he promised to attract new businesses to poor communities by creating "American opportunity zones." And two paragraphs after that, he promised to "give workers the security of insurance against major illness." Then he promised to encourage the construction of "seven million more affordable homes in the next 10 years," and then he promised to make it easier for everyone to go to college.

Then he started talking about the war on terror, so no one had a moment to stop and consider that the way in which the president was going to modernize all these systems--the way he was going to do all this attracting and encouraging and security-giving--was by inserting exemptions and credits and deferrals into the tax code; by complicating the tax code, in other words, rather than simplifying it. For a modernizer, this seems pretty old-fashioned. . . .

Coincidentally, since 1987, Republicans have also enjoyed the rise of "big government conservatism"--the philosophical lodestar for people who really like living in Washington and working for the government (or having the government work for them) while calling themselves conservatives. Republicans no longer disparage "social engineering"; in government as elsewhere, modesty is for chumps. In the proper hands--theirs--government now can be an instrument for advancing whatever ends or interests are considered desirable or lucrative at any given moment. This was the philosophy behind Bush's speech, and behind the 2004 Republican party platform, which offered the president's domestic policy in detail.

I fished out a copy of the platform the other day. The ambition of the big-government conservative begins on the very first page, and it goes on and on and on, with calls for: expanding education IRAs for college, making prepaid tuition plans tax-free, creating new deductions for higher education expenses, reinstating the D.C. homebuyer's tax credit, increasing the adoption tax credit, increasing the child care tax credit, quadrupling business expensing exemptions, extending tax rules for employer-sponsored retirement plans, creating Lifetime Savings Accounts, instituting Employer Retirement Savings Accounts, adding exemptions for Zero Downpayment Mortgages and nonprofit organizations involved in the Self-Help Homeownership Opportunities program, enacting a Single-Family Affordable Housing Tax Credit, changing rules on expensing for research equipment, enacting health savings accounts, creating new tax incentives for low-premium, high-deductible health-insurance plans for small businesses, extending tax deductibility to insurance premiums associated with the above-mentioned health savings accounts, making the research and development tax credit permanent, reorganizing the Alternative Minimum Tax, implementing the National Energy policy which will create incentives for energy efficiency including providing an investment tax credit for Combined Heat and Power projects, a tax credit for marketing fuel-efficient vehicles like the one all those Hollywood movie stars drive (not the Hummer), a "temporary, efficiency-based income tax credit lasting from 2002 through 2007" for purchasing hybrid fuel cars, tax incentives for private-sector investment in Intelligent Transportation Systems, augmenting the ethanol excise tax exemption, adding "tiers" to the tax credit for new landfill methane projects, extending tax credits for electricity made from wind, extending tax credits for electricity made from biomass including the per-kilowatt hour tax credit for biomass combined with coal-fired electricity, I get paid by the word, offering a "tax credit to help workers if they have lost their jobs due to international trade," instituting a new 15 percent tax credit for residential solar energy projects (but only up to $2,000 per fiscal year, to discourage treehugger greed), enlarging the Internet Access Tax moratorium, supporting the Nuclear Power 2010 program that makes financing for the construction of nuclear power plants tax free, extending credits for use of biodiesel technologies, extending new education savings accounts for use in kindergarten (!) and grade school, if you're still reading this you're probably a Democrat, offering "tax relief" for teachers who get training, establishing tax-free Personal Reemployment Accounts for Americans returning to work, providing tax relief for companies in the 11 government-credentialed "high growth" industries who participate in the High Growth Job Training Initiative, creating an "above-the-line" tax deduction for premiums of long-term care insurance, adding a personal exemption for an old person under in-home care, revising earning criteria to recalculate the taxation rate of worker's pension payments . . . but I'm tired and I want to stop typing now.

Oh, and one other thing: "The federal tax code is dysfunctional," says the platform. "Instead of being simple, the current tax system is needlessly complex. . . . Tax reform is necessary to achieve the simplicity, efficiency, fairness and predictability that the American people deserve, and to give all Americans the freedom to determine their own spending priorities."


February 22, 2005 | Permalink


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"Bush likes big government" says Ferguson. Indeed. I'm left wondering why the Left still hates Bush. I guess he'll have to give into the islamofascists before the left will give him any respect, which means the left will never stop hating Bush. He is, afterall, not spitball Kerry.

Posted by: Al | Feb 22, 2005 2:04:44 PM

This is one of the 2 reasons (torture being the other) why I, a small "l" libertarian, voted for Kerry.

Posted by: ostap | Feb 22, 2005 2:08:12 PM

In the 2000 Vice Presidential debates, Dick Cheney said some cogent things about the deplorable tendency to micromanage life with tax policy. Whatever their (considerable) merits, they could not be believed coming from a classic crony-capitalist like Big Dick Cheney, whose personal fortune was based on glad-handing, peddling access to government decisionmakers, and scrambling for exactly the sort of special tax (and subsidy) treatment he was denouncing. Anyone who finds the current situation surprising ought to meet Captain Renault at Rick's. I hear there's a roulette wheel in the back room.

Posted by: C.J.Colucci | Feb 22, 2005 2:21:59 PM

There're never going to be any politicians who seriously favor smaller government. What person would prefer that his profession become less important? Government can only become larger over time.

Posted by: Matt G. | Feb 22, 2005 2:29:38 PM

Matt G: ever heard of Ronald Reagan?

Posted by: ostap | Feb 22, 2005 2:30:59 PM

The name rings a faint bell. Isn't he the guy that helped drive the USSR to financial collapse through the use of massive military spending?

If you're implying that Reagan actually did make the government smaller, could you offer some examples of ways in which he did so?

Posted by: Matt G. | Feb 22, 2005 2:33:57 PM

Matt G. -

I think ostap was referring to your use of "seriously favor" not actual results.

Posted by: Ugh | Feb 22, 2005 2:52:42 PM

If he didn't bring about the results consistent with that premise, then I challenge the assertion that he seriously favored it.

Perhaps he tried and was prevented - if so, by whom and in what way?

Posted by: Matt G. | Feb 22, 2005 2:54:41 PM

The phenomena of tax complification and the big government conservativism both show how modern conservatism has really become all about the maintenance and expansion of political power. They don't even really want to help their constituencies. The real agenda is to continually dole out crumbs (complicated tax credits and schemes that eventually expire on economic policy, all talk and not much action on social policy) that keep their constituencies dependent on the government and the lobbying class for favors. It’s the complete Norquistization of government policy.

What’s funny is that this is actually quite similar to what the Right has often accused the Left of doing to its interest groups. Except in this case it’s actually true.

Posted by: RC | Feb 22, 2005 3:07:41 PM

Reagan held the line fairly well on domestic discretionary spending, but he also participated in boosting the FICA tax, which is one of the the most glaring examples of kicking the can down the road in recent political history.

I'd vote for anybody who promised to re-pass the 1986 tax law, and reduce spending to the level needed to avoid a large deficit.

Posted by: Will Allen | Feb 22, 2005 4:17:08 PM

I'm left wondering why the Left still hates Bush.

Because anything worth doing is worth doing right. The conundrum is that a conversative implementing big government policies is bound to screw up because in the end, they don't really understand big government policies.

Their idea isn't to actually help the people with the policy, its to give the appearance of doing so while actually making ordinary lives more difficult and handing some cash over to corporations in the process.

Posted by: Adrock | Feb 22, 2005 4:25:12 PM

A funny piece. And by "funny" I mean "dismally accurate".

Posted by: Jeffrey Davis | Feb 22, 2005 4:41:18 PM

Marginal Revolution reports the passing of David Bradford. This Princeton economist served in the CEA of Bush41 and had some of very good writings on the issue of tax policy and fundamental reform. Alas, the GOP needs more scholars like Dr. Bradford.

Posted by: pgl | Feb 22, 2005 6:31:12 PM


Posted by: Michael Farris | Feb 23, 2005 1:20:42 AM

Well, that's some money in the bank, man.

And yes, i am a Democrat.

a very anti-authoritarian democrat. Bush want a huge government, under his direct controll. Icky.

Posted by: indy | Feb 23, 2005 10:15:30 PM

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