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How the Taxpayer Protection Pledge helps push tax reform

The Taxpayer Protection Pledge is a one-sentence written commitment by members of the House and Senate to their constituents that they will oppose and vote against any and all efforts to increase total taxes. No net tax increase. Tax reform — reducing tax credits, deductions and/or exemptions in return for reducing marginal tax rates so that the change is not a net tax hike — is not only consistent with the pledge but was the original and continuing purpose of the Taxpayer Protection Pledge.

Over the past 18 months, those who would increase government spending complained that the pledge was the obstacle to a bipartisan compromise to reduce the deficit and debt. Now, they insist that the pledge stands in the way of tax reform.

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The GOP's take on Obama's call for a millionaires' tax

The GOP's take on Obama's call for a millionaires' tax

We know from history that both claims are wrong.

President Obama and later Sen. Tom Coburn insisted that the only way to reach a debt-ceiling “compromise” was to include both spending reductions and tax increases. Obama created the Simpson-Bowles commission, which recommended tax hikes and spending reductions. Rep. Paul Ryan calculated that the tax increases the commission proposed topped $2 trillion over 10 years. The Heritage Foundation said $3.3 trillion. Taxes would be raised. Spending, it was said, would be cut.

The same argument was used in 1982 when Democrats promised President Ronald Reagan that they would cut spending three dollars for every dollar of tax hike Reagan conceded. Taxes were raised. Spending, adjusted for inflation, actually increased after the 1982 bipartisan “budget deal” hammered out at Andrews Air Force base. By putting tax hikes on the table, the promises of spending reduction evaporated. In 1990, President George H.W. Bush (a cheaper date) was promised two dollars of spending cuts for every dollar of tax hikes. Yet taxes were raised $137 billion, and spending was not cut but actually increased more rapidly after the “deal.”

Tax increases did not complement spending cuts; they displaced them. Tax increases are what politicians do instead of spending cuts.

This year, Republican leaders John Boehner and Mitch McConnell took tax hikes off the table, and Congress and the president “compromised” on a spending reduction of $2.5 trillion over the next decade. No $2 trillion tax hike. Yes, spending reduction.

These three examples confirm the same lesson. When taxes are on the table, spending is not reduced. When taxes are not an option, spending is reduced.

But some believe that if one argument won’t get you into the pockets of taxpayers, try another.

Hence the spanking new argument: The pledge stands in the way of tax reform. This argument flows from Democratic ads that attacked Republicans in 2010, claiming that those who had signed a pledge against any net tax hike had actually promised to continue all tax deductions and credits. FactCheck.org debunked those ads, summarizing that the pledge “leaves ample room for elimination of any number of special tax breaks so long as the overall level of taxation is not increased. To claim that this ‘protects’ any particular provision of the tax code is simply untrue.”

The pledge clearly and unambiguously endorses revenue-neutral tax reform and equally prohibits a net tax increase.

This myth was again exposed when some tried to argue that the pledge stood in the way of eliminating the tax credit for corn ethanol. In fact, Americans for Tax Reform endorsed the Coburn amendment to strike the tax credit and the DeMint amendment to both end the ethanol mandate and provide an offsetting tax cut so the total reform was revenue-neutral.

Again, look at history. When did Congress actually reform the tax code by eliminating many deductions and credits for individual and corporate income tax and reduce marginal tax rates? That would be the Tax Reform Act of 1986, supported by Republicans and Democrats and signed into law by Reagan. Why was that effort successful when so many tax-reform projects stall?

That year Reagan announced that he would veto any “tax reform” that was a Trojan horse for higher taxes.

When taxpayers and taxpayer-friendly lawmakers were freed of the fear that tax reform would be corrupted into a tax hike, the tax-reform effort succeeded.

The 238 members of the House of Representatives and the 41 senators who have signed the Taxpayer Protection Pledge to their constituents stand ready to vote for pro-growth, revenue-neutral tax reform that simplifies the tax code and brings rates down for all citizens and businesses. The pledge is a barrier to tax increases. And that protection makes real tax reform possible today, just as it did in 1986.

The writer is president of Americans for Tax Reform.

 
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