Taxes could teach Democrats to be careful what they wished for 

Well, the debt deal is behind us, but it’s clear that the White House wants more taxes. Instead of fighting this head-on, the GOP might want to think about future ways of giving President Barack Obama what he says he wants. Done properly, it just might be what academics like Obama call a “teachable moment.”

One of the things that’s been floating around the Web over the past week is a video clip from 1953. It’s a short film produced by the motion-picture industry, seeking the end of a 20 percent excise tax on movie theaters’ gross revenues that had been imposed at the end of World War II as a deficit-cutting measure. (Yes, gross, not net.)

In the film, figures ranging from industry big shots to humble ticket-collectors talk about how the tax is hurting their industry and killing jobs, and ask Congress to repeal the tax.

They even explain, in a sort of pre-Art Laffer supply-side way, that a cut in theater taxes might actually produce an increase in federal revenues as the result of greater economic growth.

The effort — which includes a call aimed at “Congressman John Dingell” — father of the current Rep. John Dingell, who took over from his father a mere two years later in 1955 — ultimately succeeded.

But while I’m usually for tax cuts, in this case I think that’s too bad. Because with that 1950s battle won, Hollywood stopped talking loudly about the damage done by high taxes, pretty much for good.

When, since, have we seen such a firmly expressed appreciation of the harm that excessive taxation can do to the economy, voiced by representatives of the entertainment industries?

Were I a Republican senator or representative, I would be agitating to repeal the “Eisenhower tax cut” on the movie industry and restore the excise tax. I think I would also look at imposing similar taxes on sales of DVDs, pay-per-view movies, CDs, downloadable music and related products.

I’d also look at the tax and accounting treatment of the entertainment industries to see if they were taking advantage of any special “loopholes” that could be closed as a means of reducing “tax expenditures.” (Answer: Yes, they are.)

America, after all, is facing the largest national debt in relation to GDP that it has faced since the end of World War II, so a return to the measures deemed necessary then is surely justifiable now.

The president’s own rhetoric about revenues certainly suggests so. Perhaps the bill could be named the “Greatest Generation Tax Fairness Act” in recognition of its history.

Should legislation of this sort be passed — or even credibly threatened — I think we could expect to see Hollywood rediscover the dangers posed by “job-killing tax increases,” just as pro-tax-increase Warren Buffett changed his tune once his own corporate-jet business was threatened.

Glenn Harlan Reynolds, a law professor at the University of Tennessee, hosts “InstaVision” on PJTV.com.

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