Go to the “About” page on the Americans for Tax Reform website, and you will find the statement that “the government’s power to control one’s life derives from its power to tax. We believe that power should be minimized.”
Grover Norquist, ATR’s founder, has repeated that sentence countless times in the years since he founded the group in 1986. The main tool that ATR has used to implement its mission statement has been the Taxpayer Protection Pledge, a simple three-sentence statement that conservative activists press Republican candidates to sign each election season.
By many measures, the pledge has been extremely successful. In the 111th Congress, 34 senators and 172 representatives have signed it. So has every Republican presidential candidate who ever made it to the White House since Ronald Reagan. As Newsweek’s Jonathan Alter once said, “It has transformed American politics.”
It has been somewhat successful on a policy level as well. Reagan’s 1986 tax reform lowered the corporate tax rate from 46 percent to 35 percent. It has not budged since. Reagan also reduced the top marginal tax rate from 50 percent to 28 percent. Liberals have only managed to raise it to 35 percent.
When it comes to tax rates, the pledge has worked. But ATR claims to stand for more. The statement’s first sentence reads: “We believe in a system in which taxes are simpler, flatter, more visible, and lower than they are today.”
ATR has got the “lower” part down, but the “simpler, flatter, more visible” parts have been forgotten. Between 1987 and 2006, Congress passed 14,400 amendments to the U.S. tax code, which now contains 3.8 million words. According to the Laffer Center, U.S. taxpayers pay $431.1 billion per year just complying with the current income tax system.
So why has ATR succeeded at keeping rates low but been unsuccessful at the rest of its mission? The problem comes not from the promises in the pledge, but from the promise left out.
At the federal level, pledge signatories promise to oppose all marginal tax hikes and oppose any elimination of tax credits unless matched by reduced taxes elsewhere. But where is the promise to oppose any new deductions or credits to the tax code? Raising rates is not the only way government can “control one’s life” through taxes. Credits for electric cars, solar panels and first-time homebuyers all use government power to influence citizen behavior. How are they any morally different than higher income-tax rates?
Worse, without an opposition plank for credits and deductions, the pledge actually undermines real tax reform. Why should a senator fight for lower tax rates for everyone when he can tailor a tax deduction just for the firms in his state?
Eliminating tax credits and deductions is just as difficult as eliminating government spending programs. Both make reductions in overall tax rates more difficult. Norquist and ATR should add a plank opposing credits and deductions to the pledge. And Washington politicians should get serious about tax simplification.