Politics & Policy

Taxing Win

A GOP strategy for 2004.

If Howard Dean wins the Democratic nomination, his call for complete repeal of the Bush tax cuts will position him as advocating a tax increase on millions of voters–a tactic that crushed Walter Mondale in 1984.

From a Republican standpoint this is a political gift of almost miraculous proportions. But, Republicans should not sit by and wait to unwrap this gift. They should give history a push and exploit this Democrat weakness.

Republicans can push the tax issue to its greatest benefit by ramming a trio of policies through Congress in 2004 and making the Left oppose each one. Consider it a “made for voters” play in three acts.

Act I: Make the Bush tax cuts permanent. This would both (a) require the Democratic-primary cacophony to denounce the move–further alienating them from middle class voters and (b) force vulnerable congressional Democrats to make a very tough vote in an election year.

Act II: Pass a set of pro-savings measures currently advocated by the Treasury Department. These policies, which include the creation of “Super Roth IRAs” with large contribution limits and no withdrawal penalties, would essentially eliminate capital-gains taxes on most investing Americans.

The Left is sure to reflexively oppose this, to the detriment of their party. But moderate Democrats, especially those in high-income or swing districts would likely buckle, and the GOP would be able to deliver a valuable benefit to the investor class.

And make no mistake, investors are becoming very important politically. Our firm’s survey research in the 40 congressional districts that defined the 2002 battle for control of the House showed that 68 percent of likely voters in these districts had some form of investment in the stock market. Among this group Republican candidates had a 15-point generic advantage in October 2002–51 percent to 36 percent. The rise of the investor is one of the two most important macro-level events in current American politics. The GOP needs to seize the future and gain the allegiance of this group.

Act III: Push for a taxpayer-protection mechanism already employed in 14 states–a constitutional amendment requiring a supermajority (2/3rds) to create new taxes or raise existing ones.

A supermajority requirement for tax increases protects taxpayers by making it harder to arbitrarily take more of their hard-earned money. An LA Times poll conducted January 19-22, 1995 found 69-percent support for a similar measure (3/5ths vote). It’s an idea that is very difficult to argue against.

The political calculus is obvious. The Left would oppose such an amendment, because tax revenue is one of the key ingredients (along with envy and fear) in the glue that holds their coalition together. Moreover, they know that when the day of reckoning comes, Americans will either be forced to accept higher taxes or less government, and a constitutionally required 2/3rds supermajority to raise taxes would guarantee a stinging defeat for liberalism.

Pushing strongly for a constitutional amendment that requires a 2/3rds vote to raise taxes gives the GOP one other powerful benefit. It makes congressional Democrats in 14 states choose between liberal orthodoxy and a popular policy already at work in their home states. Consider the following:

Delaware, Louisiana, Arkansas, and California are all represented in the Senate by purely Democratic delegations. These Democrats would normally be prone to vote against any provisions limiting the ability of the federal government to take more of your money. But, each of their states has a constitutional amendment requiring a supermajority to raise taxes. Once again, President Bush could legitimately ask detractors why such an amendment, already good enough for their own states, would not also be good for America.

Forcing Howard Dean and company to oppose this tax-policy trio would put fiscal issues front and center in 2004 and position the Democratic party far from the middle-class, suburban voters it needs for victory. It would also energize and unify the Republican base.

If Republicans can push through an expensive and ambitious prescription-drug plan, they should certainly be able to make this a reality.

Robert Moran is a vice president at Republican polling firm Fabrizio, McLaughlin & Associates.

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