Politics & Policy

American Conservatives’ Anti-Tax Pledge Crosses the Ocean to Britain

(WPA Pool/Getty)

For a quarter century, the anti-tax pledge of Grover Norquist’s Americans for Tax Reform has influenced U.S. politics. It was, for instance, a key reason for the defeat of President George H. W. Bush after he broke it in 1990. The pledge has also helped block tax-increase “compromises” under President Obama. Now the idea has been embraced by British prime minister David Cameron, who faces a very tough reelection contest this Thursday. Polls show that his conservatives and the opposition Labor Party are effectively tied.

Saying that British voters face the biggest choice on the economy “for a generation,” Cameron used a speech last week to pledge that if the voters give him a second term, he will pass legislation blocking any increases in Britain’s national insurance, income, or VAT (a form of sales tax) levies. Together, those three taxes make up about 60 percent of the national government’s revenues.

“When you’re standing in the polling booth, ask yourself: On the things that matter in your life who do you really trust? When it comes to your tax bill, do you trust the [Labor Party,] who have taxed you to the hilt when they were in power and still haven’t come clean about the taxes they want to increase next time round?” Cameron asked. “Or do you trust the Conservatives, who have cut income taxes for 26 million people, and who will cut your taxes again next time? We know it’s your money, not government money. You’ve worked for it, you’ve earned it, you should be able to keep it.”

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He then went on to warn that one of the post-election scenarios mentioned most frequently by pollsters is a minority Labor government propped up by and dependent on the left-wing Scottish National Party, which is proposing a $270 billion public-spending spree.

Labor denies it has any plans to raise national insurance or income-tax rates, but it won’t say whether it might change the threshold at which higher rates take effect. The Conservatives have pledged to raise the threshold at which Britain’s highest tax rate of 40 percent kicks in — to $75,000 a year. It warns that Labor will drag an additional 1.5 million middle-class taxpayers into the highest tax bracket if it takes office.

Cameron’s promised “tax lock” was “the most last-minute desperate gimmick I have seen in an election in a very long time,” said Ed Balls, the Labor Party’s spokesman on the economy. “These promises were not made by David Cameron in his manifesto. He has decided three weeks on, people aren’t believing them, he is going to try again.”

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Balls has half a point. The Conservatives have not been stalwart defenders of the Margaret Thatcher legacy over the last five years, and many Tory stalwarts believe that David Cameron is an ideological “shape-shifter” who cannot be trusted.

National Review’s Andrew Stuttaford, who comes from Britain, is skeptical of the Cameron move. “What parliament passes, parliament can repeal,” he tells me. “Pure gesture politics, sending a signal to the right.”

I think there might be more to the pledge than that. It would be a source of abject humiliation for the Conservatives to repeal their own law against tax increases, and such a reversal could shatter voters’ confidence in them for many years. There is also some precedent for Cameron’s move. His government used similar changes to the law when they introduced welfare reform, which included a clear 1 percent cap on welfare payment increases.

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Fred Smith, the former president of America’s Competitive Enterprise Institute, points out that the pledge has worked to contain damaging tax hikes in America. He wrote in 2012:

Norquist’s genius has been to recognize politics can be disciplined only by qualitative rules, such as the ‘No Tax Increase’ pledge. Bureaucrats and politicians have proved far too creative at gaming quantitative disciplinary rules. In so doing, Americans are beginning to rethink the need for the qualitative restraints the Founders saw as far superior to the ‘parchment barriers’ proposed by so many centrists today.

The pledge, which commits the signer to oppose any overall tax increases, was devised by Norquist, who modeled it after a successful state version of it in New Hampshire. That state’s pledge — which binds signers to oppose any introduction of a sales or income tax — has held, and the Granite State to this day is the only one without either levy.

In Washington, the power of the anti-tax pledge — a majority of the House and a near majority of the Senate has signed it — has limited the maneuvering room of those who would bargain away higher taxes for less-than-solid promises of future spending restraint or bureaucratic reform. President Reagan always regretted signing a bill that watered down his tax-cut program in 1982 in exchange for such promises. “He believed Democrats in Congress would keep their pledge to make $3 in future spending cuts for every $1 in immediate tax increases,” his son Michael Reagan has recalled. “When those promised spending cuts never materialized in Congress, [the tax hike] became one of the biggest regrets of my father’s presidency.”

“The Brits have heard the message of 1776: no tax hikes. If Britain had figured this out 200 years ago, we would still be speaking English here in America.”

Naturally, most British bureaucrats are appalled at the Cameron pledge. Like the scheming mandarins depicted in the 1980s British comedy Yes, Minister, they have long relished their ability to maneuver elected leaders into compromising their principles. The pledge “considerably reduces flexibility if things turn out different from expected,” said Jonathan Portes, director of the National Institute of Economic and Social Research. “This is why I have absolutely no doubt that Treasury and Bank of England officials are tearing their hair out at this.”

That attitude convinces Grover Norquist that his durable pledge is on the right track and can work elsewhere. “Thatcher proved that it’s only when politicians can’t rely on tax increases that they will ever consider real reforms such as genuine privatization, getting rid of redundant programs, and selling surplus property,” he told me in an interview. “The Brits have heard the message of 1776: no tax hikes. This is sound politics, sound economics, and if Britain had figured this out 200 years ago, we would still be speaking English here in America.”

Should David Cameron and his Conservative Party outperform the polls this coming Thursday, I doubt that hostile media outlets will credit any surge to his anti-tax pledge. But in reality, it may well play a crucial role by boosting turnout among his core supporters, persuading swing voters that there are some clear difference between the parties, and making Labor look as if it has unspecified plans for a raid on people’s wallets.

— John Fund is national-affairs correspondent for National Review Online.

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