Just for a moment let’s consider the possibility — remote as it is — that the Democrats would allow a 1 year reprieve on the income tax. (And while they’re at it, they could throw in a 1-year moratorium on FICA too!). There would be an enormous boost in investment, hiring and spending. The deficit would get bigger, to be sure, but that’s going to happen anyway. Meanwhile, I think it would shatter the GOP for a generation — and I would still be for it! The Democrats could, with Republican help, use that year to plot a ginormous overhaul of the tax code, closing loopholes, simplifying it, even raising tax rates, and pretty much everyone would go along. Obama could even use the tax holiday to justify a series of deep cuts of government spending. The anti-tax, pro-growth, leg of the GOP stool would be balkanized and confused. For the first time since JFK, the Democrats would control the commanding heights of the tax issue. And, the financial crisis would recede quickly (though I suppose we’d certainly see a huge bout of inflation which, again, I’m sure we’ll see anyway).
Now, of course, this will not and could not happen. Congress loves a complicated tax code. Liberals are too invested in the moral case for increased taxation (it’s neighborly! it’s charity! it’s a religious obligation!) and the left has shed too much blood in the campign to de-link taxation from questions of economic growth. Meanwhile, the vast archipelago of interests groups that forms the core of the Democratic Party would never, ever, let the country peek under the tent, as it were. The best argument would come from seniors, a deadly political constiuency, who would somewhat rightly complain that they paid their taxes and now it’s the whippersnappers’ turn.
And, yes, I’m sure I’m missing a thousand other angles. Still, it’s fun to think about.