Enough Compromising, Republican Congress Needs to Slash Taxes

0 Comments | Insight on the News, March 29, 1999 | by Deroy Murdock

Even as Pvt. Ryan was saved, Americans paid lower taxes than they do today. With World War II transformed into an Academy Awards contest and the Cold War reduced to a CNN retrospective, combined federal, state and local taxes consume 31.7 percent of gross domestic product. In 1944, when American servicemen fought Hitler in Europe and Tojo in Asia, government demanded just 22.8 percent of GDP, according to Patrick Fleenor, senior economist at the Tax Foundation.

But rather than feel the people's pain and cut tax rates accordingly, President Clinton has proposed 81 new tax and fee hikes that will pick another $82 billion from Americans' pockets.

These tax hikes range from the colossal to the picayune. According to Tax Notes, smokers will pay $34.5 billion in tax levies through 2004. Trade associations face a $1.44 billion investment-income tax. New community-property rules will gouge $225 million out or surviving spouses, Rather man encourage savings, higher taxes on "excess" individual retirement account contributions will cost depositors $52 million. A new tax on income from renting one's home to vacationers will vacuum $50 million into Washington. Numerous other tax hikes are too arcane to discuss in a family newspaper.

But Clinton's most pernicious proposal also may be his most deceptively innocuous. A $15 mortgage transaction fee would raise $58 million to update 100,000 flood-hazard maps for the Federal Emergency Management Agency, or FEMA.

It's a mystery why FEMA cannot use private maps produced by, say, insurance companies with a vested interest in preventing flood damage. Better yet, FEMA could stop selling insurance to inhabitants of flood plains.

Even worse, this small fee is a crack in the dike through which a federal property tax someday could gush. If today's $15 fee is okay, why not $50 in 2001 and $100 in 2005? Why should a millionaire send Washington $100 for the mortgage on an estate when young buyers pay the same fee on starter homes? How long before politicians argue that it would be fairer to slap a 5 percent tax on all property?

If this sounds paranoid, remember that the federal withholding tax was enacted in 1943 as a "temporary" war measure. Nonetheless, it soldiers forth today, even while Omaha Beach is populated with tourists. Consider also the federal luxury tax on telephones implemented to fund the Spanish-American War. After all, only rich people owned phones in 1898. Today, while most American homes have more phones than kitchen sinks, that 101-year-old "temporary" federal excise tax adds 3 percent to U.S. phone bills. In 1997, it cost taxpayers $5 billion. Don't believe for a moment that the mortgage transaction fee is a onetime charge to fund FEMA's War on Disaster.

Against this high-tax landscape, the GOP offers something akin to a shot glass of water after a crawl through Death Valley. It may help, but it will leave people thirsty for more.

Congressional Republicans bashfully have embraced a 10 percent across-the-board tax-rate cut. Such a timid tax cut is unlikely to excite the American public, especially once Democrats drop a few coins in the class-war jukebox. While the Democrats sing along to such oldies as "Trent Lott Stole Granny's Lunch Money" and "Bill Archer Fed My Baby to the Rich," why not give Democrats a target worthy of their ire?

Republicans can renew their pro-taxpayer credentials by endorsing a dramatic measure that swings an ax at tax rates. Rep. Vito J. Fossella, a New York Republican, has introduced HR330, the Economic Growth and Tax Freedom Act. As its bill number indicates, this Reaganesque proposal would slash individual income-tax rates across-the-board over three years by 30 percent.

On Feb. 23, the Congressional Joint Committee on Taxation forecast that Fossella's package would cut taxes in current dollars by $673.5 billion through fiscal 2004 and $1.57 trillion through fiscal 2009. HR330 recognizes that leaving the Congressional Budget Office-estimated $2.56 trillion, 10-year budget surplus in Washington is like locking a dozen children in a room with a box of Girl Scout cookies and expecting it to go undevoured. Only by returning a large chunk of the surplus will Americans ever see any of the money they have over paid the Treasury.

"We need to be bold about what we are as a party and where we stand with the American people who have earned this overpayment," Fossella told me. "Let's grab their attention. Let those who oppose a significant tax cut vote no and explain to their constituents why they don't deserve a lot of their money back.... This is the right thing to do. If you believe in something, you have to fight for it."

Like war, taxes are hell. If Republicans still believe in victory, they should follow Fossella out of the foxholes and onto the battlefield.

New York commentator Deroy Murdock is an MSNBC columnist and senior fellow with the Atlas Economic Research Foundation in Fairfax, Va.