Grover Norquist of Americans for Tax Reform (and one of the left’s favorite bugaboos) has an interesting article on the possible long term tax strategy of the Bush Administration. Norquist believes the President is trying to incrementally institute a flat tax by slowly removing disincentives to savings, investment, and labor.
While this may be a good idea, I have a feeling the Bush Administration isn’t quite that far-sighted. The purposes of the Bush tax relief packages of 2001, 2002, and the latest reduction in dividend taxes are designed to jump-start the economy by removing government barriers to economic activity. I have a feeling that once the economy picks up, much of the impetus for tax relief will evaporate.
Then again, I’d love to be proven wrong. Tax simplification is badly needed in this country in order to streamline the tax system and increase revenue. A flat tax would be more fair by removing the loopholes used to shield revenues from taxation. It would make life simpler for millions of taxpayers, and would have far less impact for the poor than would a national sales tax or other ideas. A flat-tax system makes a great deal of sense, but it is likely to face resistance. If this is the long-term plan for the Bush Administration it’s a gutsy move. If not, it’s something that should be considered to help make the US income tax system more equitable and effective.
There is a long-term strategy to the Bush tax-cut-of-the-month fiscal policy, but I don’t believe it to be what Norquist suggests. Simply put, Bush is trying to make it so the only things the federal government can afford to do is maintain the military-industrial police state and finance national debt interest. Knowing that it would not be politically popular to simply destroy the social spending that Republicans have been trying to obliterate for more than 50 years, Reagan dreamed up the strategy of slowly bankrupting these programs while the public is distracted by the free money of federal tax giveaways showing up in their mailboxes. Bush is following in Reagan’s footsteps, finishing the job Reagan was unable to.
Nobody on Team Bush really believes the latest tax cut fantasy will stimulate the economy. They’ve burned through about four different teams of economic advisors before finding one who shared their lack of conscience and could sell this poisoned apple to the Adams and Eves of Main Street and still be able to slither back to their holes and sleep at night. This tax cut is all about long-term strategy. These guys know what they’re what doing. I’ll give them that. Now if they could only use their powers for something other than the purest form of evil.