|Letter to GOP Leadership: Keep Tax Hikes Off the Table in On-Going Debt Ceiling Negotiations|
|Monday, July 18 2011|
In a letter sent today to House Speaker John Boehner and Senate Minority Leader Mitch McConnell, the Center for Individual Freedom (“CFIF”) joined a broad coalition of organizations calling on Republican leaders in Congress “to block any attempt to raise taxes in the on-going debt ceiling negotiations.”
The letter points to the “grand compromises” in 1982 and 1990, when taxes were increased but not a single penny of promised spending cuts were ever realized. The letter states, “The focus must be on spending, and spending alone.”
Read the full letter below.
July 18, 2011
The Honorable John Boehner The Honorable Mitch McConnell
Dear Speaker Boehner and Leader McConnell:
Our organizations represent millions of tea party and limited government activists and scholars from around America. We are all united in one opinion about the on-going debt limit negotiations—tax increases need to be “off the table,” since Washington, D.C. has an over-spending problem, not an under-taxing problem.
Washington, D.C. already spends too much of our money. The historical level of federal government spending has been 21 percent of economic output. According to the non-partisan Congressional Budget Office (CBO), federal spending will be 23-24 percent of economic output each year for the rest of this decade, and then balloon to over 30 percent in the next few decades. Higher taxes to fuel President Obama’s super-sized welfare state will only make this problem worse.
America has a fiscal crisis because Washington spends too much, not because it taxes too little. According to CBO, tax revenues will reach or exceed the historical average of 18 percent of economic output by the end of this decade, even as spending continues to careen out of control. Raising taxes would kill jobs, wreck any hope of an economic recovery, and simply serve to enable an out-of-control spending elite in Washington, D.C.
Grand compromises to cut spending and hike taxes have failed in the past. In 1982, President Reagan was promised $3 in spending cuts for every $1 in tax hikes. The tax increases happened, but President Reagan was still waiting for the promised spending cuts when he left office. In 1990, President George H.W. Bush was promised $2 in spending cuts for every $1 in tax hikes. He broke his “Read My Lips” tax pledge at Andrews Air Force Base, but CBO numbers prove that not a single penny of the promised spending reductions were realized. Putting tax increases on the table now will only result in real tax hikes on American employers and families, and phony spending cut promises that never get realized. The focus must be on spending, and spending alone.
Agreements that focus on the deficit, rather than overspending, serve as poor substitutes for true fiscal reform. The President’s suggestion for a deficit “trigger” would serve as nothing more than a fig leaf for more spending and higher taxes. First suggested in 1985, Congress implemented deficit targets that, paradoxically, produced record deficits. By focusing on the product of overspending, rather than the spending itself, the deficit “triggers” have led to higher taxes and never produced a balanced budget.
The proper venue to examine the tax code is in the context of revenue-neutral tax reform, not a spending cut negotiation. There are $1.2 trillion in tax deductions and credits, according to the Office of Management and Budget. Many of these could be traded in for lower marginal tax rates, which would in turn boost productivity and create jobs. But this trade must be revenue-neutral, must be done in a tax reform negotiation, and simply is not appropriate in these debt limit talks. It seems clear that the opportunity for revenue-neutral tax reform is no longer possible in this negotiation— which should now be entirely focused on spending.
Tax increases are not needed to fix Washington, D.C.’s over-spending problem—in fact, higher taxes would only make that problem worse, since politicians will simply spend the new money. In order to get the budget under control, spending must be cut. Any tax hikes are unacceptable to the broad center-right movement.
60 Plus Association, Jim Martin, Chairman
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