You may have noticed that federal tax reform, which was supposed to be so urgently important to the GOP agenda as an economic booster, are stalled in Washington. Along with just about everything else, it seems, except presidential tweet-storms.
For Democrats the political mantra is “tax the rich.” Everyone favors taxes paid by someone else, especially if that someone else is as insignificant slice of voters as to be ineffective opposition.
For Republicans, the mantra has been tax cuts for all Americans. It sounds fair, would put more money in consumers’ spending hands and fits the other GOP theme of smaller government.
That’s been the party talk for nearly two generations now, ever since the early Ronald Reagan days when large tax cuts kicked the lagging Carter economy into overdrive, creating millions of new jobs and billions in new tax revenues.
So, with Congress absent again on another vacation, let’s look at what’s happening out in the states. There, Republicans are the chief executives in 33 states, most in party history, and their party controls legislatures in 26 states. Thank you, Barack Obama and Nancy Pelosi.
Republicans should be whacking taxes from here to Boise, right? Well, not so much.
Every state would like to stimulate a brisker economy and receive more tax revenues. But many states are discovering that the margin for cutting is gone. They’re already facing deficits for spending on essentials even with existing revenues.
Unlike the feds, states must balance budgets. So, some are — whispering — raising taxes.
These developments should provide a cold dose of reality TV for President Trump. They won’t because he’s adamant about deep cuts in both business and personal taxes AND spend hundreds of billions more on rebuilding aging infrastructure and a debilitated military.
Even those of us who repeated Algebra I can see the math is not there in D.C. As in the states, supply-side economics is running out of supplies.
South Carolina Republicans have blocked a set of broad tax cuts as too expensive. They also overrode the GOP governor’s veto and hiked the gas tax, always easier since federal taxes and individual state taxes are baked into visible pump prices.
The federal gas tax currently is 18.4 cents per gallon. State gas taxes range from Alaska’s 12.25 cents to Pennsylvania’s — Yikes! — 58.2 cents. Drive next door to Ohio, less than half that.
Tennessee’s GOP Gov. Bill Haslam just signed his state’s first gasoline tax increase in almost 30 years.
Dramatically in Kansas, the aggressive tax cutting and even tax eliminations of Gov. Sam Brownback didn’t produce the expected economic boom. Kansas’ Supreme Court ruled state education spending was too low.
GOP lawmakers decided this summer they could not cut anymore from basic services, let alone existing taxes. They increased taxes $1.2 billion. Brownback vetoed it. Republican legislators overrode him.
The sacred GOP tax-cut doctrine may well be fading in some state laboratories of democracy. Read my lips: The same reality could soon be coming to a national capitol near you.