If the Republican Party has an economic policy “brand,” it’s historically been one defined by tax cuts. At least in modern times. Thanks to Ronald Reagan, Jack Kemp, and modern thinkers like Steve Forbes and Larry Kudlow, the Republican Party is known for its focus on reducing penalties placed on work and investment. And while there’s been much to criticize the GOP about (including egregious economic errors) in the 21st century, its tax-cutting reputation has worked out pretty well politically as evidenced by Republican legislative majorities on both the federal and state level.
Despite this electoral success rooted in the belief that government overtaxes us, top Republicans of the present are acting as though they want to give the Party’s hard-won brand back. Specifically, prominent Republicans of the present are seemingly trying to lose by virtue of becoming the Party that wants to raise your taxes. And they’re being very public about it.
Just last week establishment Republicans of the James Baker and George Shultz variety went national (op-eds in the Wall Street Journal and New York Times) with their proposal for a carbon tax. Of the odd belief that oil extracted from planet earth is a threat to the well-being of that same planet, they’re proposing taxes meant to limit the consumption of that which powers global economic activity.
The idea is politically hazardous. Despite planet earth’s oil being a very cheap source of energy that boosts economic activity and living standards, allegedly wise members of the GOP establishment want U.S. legislators to raise the cost of consuming it for the hundreds of millions of Americans reliant on it. The Party of tax cuts wants to raise them on everyone.
Getting more specific, prominent members of the GOP want to create a new income stream for the federal government based on the theory that a major resource of planet earth will bring that same planet great harm. The theory is that absent a reduction in carbon usage, coastal cities around the world will soon be under water thanks to a warming of the earth that will push up sea levels. It’s an interesting theory, but then 44 percent of the world’s inhabitants live in coastal cities. It’s also worth mentioning that some of the most valuable companies on earth, along with most of the world’s most valuable houses, are in coastal locales.
That the above is true raises what is perhaps an inconvenient question: can scientists and politicians know what most of the rest of the world doesn’t? Figure that there’s scant evidence of a looming decline in carbon usage, and logic dictates that this won’t change much even with a tax. We know this simply because the liberalization of country economies around the world signals growing demand for carbon’s by-products that will power an increasingly large global economy. Despite this truth, it’s not as though the world’s inhabitants and businesses are moving inland in order to avoid a catastrophe that warming theorists say is inevitable.
All of which leads to a much more basic question: why? If the rise of capitalism in modern times has taught us anything, it’s that profit-motivated individuals are constantly turning scarcity into abundance. They’re solving problems, and fulfilling unmet needs. That’s the source of capitalistic wealth. That being the case, and assuming consumption of the earth’s resources will actually prove catastrophic for planet earth, why would members of the political establishment create another income stream for politicians as a solution? Government spending is a tax on freedom and innovation simply because politicians (no matter their ideology) can’t allocate precious resources as effectively as the market-disciplined in the private sector.
So, assuming rampant carbon consumption represents a threat, the obvious answer isn’t the introduction of new taxes from the Republican Party; rather it’s a reduction of the tax burden so that profit-motivated capitalists armed with un-taxed capital can divine the advances that either protect the earth from climate change, generate sources of power that aren’t carbon-based, or both. In short, if the earth is threatened, politicians are the last people we should expect to solve the alleged problem. The answer to the tautology that is “climate change” is less government consumption of wealth-enhancing resources, not more of it.
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Sadly, the Republicans aren’t limiting their tax-revenue thirst to carbon consumption. In the House of Representatives, Ways and Means chairman Kevin Brady is aggressively promoting a 15 percent tax on imports. Can he and his Party be serious?
When we get up and go to work each day, our work is what we exchange for what we don’t have, including voluminous goods and services produced for us around the world. Brady and his fellow Party members are proudly seeking a tax on our work.
Their response is that they’re doing no such thing. In return for taxing our toil, they promise reduced taxes on goods and services made right here in the United States. Yes, the Republican Party that used to be about tax cuts wants to legislate higher taxes as a way of planning how we buy goods and services. Implicit in their unfortunate proposal is that Americans don’t “Buy American” enough, so they’ll legislate that outcome.
But the fact that the U.S. is showered with more of the world’s plenty than any other country is a certain sign that Americans and the rest of the world already “Buy American” with great gusto. Basic economics tells us that countries only receive abundant imports insofar as they’re exporting in enormous fashion. With trade, it’s always and everywhere products for products.
The answer from these confused Republicans is that they want to create tax incentives that lead to more manufacture of goods right here in the United States with an eye on “creating jobs.” But the obvious problem with what is mindless is that the U.S. is the richest country in the world its world-leading companies increasingly focus on the high-margin aspects of production, all the while leaving the low-margin manufacture of goods to other, less developed countries.
That Americans more and more leave the “making” to others explains why wealth is so abundant in the U.S. Does any sentient being really think that the source of rising American wealth in Silicon Valley, Seattle, Route 128, Austin and other booming locales is a result of manufacturing? In truth, it springs from a lack of local production. Jobs for all manner of skill sets are voluminous in the parts of the U.S. where factories are least evident. It’s called economic progress, yet Republicans want to raise taxes for everybody in order to legislate the opposite of economic progress through incentives meant to render the world’s most admired companies (and by extension, the world’s most admired economy) less efficient.
Only the “stupid” Party could come up with something so injurious to every American, to the American economy, and to its growth-focused brand. But that’s where we are at the moment. The Party that attained majorities with its tax cutting reputation is aggressively seeking to shed its growth brand through the introduction of tax hikes meant to give politicians even more of what we the people produce. If so, the majority Party can kiss its majority goodbye. It will have earned its minority status.