STEPHEN MOORE: Is There Going To Be Another GOP ‘Read My Lips’ Tax Catastrophe?

Rumors are swirling on Capitol Hill that more than a few Republicans are open to raising the top income tax rate to 40% from 37% as a way to make the tax bill “fairer.”

Really? Have Republicans in Congress been hanging out at Bernie Sanders’ rallies?

If you go to the Holy Bible of the Republican Party, one of the first commandments is: “thou shalt not raise tax rates.” It’s terrible economics and even worse politics. Yet Republicans have a habit of being seduced into taking a bite out of this forbidden apple over and over.

The most famous case was when former Republican President George H.W. Bush told Americans to “read my lips: no new taxes.” Sadly, Bush was suckered into a deal two years later by Democrats, who told him it was just a little tax increase that would be used to reduce the deficit. Instead, every penny got spent. And two years later, Bush, who had seemed like a lock for reelection, instead became a one-termer as millions of voters couldn’t forgive or forget. 

For the next three decades, very few Republicans ever voted for a tax increase, let alone committing the mortal sin of raising tax rates. Grover Norquist had his “no tax” pledge that almost all current Republicans have wisely signed.

Now, we hear some GOP senators flirting with raising the corporate tax rate to 25% from 21% today. Some Republicans are pushing a “millionaire surtax” that would raise the top tax rate back up to above where it was before the Trump tax cut – wiping out one of the most pro-growth features of that tax bill.

Why? This won’t raise revenues, but it will reduce business creation, jobs and federal revenues. Arthur Laffer’s book “Taxes Have Consequences” proves that over the past 100 years, when everyone’s tax rates were raised, three bad things happened. The economy falters, the rich find ways to avoid paying the higher tax rates and the poor become poorer. Every time tax rates have fallen, the rich have paid a larger share of the tax burden.