Thirty-three Republicans voted last week to end the federal tax credit for ethanol production. From a conservative perspective, the vote should have been a no-brainer: the federal government has no business picking winners and losers in the energy sector, and the tax credit was a direct subsidy to ethanol producers.
But 30 of those 33 Republicans also signed the Americans for Tax Reform Taxpayer Protection Pledge, which forbids signatories from voting for any measure that eliminates a tax deduction unless matched by a reduction in tax rates.
The founder and enforcer of the pledge, ATR President Grover Norquist, claimed after the vote that the 30 Republican tax-subsidy detractors were not in violation of the pledge since Sen. Jim DeMint, R-S.C., had authored an amendment that would have covered the closing of the ethanol deduction with the elimination of the estate tax.
But Senate aides point out that the way Majority Leader Harry Reid, D-Nev., had structured the vote, the pledge-violating senators would never have been able to vote for DeMint’s covering amendment.
The chief proponent of ending the ethanol credit, Sen. Tom Coburn, R-Okla., definitely saw his vote as an attack on the pledge. His spokesman, John Hart, told The Washington Examiner:
“Grover’s just now realizing Republicans put the Abramoff-Norquist era behind them years ago. Three-fourths of Republican pledge signers and groups like the Club for Growth, Koch Industries, Americans for Prosperity, the National Taxpayers Union, and more, all rebuked Grover’s embarrassing defense of the ethanol earmark and gave no credence to his phony cover vote.”
Hart’s statement is a bit too personal and a bit too harsh. Former lobbyist Jack Abramoff is currently in a Baltimore halfway house serving time for his conspiracy, fraud and tax evasion convictions. But, while Norquist did do business with Abramoff over many years, he was never indicted.
That said, the way ATR’s pledge is structured definitely contributes to a business model that allows the Abramoffs of the world to thrive. It frees Republicans to buckle under lobbyist pressure and vote for any new tax subsidy, but then punishes them for trying to close any later.
The results on our tax code are clear. Since President Reagan’s 1986 tax reform, Congress has passed 14,400 amendments to the U.S. tax code, which now contains 3.8 million words.
According to the Laffer Center, U.S. taxpayers pay $431.1 billion a year just complying with the current income tax system.
The only winners from a 3.8 million-word tax code are big businesses who can pay lawyer-lobbyists millions of dollars for advice on how to turn the tax system into a competitive advantage over smaller firms.
Our complex tax code has become a weapon industry incumbents use to keep out new competitors. Since the vast majority of new jobs coming out of a recession are usually created by small businesses, the code’s complexity has become a hindrance on economic growth.
Lower taxes will always be the bread and butter of Republican policy. But for too long, a single-minded focus on lowering rates and revenues has locked the party into abetting bad public policy.
But that is changing. House Budget Committee Chairman Paul Ryan, R-Wis., has repeatedly stressed that his Path to Prosperity plan doesn’t cut taxes, but is “revenue neutral.”
Instead of selling tax revenue cuts, Ryan sells his plan as “a flatter system, a fairer system, a simpler system, one that is more internationally competitive.”
The Republican presidential field would be well advised to follow the lead of Ryan and Coburn. Or, even better, hopefully one of them will enter the race.
Conn Carroll is a senior editorial writer for The Washington Examiner. He can be reached at [email protected].
