Some Actually Learn From The Past
Kimberley Strassel devotes her weekly column in the Opinion Journal to taxes, class warfare and the unusual position some Democrats find themselves in. It makes for some interesting reading.
Back in the hot summer of 1990, Senate Majority Leader George Mitchell proudly engineered the infamous "luxury tax," a nasty little tithe on everything from furs to jewelry to yachts. Democrats were proud: Not only were they throwing new dollars at the Treasury, they'd done it by socking it to the rich. The wealthy, in the words of then-House Majority Leader Dick Gephardt, would finally pay "their fair share."
Within a year, Mr. Mitchell was back in the Senate passionately demanding an end to the same dreaded luxury tax. The levy had devastated his home state of Maine's boat-building business, throwing yard workers, managers and salesmen out of jobs. The luxury tax was repealed by 1993, though by the look of today's tax debate, its lessons haven't been forgotten. Top Democrats are working to implement a new class-warfare tax strategy, only this time they're getting pushback from those in their party who fear the economic consequences.
There are any number of tax increase schemes being bandied about to tax the rich - or the unloved industries. But some of the Democrats in Congress remember the example that Mitchell set. Taxes on the "rich" have a nasty way of coming back on everyone. Strassel notes several proposals that are being balked by Democrats worried about the fallout of those targeted taxes.
Witness the pushback. Class warrior Sander Levin from Michigan introduced House legislation levying higher taxes on hedge fund and private equity managers' earnings back in June. It took until the end of July for Senate Democrats to start publicly trouncing the idea. Washington's Maria Cantwell worried the tax would hurt returns for her state's public pension fund, which makes a pretty penny off the back of private equity funds. Others fretted it would drive their private equity companies offshore. As for the almighty Chuck Schumer, patron senator of Wall Street, he declared his opposition to any tax that wasn't also levied on non-finance industries. And since Mr. Schumer is the one doling out money for next year's Senate re-election races, that may well be the end of that tax idea.
Over in the House, tobacco-state Democrats have already taken a scalpel to the Senate's proposed 61-cent federal tax on cigarettes, whittling it down to 45 cents. Even then, 10 Democrats–several hailing from the tobacco havens of North Carolina and Tennessee–voted against the child health-insurance legislation that included the tax. Their defection makes it that much harder for Ms. Pelosi to consider an override of a presidential veto.
Madame Speaker, meanwhile, spent what was by all accounts an unfriendly hour last week trying to coax Democrats from oil-patch states to sign on to her oil-company tax hike. As of yesterday, she hadn't had much luck; Texas's Gene Green and about two dozen other oil-state dissidents were holding firm against the $16 billion tax package leveled directly at their home-state economies. It was unclear whether Ms. Pelosi could even risk bringing her vaunted energy legislation for a vote before August recess. Chief tax writer Charlie Rangel has faced so much in-party blowback to his idea of heavily taxing "the rich" in order to finance an alternative minimum tax fix, he has yet to introduce legislation.
Right now some 2/3 of the enormous Federal budget is already spent on entitlement programs. The class warfare advocates keep up strident rhetoric demanding more taxes on the rich and on "evil" corporations. Some Democrats realize that the consumer always ends up paying those corporate taxes and that class warfare can - no, does is the right word - end up in causing a loss of jobs and a raft of other unintended, negative, consequences.
By mockinbird, Friday, 3 August , 2007 @ 12:13 pm
Amen, Mister Crab.
By FedUp, Friday, 3 August , 2007 @ 2:42 pm
If I ran my househole budget like the government, I’d be in jail! Too bad congress can’t get it - they are spending OUR money and they should be careful stewards of it. Raising taxes only entitles them to spend more. How about… tying congressional pay to a balanced budget… and if they can’t do it, take it out of their pay AND their hides!
Maybe we should stop electing attorneys and make the qualifications be a CPA degree with 10 years of actual service!
By FedUp, Friday, 3 August , 2007 @ 2:42 pm
oops! Household (freudian slip?)