I agree with much of this piece by David Frum, but when he falls off the rails he really falls off the rails:
Give me a hammer and a church-house door, and I’d post these theses for modern Republicans…
5) We can collect more revenue without raising tax rates.
Republicans stand for low taxes to encourage people to work, save and invest. But how would it discourage work if we reduced the mortgage-interest deduction again?
Even if I agreed it wouldn’t discourage work, what about the “save” and “invest” portions of the statement. Why did they all of a sudden disappear from the equation?
Did it hurt the economy when we reduced the maximum eligible loan to $1 million back in 1986?
I don’t know. Why not link to a study confirming that it didn’t. For all we know maybe it did have a negative impact. I hate it when people make rhetorical questions out of ones that are subject to empirical answers…like Frum does again in the very next sentence.
Do Canadians and Brits — who lack the deduction — work less hard than Americans?
Why, as a matter of fact they do. According to the Organisation of Economic Co-operation and Development Americans work 8 more work days than Canadians and 16 more days than Brits. Additionally, Americans rank 4th in productivity while the UK and Canada rank 11th and 14th respectively. Any other empirical questions you want to ask? (Please note: I am not saying this difference between American and other workers is due to the mortgage-interest deduction. I’m merely pointing out that the difference exists where Frum claims it doesn’t.)
Wouldn’t higher taxes on energy encourage conservation? Who decided to allow inflation to corrode federal alcohol taxes by 80% over the past 50 years?
Wait a second, how are raising taxes on energy and alcohol an example of raising revenue without raising taxes?
But even then I’m calling BS on the numbers Frum is using when it comes to the alcohol tax. The rate 50 years ago was first established in 1951 at $10.50 per gallon. This rate was increased from a $9 per gallon rate established during World War II. (The federal tax on distilled spirits went from $2 per gallon in 1938 to $9 per gallon in 1944.) In 2010 dollars the World War II rate would be the equivalent of $110 per gallon (or about $22 for each 750ml bottle in Federal tax alone.) The 1951 rate would work out to $87 per gallon (or about $17.40 per 750ml bottle.) Is Frum advocating we should, as a matter of course, be taxed routinely at nearly the same level as during World War II? Nonsense. Nonsense on stilts.
Now, if someone wanted to adjust the tax to be in line with the last time it was raised (in 1991), which would mean taking it from the present $13.50 per gallon to $21 (i.e. from $2.70 to $4.20 per 750ml bottle), I could see a rationale. This is particularly so as such a number would be in line with what we have historically taxed alcohol at when we didn’t have a world war ongoing. Even during the American Civil War when the spirits tax was raised 1000% between 1862 and 1865, the resulting tax would only amount to $28 per gallon in today’s dollars. It says something about the change in this country that after the Civil War ended the emergency tax rate was dropped and alcohol taxes dropped from $2 per gallon to 50 cents (about $8.09 in 2010 dollars.) After World War II the “crisis” rate was kept.
So, while I agree with Frum on many particulars, this cavalier attitude about other people’s money is really grating. It is one of the main reasons so many people are distrustful of “mainstream” Republicans these days as being no different than most Democrats when it comes to big government.