Read my lips: I'll raise your taxes -- a lot. Thus, paraphrased only slightly, speaks George W. Bush to Middle America. Yet many of his intended middle-class victims don't seem to hold it against him. Or perhaps they haven't been listening hard enough.
In his speech at the Republican convention, Bush called for a “simpler, fairer pro-growth [tax] system” and promised to “lead a bipartisan effort to reform and simplify the federal tax code” if he's re-elected. Noble sentiments to be sure. Heck, I've devoted my career to exactly those goals. But anyone who's been paying attention knows that when Bush says “fairer,” he means cutting taxes on the rich. When he says “simpler,” he means cutting taxes on the rich. And when he invokes economic growth, well, he means tax cuts not just for rich people but for corporations, too.
This time around, however, Bush says that he doesn't plan to put his tax cuts for the wealthy on the national credit card. A senior administration official told The Washington Post after the convention that Bush will insist that his tax-overhaul plan be “revenue neutral,” that is, that it will raise just as much money as current law. So inasmuch as he succeeds in cutting taxes on the rich even further, Bush promises to raise taxes on everyone else.
Bush and his aides have dropped hints about the specific kinds of tax changes he wants to pursue. Speaking at an “Ask President Bush” event in Florida in August, Bush called the replacement of most federal taxes with a national sales tax “an interesting idea that we ought to explore seriously.” At another such campaign forum in Ohio in September, Bush called scrapping personal and corporate income taxes in favor of a flat-rate wage tax “certainly one option.” Explaining why Bush believes that both a flat tax and a national sales tax deserve consideration, aides emphasize that the president likes that such plans would essentially make interest, dividends, profits, and capital gains tax-free.
Of course, exempting most of the income of the wealthy from taxes and dropping graduated rates in favor of a single tax rate has to be a huge cut for the rich. Because Bush promises no net revenue loss, how much more will everybody else have to pay? My organization ran the numbers on a national sales-tax bill introduced in Congress -- the idea Bush found “interesting” -- and found that it would saddle middle- and low-income families with average tax increases of $3,000 to $4,000 a year. We've done studies of the effects of a flat-rate wage tax, too, with similarly frightening results.
If you don't want to believe me, listen to what Bush's own Treasury Department had to say in a 2002 memo about switching to a flat-rate wage tax or sales tax. Such change “would necessarily reduce the tax burden on high-income individuals” and would be “unlikely to result in a tax as progressive as the current tax system.” Or, if you'd like something even more straightforward, listen to the original authors of The Flat Tax (an idea later promoted less honestly by Dick Armey and Steve Forbes), who admitted: “Now for some bad news. ... [I]t is an obvious mathematical law that lower taxes on the successful will have to be made up by higher taxes on average people.”
You'd think it might be a political liability to threaten to raise most people's taxes. Yet the presidential candidate most loudly charging his opponent with a plan to boost middle-class taxes is, well, Bush! At the GOP convention, Bush claimed that Kerry “is running on a platform of increasing taxes” on everyone, adding with no apparent sense of irony, “That's the kind of promise a politician usually keeps.”
Bush says Kerry's budget numbers don't add up absent either higher middle-class taxes or fewer new programs than Kerry has proposed. But Kerry actually proposes only to scale back Bush's tax cuts for the very rich. In contrast, Kerry has explicitly (albeit perhaps foolishly) ruled out raising taxes on 98 percent of Americans, and says he'll curb his spending plans if necessary to meet his budget goals.
It's easy to laugh at Bush for charging Kerry with harboring a “hidden” middle-class tax-increase plan, even as Bush makes such a proposal openly. But it may be no laughing matter. The last time Bush promised an irresponsible, unfair tax program during a campaign, it was enacted.
Robert S. McIntyre is the director of Citizens for Tax Justice.