“And on the tax front, it’s time for rich people like me to pay more.” As some may know, but exponentially fewer than he surely hoped, that’s what 2012 Republican presidential candidate Mitt Romney wrote recently in the New York Times.
Romney seemingly missed that “Rich Republican apostasy on taxes” is nothing new. Paraphrasing Romney being criticized by Barack Obama, “the 1980s called and they want their cheap political stunts back.”
Unfortunately, Republicans and conservatives are slower than Romney in picking up on just how desperately yesterday Romney’s op-ed was. As one conservative editorial sadly put it in response, “The first point to make is that if Mr. Romney wants to pay more taxes, by all means go ahead.” It’s how conservatives always respond, and that’s too bad. It’s been the long-term norm among Republicans to tell the limousine rich on either side to pay more to the U.S. Treasury if they would like to. Unknown is why.
Seemingly lost on Romney’s various well-intentioned but mis-guided critics is that a tax on Romney, Elon Musk, or Tom Steyer is a tax on all of us. Hard as the latter is to process given the latent Keynes that resides inside the heads of so many rhetorically right-leaning types, government spending is really and truly harmful, and certainly a huge weight on economic growth. Seriously, it is.
Governments don’t just sit and stare lovingly at the dollars they vacuum up in taxes, rather every dollar taken in by the U.S. Treasury is an extra dollar of power that politicians have to substitute their narrow knowledge for that of the marketplace. Yes, central planning is honestly brutal.
So, when conservatives meet tired gimmickry with tired sarcasm, they help no one. Really, what if Romney decides to follow their advice such that Treasury has millions more to spend? No one gains from this, and conservatives should understand why.
Which brings us to the next problem with the always and everywhere response by conservatives to deep-pocketed economic ignoramuses eager to pay more taxes. Those who tell the rich and self-serious to “go ahead” and pay more taxes defend their stance with talk of budget deficits and debt. They claim that extra funds are necessary to pay down the debt. The thinking is nonsensical.
As The Deficit Delusion reminds readers with great frequency, government debt like all debt is an effect of market confidence about the present and future incomings of the borrower. This statement of the obvious has long eluded left, right, libertarian, and supply side, all who believe the path to reduced debt is more tax revenue for the borrowing entity, but for the half awake it’s tautological.
Thought of with Mitt Romney top of mind, and with it understood that rich people like Romney are the source of a substantial majority of federal revenue collections, Treasury has $38 trillion worth of debt precisely because the rich have long been overtaxed. Again, debt is an effect of trust in the future incomings of the borrower.
Which means if Romney and his critics really want Treasury to have less debt, they should be encouraging not just tax cuts for him and his ilk, but that they pay as little in taxes as they possibly can now, and in the future. In other words, the U.S. has a debt “problem” precisely because Romney and his critics haven’t a faint clue why there’s so much debt in the first place.
Originally published in Real Clear Markets.
