You know things are looking up when Grover Norquist is catching flack for being soft on tax hikes. In a surreal exchange between the GOP's Martinet of Fiscal Conformity and the Georgia Tea Party Patriots, Norquist has emerged as a champion of creeping socialism. How exactly did this paragon of conservative virtue stray from the path of reactionary righteousness? Well, it seems that he embraced a radical redistribution of wealth from the well-heeled, lobbyist-hiring, plutocratic minority of Georgians to the unwashed masses of regular folks who actually work for a living.
But I'm getting ahead of myself. First, let's consider Georgia's initial effort to craft a tax reform program earlier this year. Grover trashed it for its unfortunate tendency to raise a little money by closing egregious loopholes -- even though the plan also lowered marginal rates, usually the sine qua non of good (conservative) tax reform. As he explained his opposition:
The good parts of the reform package -- reductions in marginal tax rates -- are more than offset by base-broadening tax hikes. This is the Ted Kennedy school of "tax reform": providing rhetorical cover for the growth of government. In a meeting with A.D. Frazier and others invested in tax reform for Georgia, I urged the council to adhere to the Ronald Reagan school: reducing marginal rates in a way that is at least revenue neutral, if not a pro-growth net tax cut. Tax reform does not require raising taxes.
In other words, Norquist simply says that closing a loophole -- any loophole, no matter how egregious or repugnant to standards of common decency -- is fine if it's "paid for" with some other tax reduction. Another egregious loophole would do the trick, since losing revenue is the only measure of acceptability in Grover's world. But so would a nice, fat, across-the-board rate cut.
(Just for a second, by the way, let's consider the ridiculous notion that you "pay for" new revenue by giving up existing revenue somewhere else. In my house, we call that nonsense. Wife: "Hey Honey, great news: I got a 10 percent raise from my boss today. Me: Awesome, sweetie. I'll schedule a meeting with HR to ask for a 20 percent pay cut tomorrow -- don't want those credit card bills to start shrinking, do we!)
Grover's hectoring produced results. Under pressure to keep the state budgets in dire fiscal straits, Georgia leaders revised their tax program to eliminate any extra revenue thrown off by loophole reductions carried out in the name of fairness, efficiency, or fiscal responsibility. (God knows, don't want to sully tax reform with any claim to fairness or efficiency.) According to Georgia Democrats (and as explained by ajc.com's Jim Galloway), the new plan features a 25 percent rate cut on individual incomes, but it also imposes a cap on itemized deductions that would slightly increase taxes for anyone earning between $20,000 and $180,000 a year.
Taken as a whole, this revised plan pleased Norquist:
The new proposal brings Georgia's personal income tax down from 6 percent to 4.5 percent while taxing casual sales, auto repairs and communications. It also adds a $163 million tax exemption for energy. The new bill achieves revenue neutrality by eliminating some of the largest and most harmful tax hikes from its initial language, including tax increases on groceries and tobacco, both of which would have hit Georgia's small business community.
So there you are: Grover nudged the lefty Republicans plotting down South into technical conformity with his no-tax pledge. Good for him. Conservatives around the country should now rejoice in his triumph: Good 'ol "Drown the Government in a bathtub" Norquist has once again engineered the victory of starve-the-beast orthodoxy over fiscally responsible apostasy.
But here's the odd thing: Down in Georgia, they're not happy. At least not in the offices of the Tea Party Patriots, where they reject Norquist's reasoning and cast the reform plan as a quasi-socialist experiment in levelling and social engineering. Here's their statement as reported by ajc.com:
One can not just look at the tax rate cut, one has to look at the deductions/exemptions that are slashed and, in many cases, removed in this bill. Taxes will be raised for some and will be cut for others. In other words, this bill re-distributes wealth.
Apparently, strict revenue neutrality is not enough for Peach State Tea Partiers. (Do they like Peach Tea, I wonder, or just regular old Earl Grey, Darjeeling, or Formosa Oolong?) To meet with Tea Party approval, you need not simply revenue neutrality (or even better, revenue loss). You also have to keep existing tax distributions precisely unchanged. Because after all, we know that today's tax system is definitely the best imaginable system in the world, replete with scrupulously fair distributions of the tax burden.
As Dr. Pangloss might have said (were he a Tea Partier), we live in the best of all possible (tax) worlds. Let's not change a thing.