The Politics of Good Tax Policy-You've Got to Tell the Voters All About it

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The U.S. economy has sustained several severe “shocks” over the past three years. The burst of the stock market bubble, the corporate accounting scandals, the economic malaise in Europe and Japan, the aftermath of the September 11th attacks, and war in both Afghanistan and Iraq have each placed a significant drag on economic growth. Yet, the American economy has emerged from one of the mildest recessions on record and returned to steady and sustainable economic growth. Unlike the 1970s, when the “oil shocks” led quickly to “stagflation,” this time around America has benefited from solid economic policies from the federal government. Most importantly, tax rates have been lowered, first in 2001 and then again earlier this year.

These pro-growth measures — the largest and third largest tax cuts in American history — have helped offset the severe economic shocks, and more importantly will provide real incentives for growth over the next several years. The tax cuts have only just begun to take full effect. American families will see their take-home pay continue to increase and businesses will enjoy increased incentives for investment. Increased economic growth and job creation will follow as a result of keeping people’s money in the private economy.

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To date, the media discussion about the tax cuts has been solely about politics and numbers. The legislative process, which political party “won” and is the tax cut $350 billion or $375 billion over five years — that’s all official Washington can talk about when it comes to debating tax policy.

Fortunately, the American people fundamentally do not care about the “political buzz” around tax cuts. The American people care about how tax policies impact their families. As a result, most Americans do not know much about the tax cuts because they haven’t been provided any information that a family might find useful.

Citizens for a Sound Economy (CSE) decided to find out what the American people actually think about the tax cuts. CSE commissioned the Tarrance Group to conduct our third poll of the year on voter attitudes toward the economy and economic policy. Tarrance interviewed 1,000 registered voters nationwide. The interviews were conducted on July 20-22, 2003. The results were fascinating.

The Tarrance Group found, “With the media focus on the war on terrorism and the war in Iraq, along with the Congressional debate over the amount of tax relief and not the specifics of the plan, awareness of the plan is at forty-one percent. However, once people hear the specifics of the plan, they overwhelmingly support it.” For example, 76 percent of voters approve of making the tax cuts effective immediately, as Congress just did with the second round of tax cuts. 75 percent approve of eliminating the marriage penalty now, instead of waiting until 2009, as was done in the original Bush tax cut. 86 percent approve of immediately increasing the child tax credit to $1,000. As America enters the political season, the rhetoric blasting the Bush economic record is certain to heat-up. At this point, the main focus of the Democratic presidential candidates seems to be the two major tax cuts passed by the Congress and signed by the President in 2001 and 2003. While this rhetoric might appeal to a small portion of the extreme Left, most American voters want to know how the tax cuts actually impact their family. And once they know the facts, the voters overwhelmingly approve of the tax cuts and their support for the president’s economic policies increases 17 percent.

In other words, bring on the debate. If those who want to grow government want to talk about tax cuts, then tell the American people specifically which part of the tax cut do you plan to repeal? Because each specific element of the tax cuts has broad support from the voters. Do you want to raise taxes? The voters reject that idea. In the CSE poll Tarrance asked, “Do you favor or oppose raising taxes in order to ensure that important programs such as education and health care are not cut?” While this question is asked in the fairest possible way for those who would like to see support for tax increases, voters rejected the idea 52 percent to 44 percent.

Those of us in and outside of government who supported the good tax policy of the past three years need to do a better job of describing what has been accomplished. We do not have to explain economic theory or discuss the intricacies of the legislative process, or federal budget law. Instead, we need to explain to voters how the tax cut impacts their family. That’s all the people really want to know, and when they hear that information they overwhelmingly support what has been accomplished.

Finally, there is plenty more to do to bring fairness to our tax system. The tax code remains too complicated and special interests have carved out too many special deals for themselves. Our poll shows support for fundamental tax reform remains strong. The voters also continue to support the full and permanent repeal of the Death Tax. As voters in Democracy tend to do, they’ll ask what have you done for me lately. The answer is to give them the specifics and tell them what you plan to do next — continue to deliver fundamental reform of our tax code.

”’Dick Armey is the co-chairman of Citizens for a Sound Economy, a think tank based in Washington, DC., which believes individual liberty and the freedom to compete increases consumer choices and provides individuals with the greatest control over what they own and earn. See its Web site at:”’ https://www.cse.org

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