Grover Norquist has devoted himself full time for over 30 years to thinking about how to limit, and then reverse, the explosion of taxation in America in the twentieth century and beyond. He is quite a treasure for our nation, because Grover has a very powerful mind to devote to this cause, as evidenced by his education as an honors graduate of Harvard College, where I first met him, and Harvard Business School.
The wisdom Grover has developed over the years fighting for this cause is collected in his latest book, End the IRS, Before It Ends U$: How to Restore a Low Tax, High Growth, Wealthy America. Grover first explains how America went wrong: “Over my many years of fighting big government and its apologists I have begun to see patterns, old tricks that politicians employ over and over again to fool Americans into agreeing to higher taxes.”
One trick that we are likely to see more discussion of soon will be yet another effort to raise taxes as part of a budget deal to reduce the deficit and federal debt. But in any such deal, the taxes are real, and permanent. The spending cuts are promised, and never happen.
The Democrats tricked President Reagan himself into falling for this, in the 1982 budget deal, where they promised him three dollars of spending cuts for every dollar of tax increases. President Reagan signed the bill that year to raise taxes. He used to say in the years that followed, “I’m still waiting for those spending cuts.”
But President George H.W. Bush would not learn from this experience. He agreed to another tax increase deal in 1990 that was supposedly going to balance the budget. But the tax increase caused a recession, which made the deficit increase after the budget deal, from $221 billion in 1990, to $269 billion in 1991, to $290 billion in 1992, when voters justly booted him out of office for violating the “Read my lips, no new taxes” pledge that got him elected.
As Grover explains, the right strategy is to “focus on spending as a percentage of the economy, not the deficit.” He adds, “Step one is always to focus on the right metric. If we wish to keep an eye on government spending, if we wish to limit and reduce government spending, we should then measure and focus on government spending.”
Grover provides definitions. “Spending is how much money the government spends. The deficit is the difference between how much money the government takes in taxes this year and how much it spends this year.” Two different things.
In fact, the deficit can never be reduced through any deal that raises taxes. The tax increase reduces economic growth, and that increases rather than reduces the deficit, as President Bush proved by bad example.
There is only one way to reduce the deficit, and the explosion of debt, and that is to do what Newt Gingrich led Congress to do in the 1990s. First, cut taxes, to get the economy booming again. Two, restrain the growth of spending to less than the growth in the economy, and let tax revenues surge past spending with the economy. The result was that $200 billion annual federal deficits, which had prevailed for over 15 years, were transformed into surpluses by 1998, peaking at $236 billion by 2000.
Now Grover is pursuing, through his organization Americans for Tax Reform, a “Fifty in 2050” campaign to repeal state income taxes in all 50 states by 2050. Already, nine states survive perfectly well without state income taxes, including big states Texas and Florida, medium states Tennessee and Washington, and smaller states New Hampshire, Nevada, South Dakota, Wyoming, and Alaska.
As Grover explains, “At a minimum, success will help us end the little state versions of the IRS that each state must now maintain in order to collect a state income tax. And as each additional state phases out its income tax, we begin to make the case that perhaps the federal government could also get along without a national income tax run by the IRS.”
That has already begun, with two states, Kansas and North Carolina, having cut their income tax rates to boost economic growth, and state spending caps, to limit the growth in spending. The spending savings each year resulting from the cap on growth will then be devoted to reducing tax rates further every year, until the tax rates reach zero.
Now that’s tax reform all Americans can be for.