Two years after President Reagan launched his Second American Revolution in behalf of tax reform, the issue is a will-o'-the-wisp that has degenerated into bickering over rental tuxedos. The debate in the Senate Finance Committee the other day roared over whether tuxedos should be depreciated over three years rather than five. The discussion followed a decision to retain special tax breaks for the oil boys and timber cutters.
That is not the spirit of tax reform. Nor does it have much to do with the first American Revolution. Yet President Reagan insists that tax reform is the domestic issue of the age, and that Americans demand action now.
He was wrong about that last year, and he is wrong about it now. The citizens are not at the barricades on this April 15. Some may grumble at themselves for having procrastinated. They may puzzle over this deduction or that one. But on the whole they pay with remarkably little protest. Nine out of 10 did not wait for April 15 to file.
The President is more convinced than ever of the need for reform because, as he said, he couldn’t understand his own tax return. But most Americans do understand how they are taxed and how much they pay and, yes, even why. As Oliver Wendell Holmes Jr. wrote in 1904: “Taxes are what we pay for civilized society.”
Many Americans may suspect, as is the case, that the President abused the facts again when he said that taxes still take as much of the gross national product as in the 1970s, but that government spending “has soared up and up.” Actually, individual income taxes are a little lower than they were at the end of the 1970s, and corporate income taxes are far lower. Domestic spending this year is slightly less than when Reagan took office.
The soaring is in the defense budget--from 4.7% of GNP in 1979 to 6.3% this year. Chairman Les Aspin (D-Wis.) of the House Armed Services Committee says that the nation may have spent more than a trillion dollars and still not have appreciably improved its military capabilities.
Meanwhile, the federal debt has gone from 33.6% of GNP since Reagan took office to 50.4% this year, and is growing $200 billion more this year. That is the legacy of blank-check defense spending and tax cuts. The Senate knows, corporate America knows and economists know that the budget deficit is the critical domestic problem of the day. They know that real progress toward a balanced budget can be made only with some additional revenue.
Yet the Administration insists that taxes must go down even further, and it refuses to negotiate a budget compromise with its own Republican leaders in the Senate. At the same time, the President demagogues Congress for failing to meet today’s budget resolution deadline.
Reagan misreads the meaning of the first American Revolution, and exaggerates the demand for his self-styled Second American Revolution. Perhaps he would learn from the experience of British leader Charles Townshend in 1767. Townshend proposed a 25% cut in the British income tax and more defense spending, to be financed by duties on the American colonies. Warned not to engage in such folly, Townshend retorted, “I will! I will!”
Today the President proposes the same thing without even the benefit of additional revenue. The experts say that it can’t be done. And the President, through his actions, says, “I will! I will!”