Tax Increases for Republicans

In 2012 the Republican Party had two serious presidential primary candidates willing to call for the kind of cuts necessary to balance the budget without raising taxes. Both were soundly rejected. One was driven out of the party and the other was denied the right to speak at the convention.

Fair enough. It’s time for Republicans to admit what they want and call for higher taxes. That is, except for those Republican who forward to hyperinflation so they can cash in their hoard of gold coins.

Ah! But what about the Wrath of Grover? And how about Starve the Beast? Won’t the Democrats vote for more Big Government programs if they get the money?

Fear not! I have some very Republican friendly tax increases for you to consider. You can tax liberals, terrorists, and illegal aliens. You can close loopholes which currently encourage Big Government at the state and local level. Follow my advice and the pretty soon the Democrats will become the party of smaller government. Read on:

1. Eliminate the federal deduction for state and local taxes. Why should Blue Staters pay less income tax just because they voted for Big Government at home? If you want a monorail to the mall or a municipal golf course instead of joining a country club, so be it, but why do you deserve a tax deduction at the federal level? How do these things deliver the mail or defend the nation? Scrap this deduction and taxpayers will pay more attention to what their state and local politicians are doing. (Since I first wrote this list the Republicans did at least cap the tax deduction for state and local taxes – and the Democrats are whining. Way to go!)

2. Make municipal bonds taxable. Why should a private developer pay full interest rates while a public-private partnership gets a discount? This is a prescription for Kelo-style property seizures. Fight eminent domain abuse by making it more expensive. And how about putting private parks, private golf courses, and private schools on a more equal footing?

3. Tax old copyrights. They’re rich. They’re beautiful. And they want to pay more taxes. We should oblige them. It’s time to fight liberal guilt! Assess a special tax aimed at Hollywood idols and rock stars: a property tax on copyrights. You want it protected more than a few decades, you pay for it. Otherwise it goes into the public domain. I’ll post details in a future article, but here is the gist. Let copyright owners assess what they think their copyright is worth and the government collects a small annual percentage based on that assessment.

If the copylefters at Reddit, Slashdot or elsewhere think the assessment is too low, they can pay the copyright holder the self-assessed value and the work goes into the public domain. Or, if an investor thinks the value is set really low, he can pay double and own the copyright.

4. A big tariff on OPEC oil. They’re rich. They hate Israel. And they think our beautiful Hollywood starlets are a bunch of whores. Let’s tax them. And even if they weren’t funding terrorists or beating women for the crime of being raped, the fact is that the Persian Gulf oil states owe us hundreds of billions for protecting them from Saddam Hussein. It’s time for them to fork it over. We can tax the commies in Venezuela and Nigerian spammers while we are at it. And think of the windfall for Texas. This will make Red State government look real good.

I know some of you are thinking: “But what about the SUV driving soccer moms?” This could be a problem. But keep in mind that the kids riding in the back of those SUVs have been brainwashed by PBS to worry about rainforests and global warming. Take credit for fighting global warming and the kids will be on your side. Not only that, some of those kids have already reached voting age. Imagine the Republican candidates getting votes from people under 40. You might find this useful.

5. Tax the Internet. Who is more Republican: Silicon Valley or your local Chamber of Commerce? It’s no competition. Save local businesses and block stores; make pay its fair share in taxes. States and localities provide streets and sidewalks. The federal government (Al Gore in particular) created the Internet. It’s time to pay up.

Actually, sales taxes pay for more than the infrastructure used by local stores. Sales taxes are also taxes on the customers who shop at those stores, to pay for state and local government. When shoppers browse local stores and then buy a lower price on the Internet, they are shirking taxes for schools and other services in their community.

We could use the idea of a national sales tax to enhance federalism. Internet (and catalog) retailers could have the choice whether to collect state sales tax or federal sales tax. If the former, the transaction falls purely under state law. If the latter, it falls purely under federal law. We could have a bit of competitive government.

6. Tax immigrants. Think of the United States as a giant country club. We are giving away memberships at the same time the club is going broke. We could be selling memberships instead of operating our broken quota system. Our wonderful way of life is our most popular export – people are literally dying for it – and we aren’t charging any money. Not only could we fill the Treasury with much needed cash, those who can afford to buy citizenship are much more likely to vote Republican. Hint. Hint.

You could tax those who enter illegally instead of granting amnesty or creating a human rights nightmare of a roundup. Increase the income tax rate at the low end so everyone pays significant withholding. Then grant a citizen dividend for all adult citizens to replace the bottom low bracket and personal exemption. If it still pays the illegals to stay in the country, so be it. They are now paying for the privilege.

7. Raise tariffs. Once upon a time the federal government was funded almost entirely from tariffs and excises. This was excessive. Today, tariffs and excises comprise less than 6% of federal revenues. We have overreacted to the damage of Smoot Hawley. We are still running the anti-protectionist policy needed after World War II to keep the free world from going communist. Today, this policy benefits nominally communist China. Some rebalancing is in order. Had Republicans taken a more traditionally Republican policy on tariffs, Romney might have been able to win Ohio, and maybe some other Rust Belt states. Think about it.

And come back later when I have written some deeper economic analysis on tariffs vs. income taxes. I’ll also present a way to eliminate complicated tariff schedules. Stay tuned.