Republicans Should Squash Tax Hike Talk

National Review Online

Tuesday, April 01, 2025

 

If this is a trial balloon, it doesn’t even deserve to achieve enough altitude to get properly shot down.

 

Axios cited an unnamed senior White House official as saying that the administration was considering allowing taxes to go up on higher-income earners to help offset the revenue loss of fulfilling his campaign promise of no taxes on tips. It would be tempting to dismiss this as a one-off, but Ohio’s freshman senator, Jon Husted, went on CNBC on Monday and said he would be open to allowing taxes on “the wealthiest Americans” to go up “so that we can benefit working class Americans.”

 

For nearly 50 years now, Republicans have been known as the party that cuts Americans’ taxes — with just one notable exception to the rule. In 1988, while running to succeed Ronald Reagan, George H. W. Bush vowed, “Read my lips, no new taxes.” Two years later, though, Bush caved to the Democrat-run Congress and consented to a series of increases that came to haunt his term. In 1992, Bush paid the price for this reversal. First, Bush attracted a primary challenger (Pat Buchanan). Then, he lost the White House to Bill Clinton. Since that year, Republicans have known better than to repeat Bush’s disastrous mistake.

 

Donald Trump has made similarly absolute statements on taxation as did George H. W. Bush. On the campaign trail last year, Trump frequently promised the audience that “you’re all getting a tax cut,” swore that “our plan will massively cut taxes,” and reminded voters that, the last time he was in office, “I gave you the best tax cut in history.” This habit continued after he had been sworn in for a second term. During his address to Congress in March, Trump repeated his call for “tax cuts for everybody,” before proposing that the law he signed in 2017 had “got me high marks on the economy.” In this, Trump was correct. As last year’s election-season polling made abundantly clear, America’s voters look back fondly on the strong economy of 2019 — an economy that was largely the product of the tax bill Trump spearheaded, as well as of the “two-for-one” deregulatory approach that he took in his first term. If Trump wishes to help deliver a vibrant economy once again, he ought to make good on his word and work with Congress to renew the 2017 law in full.

 

Naturally, there is no way of reconciling Trump’s vow to provide “tax cuts for everyone” with a bill that raises taxes on some. But, politics aside, raising taxes on high earners (which would also hit small business owners who file as individuals) is a bad idea in and of itself — especially when the change is being combined with the prosecution of a disruptive, price-inflating trade war. The ideal tax system is one that is simple, that is broad-based, and that leaves the field free for prodigious economic growth. Declining to tax tips or overtime or Social Security benefits, compared with reforms of the type that Trump presided over in 2017, are little more than gimmicks. (In the case of the Social Security proposal, it would make one of America’s biggest budgetary problems worse.) If, as may be the case, there is room in the budget for only one approach, it ought to be the one that expands the economy for everyone rather than the one that rewards a handful of arbitrarily chosen constituencies. Absent the political imperative to please, there is no economic case for the latter course.

 

That this change is reportedly being considered when Republicans hold a trifecta makes the whole thing more astonishing. Republicans would use one of their few shots at bypassing the filibuster to deliver a policy that is being desperately sought by the Democrats. How bizarre it would be to watch the GOP take a party-line vote to raise taxes — and to get nothing of consequence in return. One could just about understand the play if Republicans were trading tax increases for serious entitlement reform, as part of some grand bipartisan bargain to fix the federal fisc. But to do it unilaterally would be naïve beyond description. As history shows us, the Democratic Party has a bad habit of regarding whatever are the current rates of taxation and spending as its starting point, and calling for increases in both at all times. If, as is entirely possible, the Democrats return in 2028 with a trifecta of their own, they will pocket the Republicans’ gift and immediately move to raise taxes once again. That is not, we assume, what is meant by “the art of the deal.”

 

Let us hope that the chatter about the prospect of raising marginal rates is just that — idle Washington chatter, of which we can expect to hear lots more as the tax bill gets debated in the coming months. And if that is the case, Trump and Republican leadership in Congress should emphatically state that this report is mistaken, and no such plan to raise taxes is under consideration.

 

The 2017 tax reforms were a great achievement. In one fell swoop, the Republican trifecta lowered taxes, simplified the system, reduced the influence of special interests, discouraged profligacy in the states, and spurred such widespread growth that the electorate concluded that the pre-Covid economy was better than it had been since 1969. It would be an act of immense folly if, instead of ensuring that this achievement endured, the second Trump administration sabotaged it.