Budget stalemate: Why America won't raise taxes
Budget stalemate has many on Capitol Hill crunching numbers. With any new budget, taxes may be the real third rail of politics. Can the U.S. solve its fiscal woes without more revenue?
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The average voter cut some $145 billion in spending, with Democrats actually cutting more than Republicans. And 91 percent of respondents – including 77 percent of Republicans and 66 percent of self-identified tea partyers – chose to raise taxes by an average of $292 billion.Skip to next paragraph
"Congress has gotten itself in a position where they feel various pressures, primarily from organized groups, and their tendency is to assume that the totality of organized groups is representative of the public as a whole – and that's a big mistake," says Kull. "The average person is not wedded to any particular position."
Indeed, some say Americans have never been as opposed to taxes as the national mythology would suggest. "We've got remarkably high compliance rates," says Mr. Thorndike of the Tax History Project. "You might just as well marvel that Americans have been as willing as they are to pay taxes."
At the Boston Tea Party, after all, colonists weren't refusing to be taxed on principle – they were rebelling against taxation without representation. If there's one overarching tax attitude that has always resonated with the public, it's fairness.
Americans are generally willing to pay into the system as long as they feel it is working for them and that everyone else is also paying their fair share. It's when they sense others are scamming the system, or finding ways around it, that trust – and tolerance for taxation – evaporates.
In the past, politicians have effectively used this argument to push for tax reform and to raise new revenue. President Franklin Roosevelt was a master at this, defending a series of tax increases, largely on the rich, in the name of battling tax avoiders. Reagan also relied on a sense of public outrage when selling his 1986 tax reform bill.
That bill – which eliminated loopholes and deductions, broadening the tax base while also lowering rates – was similar in some ways to the tax proposals recently offered by the Deficit-Reduction Commission, and now being considered by the Gang of Six in the Senate.
Still, unless the changes come in a "revenue neutral" package, as in 1986, it's hard to see how they would pass the GOP-controlled House. And Democrats and many independent analysts say a package without more tax revenue won't do enough to solve the deficit problem this time.
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America has faced serious fiscal challenges before. But what makes this situation unusual is both the scope of the problem – historic deficits and debt levels, which are only projected to worsen as the Baby Boom generation ages – and the fact that it is happening at a time when political resistance to raising taxes appears stronger than ever.
As a result, the country may be about to embark on its grandest test yet of a bedrock conservative principle – the idea that nation's wildly unbalanced bank account can be fixed largely by spending cuts alone.
If successful, it could lead to a wholesale change in the size and function of government. If not, it could lead to fiscal peril – and perhaps another revolt at the ballot box.
IN PICTURES: Why America won't raise taxes