Conservatives Split On Taxes

There is a philosophical split right now between two groups of conservatives. On the one side are those looking to cut the power and scope of government. This group is led by Sen. Tom Coburn (R-Ok), one of the most fiscally responsible conservatives in the Senate. The second group opposes tax increases. This group is led by Grover Norquist, founder of Americans for Tax Reform. Normally, I like and respect both men, but Norquist has gone off the deep end this time.

This issue in question is tax breaks for ethanol. And how this issue arises is that Coburn is looking for ways to cut the budget deficit. One of his proposals involves eliminating the $6 billion a year tax break given to ethanol producers. Eliminating this makes sense in a lot of ways. For one thing, it would add $6 billion a year in revenues should they continue making ethanol. Secondly, if it does stop or slow the production of ethanol, that would be good for the environment, good for food prices, and good for our energy policy as corn-based ethanol takes as much energy to produce as it creates when it’s used. Republicans (and some right-thinking Democrats) have been trying to scrap this for years.

So who could object? Grover Norquist. Why? Because he sees this as a tax increase. Norquist is arguing that this would result in a $6 billion a year tax increase on ethanol producers and therefore would break Republican pledges not to raise taxes.

This is wrong on several levels. First, Norquist is wrong to defend specialize deductions within the tax code. These deductions are most often sops to interest groups and are corrosive to democracy, just as the left’s attempt to create a progressive tax code is corrosive. All citizens should be treated equally. If they aren’t, then the government begins to lose its legitimacy.

Moreover, even if this wasn’t purely a sop, this is an attempt at social engineering by the government. The government should not be in the business of picking one form of energy over another. By doing so, it distorts the private market, which misallocates resources and hinders the natural scientific and economic development of our economy. In other words, so long as ethanol is made artificially cheap compared to other forms of energy, people will invest less in the production of better forms of energy. Also, these tax breaks have been sufficient to result in food being diverted from consumers to producers of ethanol, which has artificially increased the costs of food.

Further, if Norquist’s real goal is to decrease taxes, then allowing these carve-outs to special interests to continue will only further entrench the opposition to correcting the tax code or replacing the tax code. Even now, when we talk about flattening the code or replacing it, a chorus of voices rises up demanding that their own carve-outs continue. That’s how the government makes its citizens dependent upon it.

Also, in this instance, Norquist’s stance runs counter to the conservative interests of smaller, fairer government. Sometimes you need to accept things like the elimination of these deductions or spending cuts in favored programs to get an overall better structure for the country. If we don’t accept this, then we will never be able to cut any corporate welfare, any distorting deductions, or even raise taxes on those who don’t currently pay tax (which should be a conservative goal -- everyone needs to pay if we are to kill the idea that the government can give something for nothing).

Finally, in this instance, Norquist is making matters worse by making deceitful ad hominem attacks on Coburn: "Coburn said on national TV today that he lied his way into office and will vote to raise taxes if he damn well feels like it. . ." This is never appropriate for conservatives.

It’s time to think strategically and not lose the war through tactical intransigence.