The post-election fights on the Right have been fascinating because they reveal unexpected disagreements when it comes to matters of principle — and a real question about what constitutes a matter of principle in the first place.
To wit: Is fighting to keep all marginal tax rates at the same level they have been since 2003 a matter of principle, something no Republicans or conservatives can possibly argue against without losing their ideological compass?
Or is the goal of keeping the top rate at 35 percent rather than letting it rise to 39.6 percent more a matter of sensible policy — something for which Republicans and conservatives are arguing because it would be better for the overall economy after four years of extremely slow growth?
This distinction matters.
It’s one thing to concede you’re going to lose on a matter of policy as the result of a national election; parties lose on policy all the time, and then must regroup. But a party and a movement can’t surrender on a matter of principle without sacrificing their souls.
Everybody agrees there is a moral component to marginal tax rates. Liberals, led by the president, think they are too low not simply because they want more money for government coffers but also because they believe the wealthy should be compelled to sacrifice lucre for the greater good.
Conservatives believe taxes are a seizure of private wealth for public purposes, an activity that should be done sparingly and only as a result of necessity.
Thus, both liberals and conservatives agree taxes are inherently confiscatory. But liberals think the confiscation is inherently just, while conservatives believe it is inherently unjust.
But that doesn’t mean that a 39.6 percent marginal tax rate is inherently unjust, while a 35 percent rate is a more moral one. Is that 4.6-percentage-point overall gain the tipping point to what Mitt Romney called a “government-centered society”?
The case would be easier to make if it were an unprecedented hike. But it’s not; it’s a return to a rate from the mid-1990s, which was cut in 2001 and 2003 because the economy went into recession in early ’01 and was mired in the doldrums in ’03.
As a matter of policy, at a time when economic growth should be the first and last thing on everyone’s mind, increasing the top tax rate is at best economically useless and at worst destructive. We won’t know which until and unless it happens.
But that’s not the argument we’re having. The fight at present is over a looming deadline. Taxes will go up on everyone on Dec. 31 unless Democrats and Republicans pass a new law or set of laws.
As a result, if Republicans stand ground and refuse to agree to raise the top rate, they’ll be assenting to a much larger and more broad-based tax increase.
Of course they are opposed to raising taxes on anyone, and feel as though they’re being held hostage by President Obama’s insistence on letting the top rate rise. Without question, they’re in a terrible fix.
It will be a blow for members of the GOP to concede to any tax-rate increase, especially with the threat of finding themselves challenged in primaries next year by Tea Partiers who’ll use any such vote against them. If they don’t, however, they will be blamed for a fiscal and economic crisis that will have far graver national consequences.
There are clever ways to reduce or limit the damage and fallout. What’s important is that the fix they’re in is a political one. It’s not a matter of first principles.