Bruce Bartlett, the VAT, and the Right

February 25, 2010

Comments

In an interview with Pejman Yousefzadeh on why Supply Side Economics has outlived its usefulness and the United States desperately needs a Value Added Tax, former WSJ columnist Bruce Bartlett remarks, “I have yet to find anyone on the right who takes any of my arguments seriously.”

The line happens to be Glenn Reynolds‘ takeaway from the entire interview and it is both amusing and illuminating.

It’s amusing because I picture Bartlett in the role of Zathras. As you may recall, no one listen to poor Zathras. Zathras used to being beat of burden to other people’s needs. Very sad life. Probably have very sad death. But at least there is symmetry.

It’s illuminating because, while he’s left the reservation, Bartlett has pretty solid Movement credentials. In addition to his journalism career, he served in the cabinets of Ronald Reagan and George H.W. Bush and worked for Jack Kemp. Indeed, he helped draft the cornerstone achievement of Supply Side Economics, the Kemp-Roth tax cuts of 1981. Then again, he started his political career working for Ron Paul, so maybe he’s coming full circle.

But, depending on one’s definitions, there are certainly people “on the right” who favor a VAT — including very influential economists like Greg Mankiw and Tyler Cowen. Now, whether they take Bartlett very seriously on the issue is another question.

And while I tend to agree with Bartlett that “There is simply no evidence that tax cuts would do the slightest good under current economic conditions,” he’s not exactly likely to win over opponents when he says, “Those who propose them are simply repeating tired dogma.” That’s not argument, it’s name calling.

13 responses to “Bruce Bartlett, the VAT, and the Right”

Andy

February 25, 2010 at 12:56 pm

After the Bush and Obama tax cuts, close to 40% of tax filers little to no income tax at all and the many in the lowest quintile actually pay a negative rate – ie. they get more money back from the feds than what they pay. So yes, I think tax reductions aren’t likely to do much.
Dave Schuler

February 25, 2010 at 1:08 pm

I suppose it depends on how you define “slightest good”. Tax cuts as fiscal stimulus are believed to have a multiplier effect just as spending is. Certainly Christina Romer, the Obama Administration’s chief economic advisor who has devoted substantial professional effort quantifying the multiplier effect of tax cuts, wouldn’t dispute it.

However, on the broader question of how we right our fiscal ship, I’ll admit to being in a quandary. Is there the slightest evidence that increasing taxes (the thrust of Mr. Bartlett’s plan) will have the slightest effect in the current environment? As long as both political parties are manifestly willing to spend more than the government takes in through revenues, we remain on course for a smash-up regardless of how much revenue is raised.

Just for the record, I think that once the current economic downturn can reasonably be said to be over we should trim entitlements, trim military spending, increase net revenues somewhat, and continue to run a small, sustainable deficit. Unfortunately, that may not be for a long time and the political posturing on both sides of the aisle doesn’t look particularly conducive to solutions of any kind.
Dave

February 25, 2010 at 1:09 pm

I don’t see how refuting someone’s argument as “dogma” is name calling. Name calling is when you call someone names. Argument is when you argue with someone arguments.
James Joyner

February 25, 2010 at 1:19 pm

I don’t see how refuting someone’s argument as “dogma” is name calling. Name calling is when you call someone names. Argument is when you argue with someone arguments.

Saying, “Tax cuts made sense when the top marginal rate was 90% or 70% but they won’t have the same impact now that it’s 38%” is an argument. Or, at least the thesis statement of an argument.

Saying, “People who disagree with me are dogmatic” is name-calling.
Alex Knapp

February 25, 2010 at 1:31 pm

James,

I’d argue that there’s a a difference between “People who disagree with me are dogmatic.”

and

“There is simply no evidence that tax cuts would do the slightest good under current economic conditions. Those who propose them are simply repeating tired dogma.â€

The former is name-calling. The latter is, more like name-calling against the argument itself, not the person making it.
Greg Ransom

February 25, 2010 at 3:31 pm

The problem is Bruce is no economist.

There’s lots of reason to believe that an payroll tax cut would have the “Keynesian” effects Bruce says we need — far superior to those “promised” by the Obama pork packages.

Bartlett writes:

“There is simply no evidence that tax cuts would do the slightest good under current economic conditions,â€
Matt

February 25, 2010 at 5:20 pm

+5 for the B5 reference but it’s beast not beat 😛
Mpw280

February 25, 2010 at 5:25 pm

How would you stop the spendaholics in Wash DC from raising the VAT everytime they wanted to spend more on entitlements? Cap the rate and make it equivilent to an ammemdment to change it and just possibly you might get it to pass. You would also have to abolish the income tax to get it done otherwise you are looking at endless spending increases and we remain in the same boat we are in now! Now it sounds like the fair tax plan flogged by Boortz, which I don’t know if I am in favor of yet. mow
steve

February 25, 2010 at 6:11 pm

I read Bartlett regularly. He creates problems for Republicans because he was actually part of the team that implemented the modern conservative agenda. He has seen where it went wrong and is not afraid to speak out.

What I like is that he uses actual numbers, real data. You never, and I mean never, see his numbers refuted by anyone on the right. Of course that is an old bugaboo of mine. You mostly see folks on the right talk ideas, not numbers.

Of course he is not that well liked by the left, since he still favors smaller government. He just thinks we should pay for what we have charged up. He also thinks that we should pay for the legislation that we pass. This separates him from any Republican leader of the last 20 years.

Steve
Pete

February 25, 2010 at 9:32 pm

Bartlett wrote an op-ed criticizing The Fair Tax and was soundly trounced in rebuttal. The Fair Tax is similar to a VAT, but is transparent and only imposed ONCE. A VAT is a hidden, creeping tax imposed at every level of production. The Fair Tax bill is 133 pages long; The IRS tax code is upwards of 65,000 pages long. Lobbying the tax code comprises the largest number of lobbyists in DC.
floyd

February 26, 2010 at 1:35 am

VAT advocated at a time when it is claimed that the economic recovery depends on consumption??
Raoul

February 26, 2010 at 2:51 am

I am stumped here: how would someone refer to a group of people who repeat old cliches? I have no problem with “tired dogmas.” Me thinks you proteth too much.
Highlander

February 26, 2010 at 11:24 am

I own 4 small business enterprises, they involve aviation, real estate, and farming. I run lean and hard, and only have 15 direct employees.

I am personally at the bottom end of the scale of what an average person would call rich. In the oligarchical system we now live in, that makes me the expendable rich.

We have weathered the recession fairly well, but with the current tax regime. There is absolutely no incentive to grow my enterprises. And a pretty good case could be made that I should at my stage of life, just slowly sell of the pieces, lay off the employees ,and retire to the Caribbean.

If you think the effective top tax rate is in reality 38%, you’re “out to Lunch”. Something innovative and probably radical needs to happen in order to renew our economic and political system.

It does not appear to me that the nation’s elites have the ability, interest, or integrity of purpose to pull it off. Rather, we will probably just become more like the “losers” in Europe(yes, yes …I know they have better wine and cheese, and unemployment benefits. But even all of that is now on a count down). Let’s hope,I’m wrong.