He Comes to Bury the Tax Cutters

Michael J. Graetz long ago established himself as a nettle in the side of those who promote lower tax rates for economic growth–in recent times what’s known as a “supply-side” agenda. Today Princeton University Press publishes the Ivy League law professor’s book chronicling the last 45 years of that cause, “The Power to Destroy: How the Antitax Movement Hijacked America.” He traces the origin of the modern antitax push to Howard Jarvis’ finally-successful (in 1978) crusade to cut and limit property taxes in California. To Graetz’s credit, he has sophisticated awareness of tax politics, more than most Washington Beltway pundits. For one thing, he recognizes the role of the Wall Street Journal’s editorial page and even begins the book with a quotation from my former boss there, the late Robert L. Bartley. Graetz acknowledges what his adversaries were on to, and even concedes that some supply-side response to the stagflation of the late 1970s was “probably necessary.” His jaundiced view of tax-cutting legislation has undeniable elements of truth: much of the horse-trading was about gains for purely special interests, and the unwillingness to reduce the reach of government while cutting levies to pay for it has spawned enormous deficits. (The Laffer Curve for identifying when lower rates bring more revenues has been spongy in application—politicians and advocates aren’t inclined to find the apex and stop there.) As a result, tax policy has helped to foster greater inequality of result in America, whatever else it did.  A shrewd defender of progressive, broad-based taxation should stop there—and perhaps acknowledge that the wealthy in more socialist societies abroad also find plenty of loopholes. Unfortunately, Graetz doesn’t offer even-handedness, instead making gratuitous political swipes that serve only to pigeonhole him as one more attack dog of the left. There’s the accusation of racial animus as a motivation for tax cutters (as a way to strike at black beneficiaries of the welfare state—but then what explains Jack Kemp?). There are numerous digs at peripheral right-wing figures, and of course at Donald Trump. (And when Trump’s 2017 tax bill aims to remove a break for the rich—the SALT deduction—he dismisses it as a slam on blue states.) There’s even a harkening back to the fall of Alger Hiss!  Yes, in politics common cause is made with assorted forces whose agendas are ancillary to your own, and supply–side economists were no exception. U.S. tax policy is hard to separate from the right vs. left wars. That’s the reason Graetz’s book, for all its nitty-gritty on form 1040, bears a supportive blurb from the president of the ACLU. –Feb. 13, 2024