A surprising divide on a core issue.
May 18, 2015, Vol. 20, No. 34 • By MICHAEL WARREN
Wisconsin Republican Paul Ryan has an unusual decoration on the wall of his Capitol Hill office: a framed Laffer curve. This totem of supply-siders everywhere is drawn on a napkin and signed by the economist Art Laffer himself. “To my friend, Paul Ryan,” reads the note.
Ryan is the chairman of the House Ways and Means Committee, which makes the memento all the more fitting. For decades, the concept illustrated by Laffer’s curve—that raising the rate of taxation past a certain point actually lowers revenue—has been the organizing principle of the Republican policy of lowering taxes by cutting marginal rates. Republicans aren’t ready to abandon that idea in spirit, but as the 2016 presidential election nears, there are signs of some divides within the party about what’s a priority—and what isn’t—when it comes to tax reform.
Ryan himself is pretty direct about where he sees the debate over taxes. Recently, a reporter in Washington asked him if lowering individual and corporate tax rates is still a top priority for him. “Yes,” he said immediately. Has interest in lowering rates waned? “No,” he said just as quickly. Is the goal to push the top marginal rate down below 30 percent? “Absolutely,” he said.
That may be the case for Ryan, but the path to a Republican consensus on taxes isn’t so straightforward. Texas senator and contender for the presidential nomination Ted Cruz has argued for a flat tax that would allow an American taxpayer’s return to “fit on the back of a postcard.” John Kasich, the Ohio governor who also may run for president, told reporters in Washington this month he’s been “in conversation” with conservative activist Steve Forbes about the flat tax as well. And the newest declared presidential candidate, former Arkansas governor Mike Huckabee, used his announcement speech to reiterate his support for the FairTax, a single-rate consumption tax replacing numerous federal taxes including the income tax.
But at the center of the debate is the proposal put forth by first-term senator and White House hopeful Marco Rubio of Florida. Coauthored by fellow senator Mike Lee of Utah, it’s the first serious tax plan by any presidential candidate this cycle. It’s also the first to break the strict “lower the rates” Republican mold. Briefly, Rubio and Lee propose two individual income-based tax brackets of 15 percent and 35 percent; a corporate tax rate of 25 percent; stripping the code of all deductions except those for charitable contributions and mortgage interest; and—perhaps the most controversial feature on the right—a significant increase to the child tax credit. Rubio and Lee called it “pro-growth, pro-family” tax reform.
For the run-of-the-mill Republican voter—a middle-class homeowner, married with a few kids—the plan sounds too good to be true, and some tax wonks on the right think it is. The economists at the conservative-leaning Tax Foundation rained on the Rubio-Lee parade when it issued a report on the plan stating the federal government would likely lose $1.7 trillion in revenue over the first 10 years before seeing gains. Daniel J. Mitchell, a tax scholar at the libertarian Cato Institute, found “several very attractive features” of the plan but called the top individual rate of 35 percent “disappointing.” Avik Roy of Forbes and the Manhattan Institute (and an adviser to former Texas governor Rick Perry) calls the child tax credit provision “social engineering” that would “increase the deficit without expanding the economy.”
Paul Ryan hasn’t exactly embraced Rubio-Lee. “I don’t want to be critical of any tax reform proposal on my end because I want to encourage people to put plans out there,” he said when asked about it. His counterpart on the Senate Finance Committee, Utah’s Orrin Hatch, was characteristically judicious but said he worried about how the proposal would add to the deficit. “I’d say Rubio-Lee is the first one I’ve seen recently that has some good ideas,” said Hatch in an interview. “But on the other hand, it has some real big problems, too, as almost any suggestion will.”
The editorial board at the Wall Street Journal was perhaps the harshest in its assessment of the child tax credit provision. Shortly after Rubio announced his candidacy for president, the paper wrote that the Florida Republican had become “the party’s most visible ally of the ‘new’ Republican idea that the Reagan tax-cutting agenda is a political dead end, and that the party now must redistribute revenue directly to middle-class families.” Hatch has reservations about the idea as well. “If you expand the child tax credit, to a lot of the economists, that doesn’t have a lot of the pro-growth elements,” he said.
4:04 PM, Apr 15, 2015 • By MICHAEL WARREN
While Hillary Clinton was meeting with voters in Iowa on her second full day as a presidential candidate, Marco Rubio spent part of his discussing a tax policy white paper at a Washington think tank. The newly declared candidate joined with Utah Republican Mike Lee at the Heritage Foundation to talk about their proposal to reform the tax code, which has already become a point of contention in Rubio's nascent presidential campaign.
2:01 PM, Apr 10, 2015 • By MICHAEL WARREN
It appears to be a three-way tie in the Mike Lee presidential primary. At a breakfast sponsored by the Christian Science Monitor in Washington Friday morning, the Republican and first-term senator from Utah spoke glowingly about his “three best friends” in the Senate who are or are preparing to run for president: Ted Cruz, Rand Paul, and Marco Rubio. Lee wouldn't say which candidate he preferred, though he seemed particularly laudatory of Rubio.
7:31 AM, Mar 4, 2015 • By MICHAEL WARREN
Republican senators Marco Rubio of Florida and Mike Lee of Utah have returned to the pages of the Wall Street Journal to tout their latest tax reform proposal. The Republicans call their plan both "pro-growth" and "pro-family," and say it addresses inequities in the tax code for businesses and middle-class families.
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3:21 PM, Feb 18, 2015 • By MARK HEMINGWAY
Republican senators Mike Lee, Ben Sasse, and Rand Paul have all been high profile opponents of the Obama administrations current plan to regulate the internet -- in particular, Lee has called the regulation a government "takeover" of the internet and says it amounts to a "a massive tax increase on the middle class, being passed in the dead of night without the American public really being made aware of what is going on.”
Utah’s Mike Lee is the most important Republican not running for president Feb 9, 2015, Vol. 20, No. 21 • By MICHAEL WARREN
There’s an old saw in Washington that every senator looks in the mirror and sees a president. Utah’s Mike Lee doesn’t, though you’d be forgiven for thinking otherwise. Over the past two years, Lee has been delivering speeches and introducing policy proposals at a pace that far outstrips his tenure and experience. On the whole, it looks like the beginnings of a domestic policy agenda for a future presidential candidate.
5:28 PM, Dec 15, 2014 • By MICHAEL WARREN
In one final ignominious act of parliamentary genius, outgoing Senate majority leader Harry Reid rolled Republican troublemaker Ted Cruz of Texas over the weekend, robbing the GOP of a chance to stop Democrats in the lame-duck session.
The demise of the GOP has been greatly exaggerated. Nov 24, 2014, Vol. 20, No. 11 • By MARK HEMINGWAY
Ever since the Democrats were trounced in the midterm elections, they and the media have been trying to figure out how Republicans triumphed so thoroughly. Wasn’t the GOP supposed to be in permanent decline, on the wrong side of history, demography, and the issues? So far the soul searching has been almost nonexistent. National Journal’s Ron Fournier, a weathervane for centrist Beltway journalists, tried to dismiss the GOP’s triumph out of hand: “The Republican Party didn’t win the overall election—not with numbers like that.
10:31 AM, Nov 13, 2014 • By BRIAN BLAKE
As Republican euphoria over the November 4 election begins to subside and more practical considerations emerge, a looming question is whether the various factions within the Republican party will be able to work together. One recent but little-noted change in Senate leadership may have increased the likelihood of success: On September 16, Republican senators elected Senator Mike Lee of Utah as the new chairman of the Senate Steering Committee, the Senate’s conservative caucus. Replacing Senator Pat Toomey of Pennsylvania, Lee will be given the reins of an organization that
9:32 AM, Apr 7, 2014 • By DANIEL HALPER
Republican senator Mike Lee has an op-ed decrying cronyism. But first, he says, the Republicans must purge the unseemly activity from within its "own ranks."
9:20 AM, Mar 5, 2014 • By JEFFREY H. ANDERSON
Mike Lee, perhaps the United States Senate’s leading voice for a conservative reform agenda, has now endorsed Ben Sasse in Nebraska’s Senate race. Lee declared, “Nebraskans need Ben Sasse to represent their values, reformers in the Senate need his conservative vote, our country needs his voice.” Lee added that Sasse is “a strong constitutional conservative who understands the proper role of government” and who “also recognizes that we must run and win on the power of our positive ideas.”
11:31 AM, Feb 21, 2014 • By DANIEL HALPER
Four United States Senators have a written a letter to FBI director James Comey about the indictment of author and filmmaker Dinesh D'Souza. Senators Charles Grassley, ranking member of the Judiciary Committee, Jeff Sessions, Ted Cruz, and Mike Lee are the four senators, all Republicans, to have signed the letter.
The letter quotes Harvard Law School professor Alan Dershowitz as saying, "I can't help but think that [D'Souza's] politics have something to do with it. ... It smacks of selective prosecution."
Sep 30, 2013, Vol. 19, No. 04 • By YUVAL LEVIN
Republicans these days are eager to replay the Reagan revolution. It is not hard to see why: In the 1980s, the GOP was the party of ideas, and the vision that Ronald Reagan and his supporters brought to Washington proved immensely popular with voters and profoundly improved American life. But in their effort to repeat Reagan’s particular policies, rather than his more impressive feat of developing policies that applied conservative principles to the problems of his day, today’s Republicans risk becoming detached from the country’s real concerns.
Utah’s freshman senator makes his mark Sep 9, 2013, Vol. 19, No. 01 • By TERRY EASTLAND
When I asked Mike Lee, the freshman Republican senator from Utah, how he identified himself politically, he said, “A constitutional conservative.” Note the adjective “constitutional.” It’s not surprising that the senator uses it.