Writing for The Wall Street Journal in 1980, the godfather of neoconservatism, Irving Kristol, argued that conservatives ought to stop worrying about deficits and focus on the important work of cutting taxes. Unlike traditional fiscal conservatives, who insisted that all tax cuts be coupled with spending cuts to balance the budget, neocons like Kristol advised Republicans to leave the problem of soaring deficits to be “coped with by liberal interregnums.” The neoconservative “wants to shape the future, and will leave it up to his opponents to tidy up afterwards,” wrote Kristol. Every Republican president since Ronald Reagan has followed Kristol’s advice, passing broad tax cuts, blowing up the federal deficit and leaving Democrats to clean up their fiscal mess during “interregnums.” Democrats, to their detriment, have often played right into Republican hands by adopting an active posture of fiscal responsibility. Both presidents Bill Clinton and Barack Obama inherited record-breaking deficits from their Republican predecessors, then left far more favorable fiscal conditions to their successors, including the brief surplus that George W. Bush squandered with another round of tax cuts benefiting the rich. Democrats have long struggled with how to respond to their Republican opponents’ radical tax-cutting project. The Republican charge that Democrats are the party of high taxes has stuck for decades, despite the fact that Democrats have failed to increase income tax rates since 1993 — and only then for top earners. Since Walter Mondale’s landslide loss in 1984 — following his statement that taxes must be raised to reduce Reagan’s deficits — Democrats have been reluctant to even broach the idea of raising taxes on anyone other than the very top earners (typically those making more than around $400,000 a year, or the top 1%-2%).
More recently, some Democrats have concluded that the best way to shed their high‑tax reputation is to outdo Republicans in cutting taxes — albeit largely for working‑ and middle‑class households. The clearest expression of this impulse came last March, when two Democratic senators and more than a dozen co-sponsors put forward separate bills that would slash taxes for millions of Americans and exempt broad swathes of the population from income taxes altogether. Unlike Republican tax cuts, these proposals would provide tax relief primarily for those in the lower-to-upper middle class and would also raise taxes on the very wealthy. “Some Democrats appear to be mistakenly under the impression that we live in a nation of Grover Norquists.” Though different in design, the two bills — Maryland Sen. Chris Van Hollen’s “Working Americans’ Tax Cut Act” and New Jersey Sen. Cory Booker’s “Keep Your Pay Act” — would both vastly increase the number of Americans paying nothing in federal income taxes. In Hollen’s more targeted proposal , those making at or below $46,000 for single filers or $92,000 for married couples — what the senator describes as a “living wage” — would no longer pay a dime in federal income taxes. This “living wage” exemption would be gradually phased out on income above these levels up to $80,500 for individuals and $161,000 for joint filers. According to one estimate, it would nearly double the number of Americans who pay nothing in income taxes from 37 million to 66 million. While completely exempting the working class from income taxes, Hollen’s bill would pay for most of these cuts by adding multiple surtaxes for those earning over $1 million in income, including passive income (i.e., capital gains). Booker’s proposal is more straightforward, doubling the current standard deduction of $16,100 for individuals and $32,200 for married couples to $37,500 and $75,000, respectively. It is also less progressive, as relatively high income earners in the upper two quintiles would see the largest absolute reduction in taxes. Like Hollen’s, Booker’s proposal would also increase taxes on the highest earners, raising marginal rates on the top two brackets (some of which would be offset by the newly expanded standard deduction). Unlike Hollen’s bill, Booker’s does not pay for itself and would reduce federal tax revenue by up to $6.7 trillion over the next decade.
These proposals have set off a debate within Democratic and progressive policy circles, echoing the Republican debate between fiscal traditionalists and supply-sider neocons half a century ago. Supporters maintain that such broad-based tax cuts (coupled with tax hikes on the rich) would vastly increase the progressivity of the tax code and provide immediate relief for working- and middle-class families. Critics have largely dismissed the proposals as “ill-conceived” political theater that cedes the ideological ground to Republicans rather than challenging it. “I think some Democrats appear to be mistakenly under the impression that we live in a nation of Grover Norquists,” remarked Vanessa Williamson of the Bookings Institution.
For half a century, anti-tax extremists like Norquist have portrayed taxes as an oppressive tool of bloated and wasteful government. The idea that taxes are inherently punitive and unfair perfectly aligns with the right’s worldview in which energetic and redistributive governments are seen as inherently tyrannical and evil. Their antipathy toward taxation goes hand in hand with their antipathy toward the state, reflected by Norquist’s famous quip that the best government is one that can be “drag[ged] into the bathroom and drown[ed] in the bathtub.” For Democrats, the greatest danger of trying to outflank Republicans on tax cuts is the risk of lending credibility to the Reaganite notion that taxes are unfair and punitive, rather than a legitimate and necessary means of funding the common good. If implemented, the Democratic anti-tax agenda would deliver a major blow to the kind of bold vision of government that progressives have long fought for. While dramatically reducing the size of the tax base would technically increase the progressivity of the tax code and boost the real earnings of millions of Americans, it would also undermine the foundation of the kind of expansive and activist government that emerged from the New Deal era in the mid-20th century. The U.S. tax code was at its most progressive in the early 20th century, when only the very wealthy paid any income taxes, making it essentially a “class tax.” This changed during the Second World War, when the tax base rapidly expanded from just a small minority to the vast majority of working Americans, becoming a “mass tax” with rates as high as 94% for top earners during the height of the war. In a recent podcast , Booker pointed to this original progressivity of the income tax, noting that it was originally “just for the wealthiest of the wealthy” and that today you have a “tax code where actually working people, middle-class families are paying higher effective tax rates than some of the wealthiest corporations and the wealthiest of the 1%.” But while Booker is correct to point out that the tax code has become less progressive over the past several decades — largely due to the Republican tax policies that Democrats failed to push back on or reverse once in power — his nostalgia for the early era of the income tax is not all that different from Donald Trump favorably invoking the 1890s, when most government revenue came from tariffs. (Trump has repeatedly fantasized about replacing income taxes altogether with high tariffs, restoring his perceived golden age). “We should argue from an FDR frame that believes in the role of the state to provide essential services.” What these eras have in common is the small size of government. Indeed, today many conservatives and libertarians of the Norquist ilk look back favorably to the early 20th century, when the federal government’s budget was under 3% of GDP, compared with roughly 23% today. The expansion of the tax base tracked closely with the expansion of the federal government — from the New Deal’s proliferation of alphabet soup agencies to the creation of Social Security and Medicare and other social programs. Over the last half century, much of that legacy has been steadily eroded by Republicans, often with the aid or passive consent of Democrats. The tax base has also grown smaller during this period, including at the top of the income ladder, where some of the richest Americans often pay little to nothing in taxes due to various exemptions and loopholes in the tax code . The Van Hollen and Booker proposals would, as one tax expert has put it , “dramatically accelerate the erosion from below,” thus undermining the future potential for bold expansions of government like Medicare for All. Instead of trying to compete with Republicans on tax-cutting, Democrats should focus on addressing the main flaw in the current tax code: that it permits the rich and ultrarich to often pay lower effective tax rates than working- and middle-class people (and sometimes no taxes at all). Fortunately, on this problem a growing number of Democrats and the majority of Americans are in agreement: The rich must pay more. Rep. Ro Khanna, D-Calif., has come out against the effort among some of his colleagues to outflank Republicans on cutting taxes. “Democrats need to offer a vision of the state that provides health care, education and child care and asks each of us to do our patriotic duty in rebuilding our communities and nation,” the congressman told NBC News. “We should argue from an FDR frame that believes in the role of the state to provide essential services to Americans, not the Reagan frame that believes government is the problem and taxes are evil.”
In the end, there is something deeply self‑defeating about Democrats joining the race to slash taxes. Whatever short‑term electoral gains it brings, it ultimately weakens the larger goal of building a government capable of doing big things for ordinary people and confronting the power of concentrated wealth. If Democrats are looking for a tax policy that is both politically potent and consistent with a progressive vision of government, the answer is straightforward: Everyone should contribute, but none more so than the rich.
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