The Conservative Agenda 2002: Tax Reform

By Jeff Johnson | July 7, 2008 | 8:28 PM EDT

Capitol Hill ( - As the wrapping paper and Christmas decorations are put away for another year, "wish lists" may be the last thing on the mind of most Americans. But conservative think tanks in Washington and around the country have been working hard to develop their lists of what Congress must and must not do in 2002.

One item that has always dominated debates between conservatives and liberals is tax policy. But Eric Schlecht, director of congressional relations for the National Taxpayers Union (NTU),

says the aftermath of the September 11 terrorist attacks will reduce the emphasis on most domestic policy issues.

"Quite understandably, the White House is focusing on foreign policy right now," he said. "So, it makes it a little harder for organizations such as NTU to get the administration honed in on something that, in the past, they have expressed support for, for instance tax reform."

A major overhaul of the tax code probably won't get the attention the Bush administration had planned to devote to the issue prior to the attacks, agrees Genie Hayes, communications director for Houston-based Americans for Fair Taxation (AFT).

"The campaign goes on, but it's a different campaign," Hayes said. "If we really want tax reform, it's going to have to come from the people."

Hayes says conservatives can be understanding of the priorities members of Congress must address, while reminding them that tax reform is still a very important to voters.

"Unless the grassroots makes themselves heard," she added, "there are other things on the administration's plate that are taking priority, and understandably so."

Educating the American people about who is responsible for blocking tax reform will be a top priority for 2002 according to Grover Norquist, president of Americans for Tax Reform (ATR).

"The Democrats and [Senate Majority Leader] Tom Daschle (D-S.D.) are capable of stopping anything from passing," he said. "But if they get enough pressure and it's expensive enough to them, then they may let something through."

Schlecht predicts liberals will exploit the terrorism issue to justify their continuing opposition to tax reform.

"When we've got surpluses [liberals say,] 'We can't cut taxes,' and when we've got deficits [they say,] 'We can't cut taxes,'" he said, noting that the tax cut passed last summer did what it was supposed to do; reduce the amount of tax revenue flowing to Washington. "But with revenues down because of the 11th you'll have folks on the other side saying, "This isn't prudent at this juncture."

Norquist says, despite any real or imagined obstacles created by September 11th, it's Democratic control of the Senate, not terrorism, which is the greatest hindrance to most substantive tax reforms.

"There's a series of things we need to do. We need to get rid of the death tax permanently. We need to go to expensing rather than long depreciation schedules. We need to get rid of the Alternative Minimum Tax on individuals as well as on companies. We need to expand IRA's and 401k's ... and we need to get to a single rate tax," he said. "We can do any one of them, one at a time, or together. The challenge is that Tom Daschle opposes all of them."

AFT supports a national 'consumption tax' on goods and services. They say this is inherently fairer than the current income tax, because it allows taxpayers to control the amount of money they give the government; the more they buy, the more they pay, the less they buy, the less they pay.

NTU supports either a "FairTax" type system, or ATR's flat tax. Whichever is chosen, though, Schlecht cautions against continued in-fighting among fiscal conservatives that, in the past, has helped liberal supporters of the status quo.

"They don't really have to go on the defensive because we're too busy fighting each other," he said. "Once we get everyone convinced that a consumption-based tax is the way to go, then we can sit down and debate whether it should be a flat tax or a sales tax."

Even with the very real distraction from domestic politics the terrorist attacks caused, all three groups say support for conservative tax reform proposals is growing. Hayes says both the growth in membership at AFT, and the increased public awareness of the consumption tax idea, are positive signs.

"We've grown from 250,000 members to 420,000 in a year's time. I've never seen any kind of growth like this and I think it's indicative that America is going to go to a consumption tax," she said. "Now when and where? I don't know. But I think it's going to be up to the average person to determine that ... I think it's going to happen in people's living rooms when they say they've had enough."