Perhaps there was no greater champion of tax-cuts than Ronald Reagan, but his famous quote "trust but verify" indicates his advocacy that favorable results promised when tax-cuts are enacted need to be periodically verified.
Milton Freidman, on the other hand, said the following about
tax-cut: "I am in favor of cutting taxes under any circumstances and for any
excuse, for any reason, whenever it's possible." Freidman, a tax-cut huckster, was willing to
peddle tax-cuts of even the "rotten variety" to enhance his pro-greed and
Grover Norquist, founder and president of Americans for Tax Reform (ATR), the lobbyist group that enforces the taxpayer-protection pledge, has taken Milton Freidman's blind trust in tax-cut to a new level. Specifically in the case of the Bush tax-cuts, which were negotiated in good faith to be temporary, Norquist successfully framed their expiration in 2010 as a violation of the tax pledge and now is at it again. This self-serving logic blatantly violates the expectations that existed at the time the tax-cuts were enacted and creates an environment where nothing is as permanent as tax-cuts negotiated to be temporary. Put in the context of the greed mentality, Norquist is attempting again to "perfume a pig".
The Bush tax-cuts that reduced the dividend and capital-gain rates were, from the get-go, among the most wasteful of our history in that the vast majority of this tax-cut accrued to investors that had already invested with only a small fraction benefiting new investment. In addition, it potentially benefited all stock or capital investment, without regard to whether or not it benefited the U.S. economy. The tax-cuts on investment in foreign stocks empower foreign competition (detrimental to U.S. job growth) and tax-cuts on speculative assets rewarded investment that diverted resources away from U.S. job growth.
These Bush dividend and capital gain tax-cut did not accrue to all stock or capital investors. Tax-deferred investments accrued no benefit. These are the investments of choice of the vast majority of the 99%, i.e., the 401k, 403b, IRS, pension and retirement-plan investor, who are more likely to invest in domestic rather than foreign enterprises. Also, these Bush dividend and capital gain tax-cuts did not accrue to tax-free investors, i.e., universities, charities, foundations, etc., that use the income from their investments to supplement the declining funding of government programs.
The Bush dividend and capital-gain rate reductions were among the most fiscally irresponsible tax cuts, squandering time, treasure and talent with no verification or accountability with regards to their results or cost/benefit.
Enforcement of ATR's tax pledge is possible when there are only a few tax defectors, but just like a run on a bank, any attempt by ATR to counter mass defection will spread its resources thin and produce unwanted publicity to it and its tax-pledge signatories. Perhaps, exposing these wasteful tax-cuts, rooted in an ideology of cutting taxes under any circumstances, for any excuse, for any reason and whenever possible, will provide taxpayer-protection-pledge signatories that are at a tipping-point with a plausible defense for acting as Americans first and partisans second, i.e., doing the right thing for the U.S.A.
The Fiscal Cliff is a double-edged issue. If its resolution mandates result-producing tax-cuts or better yet an integrated America First U.S. Tax Code, its silver lining will shine through.