The U.S. Senate voted last Thursday to repeal a tax break for the ethanol industry that cost $5.4 billion last year. Some observers interpret the vote as an indication that the grip of anti-tax ideologue Grover Norquist over Congress is loosening. However, Republican and Democratic lawmakers who have slavishly signed and followed Norquist’s so-called “Taxpayer Protection Pledge” will have to do far more to prove they can address our revenue shortfall in a serious and honest way.
The vote brought to a climax the months of sparring between Norquist and Senator Tom Coburn of Oklahoma over the idea of repealing tax expenditures as part of a compromise to reduce the deficit.
Norquist’s Americans for Tax Reform (ATR) stated that even though it opposes ethanol subsidies, any repeal of the tax subsidy that was not offset with tax cuts represented a “a corporate income tax increase and therefore a pledge violation.”
The pledge in question is, or course, ATR’s so-called “Taxpayer Protection Pledge” which most Republicans and some Democrats in Congress have signed, swearing to forgo any tax increase until the end of time.
Once it was clear he was going to lose the vote on the subsidies (with 34 Republicans voting for the measure), Norquist tried to save face by claiming that a vote for repeal was not a pledge violation as long as it was coupled with a vote for South Carolina Senator Jim Demint’s amendment, which would eliminate the estate tax along with ethanol subsidies. This amendment, however, never even came up for a vote, forcing Norquist to shift again, saying that the defeat of the larger bill on which the ethanol language was attached means the pledge has not been violated.
South Dakota Senator John Thune of South Dakota, certainly no progressive on tax issues, described Norquist’s maneuvers as “a tremendous amount of gymnastics.”
One GOP aide opined in an interview with the National Review that 34 Republicans voted to tell Norquist to “take a hike” and “rejected his narrow and ridiculous interpretation of what the pledge means.”
But before anyone starts patting the pledge-signers on the back for being responsible, it’s worth remembering that an awful lot of them would have voted for the repeal of the estate tax, if that came up for a vote. The Tax Policy Center has projected that the estate tax will raise $487 billion over the coming decade, far more than was saved by repealing the tax subsidy for ethanol.
Of course no one can be blamed for being hopeful that lawmakers will realize that cutting government spending should include cutting government spending that is done through the tax code. Such a shift is long overdue. Tax expenditures have ballooned to over a trillion dollars annually and are not given the scrutiny that Congress applies to direct spending.
The vote may only be a fleeting setback for Norquist. As Washington Post commentator Ezra Klein notes, the fact that raising ANY revenue from repealing even the most egregious and minor tax breaks is considered a major concession shows just how influential Norquist and his anti-tax extremism have become.
Photo via Gage Skidmore Creative Commons Attribution License 2.0