Republicans Are "Taxing the Hand That Feeds Us"

(Hat tip: Mark Shea)

Ramesh Ponnuru writes in an Op/Ed in The New York Times:

REPUBLICAN presidential candidates can’t get elected without owning the tax issue. So far, the current crop is giving it away.

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Yes, the top Republican contenders for 2008 are promising to keep all of Mr. Bush’s tax cuts. But the Democrats are not threatening the child tax credit or Mr. Bush’s reductions in the lower-level income-tax rates. Those issues are off the table.

What Mitt Romney and Rudy Giuliani — who have made the most detailed remarks on taxes of the top-tier candidates — are really saying is that they will make sure that taxes on capital gains, dividends, estates and high earners will stay low. Not many middle-class taxpayers will benefit directly from any of those policies.

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Both Mr. Romney and Mr. Giuliani speak vaguely about making sure the alternative minimum tax doesn’t affect any more middle-class families. That is a step in the right direction. But it isn’t a tax cut.

Mr. Romney has also proposed an initiative to make the return on middle-class savings tax-free. It may also be a step in the right direction, but it’s small change. The primary focus of the Romney and Giuliani tax plans remains high earners.

What would be a serious middle-class tax cut? One answer is to expand the tax credit for children. But none of the candidates is proposing to do so, or any other big tax relief for regular folks. You might think that Mr. Giuliani would want to do everything he can to appeal to social conservatives short of actually becoming one himself. But why should he offer a pro-family tax cut when even the hard-core social conservatives in the race aren’t interested? Mike Huckabee wants a national sales tax and Sam Brownback wants a flat tax. Either proposal would increase taxes on a lot of middle-class families.

The Republicans in Congress are no better. For much of the right, the great passion of the moment is to make sure that the carried interest at hedge funds is taxed at what look an awful lot like preferential rates. For years, liberals have said that Republicans talk about “family values” but won’t do anything to meet the economic needs of families. Right now, on taxes, that charge hits home.

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... Republicans believe, in general, that the tax code should generate its revenue in a way that does the least damage possible to the economy. So they seek tax reforms that cut taxes on investment returns and thereby increase economic growth. What they ignore is that we overtax investments in children, too. Parents make financial sacrifices to produce the next generation of taxpayers, who will pay for everyone’s retirements. Yet the tax code does too little to recognize parents’ investments.

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(emphasis added)