We are conservatives. We oppose government intrusion in the market economy. And we oppose increasing taxes. But now we have no choice – we must increase revenue-generating measures across the board in order to pay for the needed coronavirus stimulus bill that passed $2 trillion.
We have also learned that even a historically strong economy will not save us from the bleak fiscal reality we’re now facing.
With historic speed, the current crisis is putting an unprecedented strain on federal, state and local governments. We are spending hundreds of billions essentially weekly, and once trillions of dollars are deployed in response, the realization will arrive that we are borrowing every single one. Doing the right thing comes with a hefty invoice, and that cost is going to be the need for additional revenue to cover the new coronavirus bill.
That’s why we’re calling on Congress to craft plans to do two things in the immediate wake of this crisis.
First, we need to regrettably roll back the Trump tax cuts. We both supported these cuts, and they have been remarkably effective in revitalizing an economy that had stagnated and underperformed for almost a decade. Stagnation and freefall, though, are not the same thing, and at this moment, it requires a different response. Businesses must not be saddled with a host of new regulations – and, based on the repeated need to ignore or eliminate regulations to combat the coronavirus outbreak, Congress would be well advised to continue focusing on reducing and eliminating barriers. President Trump’s actions in this regard over the past few years have had at least as much to do with our economic growth as his tax cut did. But the tax rate must go back up.
Second, we are calling for the enactment of a temporary national one-cent sales tax. In crafting this proposal, Republicans must be adamant that any legislation include provisions for a hard sunset, and would require a supermajority of both houses to extend.
According to the Organization for Economic Co-operation and Development, reversing Trump’s tax cuts would have added $1.5 trillion to government coffers in each of the past two years. And based on 2019 retail sales of approximately $3.8 trillion nationwide – a figure that will likely take several years now to get back to – a one-cent sales tax would generate $38 billion per year. We’ll need both sources, not only because these past totals are going to be far higher than the revenues these taxes will generate in the wake of the economic contraction and severe recession we are entering, but also to spread the burden for the recovery.
Prior to the current crisis, 44% of American workers paid no net income taxes. That percentage is nearly certain to rise – and dramatically – in the wake of a crisis that will result in a colossal number of new jobless claims. It is entirely possible that less than half of the working age population in our country will be net tax
For this reason, placing the entire burden for the future of our country on a minority of citizens is simply not tenable in the long run and will suppress our economic health for even longer. Receipts for purchases or goods should simply itemize it as “Coronavirus Cent” to remind tax payers why this tax is being paid.
By both reversing the Trump tax cuts and instituting a temporary national sales tax, we ensure that every citizen has a stake, and a role, in helping to dig our way out of the financial hole COVID-19 is putting in our way and not add another onerous debt at our children and grandchildren’s feet.
As we’re ramping up the financial response to this crisis, we also need a plan to pay for it to keep our economic engine the strongest in the world. This is the fastest, fairest and – for conservatives – most sensible way to do that. President Trump has said he is a “wartime president” – it is hard to argue he is not against this invisible enemy. Unlike the greatest generation which was required to go overseas with guns with many never coming home again, this is the least we can do to pay for this stimulus that will help our neighbors, friends, family and for many, even themselves.
— Chuck Warren is the managing director of September Group LLC, and Samuel Stone is chief of staff for Phoenix City Councilman Sal DiCiccio.