By Karl Rove
The U.S. went 15 years without a federal tax increase.
Yesterday was Tax Day and it was marked by large numbers of Americans turning out for an estimated 2000 tea parties across the country. This movement is significant.
In 1978 California voters enacted Prop. 13 in reaction to steep property taxes. That marked the start of a tax-cutting movement that culminated in Ronald Reagan slashing high national income taxes in the 1980s. Now Americans are reacting to runaway government spending that they were not told about before last years election and which Americans are growing to resent.
Derided by elitists as phony the tea-party movement is spontaneous decentralized frequently amateurish and sometimes shrill. If it has a father it is CNBCs Rick Santelli who called for holding a tea party in Chicago on July 4. Yesterdays gatherings were made up of people who may never meet again (theres no central collection point for email addresses). But the concerns driving people to tea parties are real growing and powerful. Politicians ignore them at their peril.
One concern is the rise of state and local taxes. New York and California passed multibillion-dollar tax increases this year. Other states are considering significant tax hikes or have enacted tax increases in recent years. The many tax and fee increases enacted or under consideration is angering voters.
If that anger persists it may give Republicans a leg up in the 38 gubernatorial elections over the next two years as well as in key state legislative races that will determine which party redraws congressional and state legislative districts after the 2010 census. Expect voters to hear a lot about jobs being created in low-tax states in the coming years.
But the center of the debate is in Washington not the states. The fear of future federal tax hikes is fueling the tea-party movement.
This is an important development. In 2008 voters were less worried about taxes than they had been in previous elections. Why? Because the 15 years between President Bill Clintons 1993 tax hike and Barack Obamas increase in cigarette taxes in February was the longest stretch in U.S. history without a federal tax increase. President George W. Bushs tax cuts also cut 13 million people on the lower-end of the income scale from the income tax rolls -- people who dont pay taxes arent worried about the tax burden.
So far Mr. Obama has decided to let the Bush tax cuts expire in 2011 and avoid forcing Democrats to take a tough vote. But the tea parties reveal how hard it will be for the president to hide the Democrats tax-and-spend tendencies from voters.
Mr. Obama plans to boost federal spending 25 while nearly tripling the national debt over 10 years. Americans know that this kind of spending will have economic consequences including new taxes being imposed by the new progressives.
It hasnt gotten a ton of attention but people are fed up with the complexity of their tax code and ready to do something about it. The Tax Foundations 2009 Annual Tax Attitudes (which was conducted Feb. 18-27 by Harris) shows us that many Americans are willing to trade popular deductions for lower rates and a simpler code. Theres also been a flurry of interest among Americans in replacing the current system with a national sales tax or a flat tax.
The open question is whether Republicans will be boosted by the nascent tea-party movement. House Republicans smartly offered a proposed spending plan this year that would freeze nondefense discretionary spending suspend earmarks for five years and reform entitlements. But cutting spending wont be enough. Taxes matter -- and will matter more in the coming years.
The 2009 Tax Foundation survey found that Americans believe that taxes should on average take just 15.6 of a persons wages. And 88 of Americans in the same poll believe that there should be a cap on all federal state and local taxes of 29 or less -- there is still a constituency out there that will favor tax cutting politicians.
But to tap into that constituency Republicans will have to link lower taxes to money in voters pockets and economic growth and jobs. They must explain why the GOP approach will lead to greater prosperity. Such arguments are not self-executing. They require leaders to make them time and again as Reagan once did.
Some liberals believe that the recession has made tax-and-spend issues pass. But political movements are often a reaction against aggressive overreach by those in power. Mr. Obamas response to the financial crisis -- a government power grab and budget explosion -- has put spending and taxes back on the front burner. The tea parties are an early manifestation of that. More is sure to follow.
Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.
