The House Ways and Means Committee unveiled its tax cut bill this week. With narrow margins in both Houses, the bill cannot pass without virtually unanimous support from GOP Senators and Congressmen. However, many voices in the GOP condemn the plan: Blue State Republicans who complain about the loss of the state income tax deduction, supply-side capitalists like the Wall Street Journal who want to eliminate the child tax credit, and pro-lifers who are calling the loss of the adoption tax credit “unacceptable.” All three groups are guilty of political and economic miscalculations. A coalition can succeed only if all of its members coalesce.
Blue State Republicans are right to be concerned about the welfare of their constituents, and the elimination of the local and state tax deduction would mean a short-term increase in the burden of taxpayers in high-tax states like New York, Connecticut, Illinois, and California. However, things look very different when we take into account the long-term effects. Current law subsidizes state taxes. If a taxpayer is in the 39 percent bracket in the federal system, the federal government is in effect paying 39 percent of the taxpayer’s state taxes through the deduction. This makes it easier for Blue States to raise and maintain high rates, which in turn shifts the political balance of power in those states toward the Left and the Democrat Party. Once we eliminate the deduction, the full burden of high taxes will hit voters in the Blue States, igniting a powerful political movement for cutting taxes and spending. The end result will be a much stronger Republican Party in those States in the medium term, and, in the long term, with lower taxes across the country and within their own borders, new industries and new jobs for all.
In a November 1 editorial, the Wall Street Journal editors attack the proposed increase in the child tax credit, from $1,000 to $1,600 per child (in the latest version). The WSJ editors argue that the credit is “a form of income redistribution — a special favor for some taxpayers that costs the Treasury a bundle in lost revenue.” They object to the fact that the credit favors one kind of “behavior” (having children) over another. The WSJ and others in the supply-side movement favor tax reform that encourages long-term growth, especially lower marginal rates. Where they go wrong is in failing to realize that the most important kind of economic growth is growth in the native population. As Julian Simon argued so brilliantly in the 1980’s, the human being is “the ultimate resource.” The sustainability of our Social Security and Medicare systems depends on our procreating a new generation of workers, but America is deep in a critical “birth dearth,” with the average number of children per women falling far below the replacement rate of 2.1 — down to 1.9, with the birth rate reaching the lowest level ever recorded in 2011.
The Wall Street Journal’s solution to the birth dearth is to increase immigration to ever higher levels. If current trends continue, the Census Bureau projects that by 2050, 44 percent of all Americans will be immigrants or the children of immigrants, a level unprecedented in world history (barring cases of invasion). We should call this the Great Genealogical Disruption, since it is unclear whether the political culture of any country can survive such a high-velocity swamping of its native population with newcomers. If our birth rate were higher, we could sustain more immigration. With a higher native birth rate, there would be a much weaker case for immigration restriction. Thus, the WSJ should support a strongly pro-natal policy, including increased child tax credits.
What, then, about the elimination of the adoption tax credit? Isn’t this a pro-natal and pro-life policy? Yes, but the credit is simply too expensive. The adopting parents can claim $13,400 for each adoption — and not just a deduction from taxable income, but a full, 100 percent federal reimbursement. If we enable more working poor to afford children, through generous child tax credits and better jobs at higher pay, fewer will face the awful choice between abortion and giving away their children. For conservatives, who favor the natural family, a strong presumption always exists for giving children the benefit of their own biological parents.
A political party can function only if its members are loyal. Loyalty must be a two-way street. For generations, populist Republicans dutifully lined up behind Establishment Republicans like the two Bush Presidents. Now it is time for the free marketeers and Blue State Republicans to return the favor and lend their aid to their party in its time of need.
Rob Koons is a professor of philosophy specializing in logic, metaphysics, philosophical theology, and political thought. He is the author and editor of six books, including "The Atlas of Reality: A Comprehensive Guide to Metaphysics" (with Tim Pickavance, Wiley-Blackwell, 2017). He has been active in conservative circles, both nationally and in Texas, including the Intercollegiate Studies Institute, the National Association of Scholars, the Texas Public Policy Foundation, the Philadelphia Society, and the Austin Institute for the Study of Family and Culture. To read more of his reports — Click Here Now.
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