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Grover Norquist: History Proves Tax Increases Lower Economic Growth

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President Obama heads to Pennsylvania today to push for the extension of the temporary payroll tax cut that is set to expire at the end of the year.

Enacted last year as part of a larger tax compromise between President Obama and Congressional Republicans, the cut reduces the tax levied on the first $106,800 of income from 6.2 percent to 4.2 percent for calendar year 2011.

Democrats not only want to extend the tax cut, they want to further reduce the rate to 3.1 percent. The reason: they believe it would spur spending, growth, and ultimately, employment. Should Congress fail to approve an extension, the full payroll tax of 6.2% would be restored starting in January 2012, effectively raising taxes on 160 million Americans. The administration has proposed offsetting the revenues lost from the payroll tax extension with higher taxes on people making more than a million dollars per year -- a proposal Republicans reject.

Grover Norquist, founder and president of Americans for Tax Reform, has long been an enforcer within the Republican party to oppose all sorts of tax increases. He told The Daily Ticker's Aaron Task that raising taxes on Americans — rich or poor — would lead to lower economic growth and should be off the bargaining table. He supports a one-year extension of a payroll tax holiday only if the government reduces spending by the same amount of the tax loss. He dismissed recent poll numbers that more than half of Americans favor hiking taxes on the "1%" and was incredulous that any new revenue gained from higher marginal tax rates would be used to pay off the country's $15 trillion national debt.

"Tax increases slow the economy and they're bad for the economy," Norquist says in the accompanying clip. "They're too high, not too low."

Norquist has been defending his anti-tax stance for years. When he meets with incoming GOP members of Congress, Norquist asks them to sign his no-new taxes pledge. Some have even called him the most powerful man in the Republican party. As Congress and President Obama haggle over reducing the budget and finding new revenue sources, Norquist presses on with his no-tax ideology, using history as a guide. Norquist says the past 60 years have shown that when a president raises the top tax rate, economic growth fell.

Of course, economic growth powered ahead rapidly in the years after taxes were raised on top earners in 1993. President Clinton and a Democratic controlled Congress boosted the top marginal income tax rate from 31% to 39.6% in 1993 as part of a deficit reduction effort. The economy went on to grow for 32 consecutive quarters and create millions of jobs. But Norquist believes it was the 1994 Republican takeover of the House of Representatives — not President Clinton's economic and tax policies — that really spurred growth.

Taxes have become a hot word in America's lexicon. Occupy Wall Street brought the issue of income inequality between the "99%" and the "1%" to Americans' attention and raising taxes on the rich has become a key issue in the 2012 presidential race. Polls generally show that raising taxes on high earners is popular.

Will Republicans acquiesce to Democrats' tax increase demands? Will Norquist continue to hold Republicans to their no-tax pledge? And if they do, will the American people reward them at the ballot box next year? What do you think?

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