There's been an interesting debate about this question recently.  Rhetorically, some (including, at times, us) are calling the January 2011 scheduled tax hikes "the biggest in history."  Liberals and media watchdog types have said that this is an over-statement, so there's been some recent softening of the rhetoric.  Look at our countdown clock above, and you'll see that language embedded there.

Critics need to understand that there's some poetic license involved here.  Arguing whether or not a multi-trillion dollar series of tax hikes is the biggest, second biggest, etc. is kind of like arguing whether the meteor that killed the dinosaurs was the size of Texas or Alaska.  It was a big rock, and it did a lot of bad things.  The rest is secondary.  I'm sure liberals referred to Bush's "record" deficits without looking at the GDP tables.

For our part, I did a brief study of this last week.  I found to my surprise that there was one tax hike on record bigger than the series of Obama-Pelosi-Reid tax hikes: the Revenue Act of 1942.  Expressed as a percent of GDP, it was over fifty percent bigger.  But these tax hikes are still huge, would increase federal tax revenues to 120% of the historical federal tax burden, and likely approach the Clinton-era record for the federal tax revenue take.

Gerald Prante of the Tax Foundation responds to this posting today.  Answers to his criticisms are below:

1. Were there bigger tax hikes from before World War II?  Perhaps, but the data I found only went back that far.  If there's older, good data, I will update.  Given the magnitude, though (several percentage points of GDP), it will be hard to top.  Big government didn't really get started until Hoover.  And I do in fact say that this era's tax hikes are not quite the biggest, but mock those who think this is somehow a "gotcha" against those wanting to keep taxes low.
    
2. Prante is correct that we are co-mingling several groups of tax hikes into one.  In fact, my article breaks them all out separately for reader interest.  My point is that these tax hikes are part of a unified agenda on the part of Obama-Pelosi-Reid.  I'm not going to give them a pass by breaking them up.  We're looking at total tax effects in the ten year window starting in 2011.
    
3. Furthermore, I'm not going to be limited by CBO/JCT scoring baselines here.  If someone's taxes go up, it really doesn't matter if it was a result of a tax cut expiring, or a new tax being put in place.  Their taxes just rose.  Baseline stuff is a distinction without a difference.
    
4. ATR doesn't believe anyone's taxes should go up.  To the extent that Republicans are calling for higher-than-present taxes, that's not good.  But the example Prante cites is a bad one.  The Making Work Pay credit is partly tax relief, and partly government spending.  Furthermore, the Republicans have proposed further tax relief which he doesn't mention (the 20 percent small business tax deduction comes to mind) which are also part of their plan.  On the death tax, ATR is for full and permanent repeal of the death tax.  If the best we can get is something less than a 55 percent top rate, we'll of course take it.  But that doesn't absolve Congressional Democrats and Obama of passing hundreds of billions in new taxes, and willfully letting trillions more in tax hikes happen.
    
5. Prante mentions the Taxpayer Protection Pledge here, and that's worth exploring.  The Pledge is the nuclear bomb of tax lobbying for most Republicans.  In order for something to violate the Pledge, it must be a clear and unambiguous net income tax hike.  We get asked all the time to invoke the Pledge when it's not crystal-clear what's going on (no JCT score, offsetting tax relief, etc.)   The Pledge is a sacred covenant between the signer and his constituents, and its use as a protective device is rare.  Bright lines only.
   
   The baseline distinction mentioned earlier (new tax hikes vs. expiring tax relief) muddies things here.  We can't assert that failure to vote for an extension of current tax law is a Pledge violation.  The Pledge only binds people to oppose and vote against new income tax hikes.  The signer must be positively voting for higher taxes, not merely failing to be sufficiently-supportive of keeping existing taxes where they are.
   
   That brings up an interesting distinction people need to know: ATR can support and oppose all sorts of tax legislation, and the Pledge may or may not enter into it.  In fact, most of the time the Pledge is not relevant.  Nonetheless, we can have strongly-held views independent of the strictures of the Pledge.

Posted by Ryan Ellis on Monday, October 4, 2010 4:06 PM EDT

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