The GOP is in a tax panic. Pressured by donors and worried about the 2018 midterm election, party leaders have convinced themselves that a tax cut is vital to their political survival. The unseemly result? A headlong rush to get something – anything – passed into law.
Republicans might be right about their need for a tax cut. The tax legislation making its way through Congress is remarkably unpopular. In fact, this tax cut is polling worse than many past tax increases. But when it comes time to face the voters, Republicans might be better off with an unpopular accomplishment than showing up empty-handed.
But the politics of tax cuts can be tricky. It seems like tax reductions should be a slam-dunk for political parties, a golden ticket to election victory. But in fact, tax cuts tend to deliver only modest political benefits – and sometimes none at all.
Consider a notable case in point: the Revenue Act of 1948. This law provided for the third biggest tax cut in American history (when measured as a share of GDP); that makes it a much, much bigger cut than anything under consideration this year.
But despite its generosity, the 1948 tax cut didn’t save its Republican champions from a drubbing at the ballot box. In fact, they got slaughtered.