Tax Reform Is Splitting the GOP. It’s Happened Before.
“If we fail on taxes, that's the end of the Republican Party’s governing majority in 2018 [and] probably the end of the Republican Party as we know it,” Sen. Lindsey Graham warned last month. But Graham should have a bigger fear: Passing tax reform could be the end of the Republican Party’s governing majority and the end of the Republican Party as we know it.
Many Republicans are looking to Ronald Reagan’s 1986 tax reform for inspiration. President Donald Trump said in August that Reagan’s mix of reduced rates and brackets combined with revenue-raising loophole closures was “really something special” and a model to emulate. (He neglected to mention that in 1991 he called it an “absolute catastrophe for the country.”) But while the Tax Reform Act of 1986 may have been the crowning domestic policy achievement of Reagan’s second term, it was an electoral snooze. Two weeks after Reagan signed the bill into law—and barnstormed the country to tout his achievement—Democrats romped in the midterm elections, netting eight Senate seats and seizing control of the upper chamber.
The New York Times credited overall “economic discontent” and a favorable map—not any sort of backlash from the tax bill—for propelling the Democrats’ win. The bill was a thoroughly bipartisan effort, with majorities of both parties’ caucuses voting in favor, making it hard for either party to gain an electoral edge from passage. Still, a Republican president pocketing a long-held conservative goal of slashing the top tax rate from 50 percent to 28 percent proved powerless to reverse the political winds.
Reagan’s tax reform did not destroy the Republican Party, as Reagan successfully passed the torch to his vice president in 1988. But there is a more ominous episode in Republican tax policy history that should give the party pause: the 1909 “Payne-Aldrich” tariff reform.
The law was spearheaded by Republican President William Howard Taft, shaped by a Republican-controlled Congress and passed with barely any Democratic votes.But this was no rubber-stamped partisan measure. Many compromises were required to bridge the GOP’s progressive-conservative ideological divide, yet they only exacerbated it. A year after passage, Republicans lost control of the House and shed seats in the Senate. In 1912, the Republican Party literally cleaved into two. ...