A battle over tax hikes is causing a GOP identity crisis

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The Republican Party is facing an identity crisis, caught between a rising tide of populism and its long-held orthodoxies on issues like taxes, labor unions and its relationship with big business.

On Monday, Sen. Roger Wicker, R-Miss., expressed the party’s traditional position. The 69-year-old lawmaker reiterated his opposition to increasing the corporate tax rate to pay for President Biden’s proposed infrastructure package. For old-school Republicans like Wicker, tax hikes like the ones Biden is advocating are unfair to high earners and lead to economic stagnation.

But J.D. Vance, author of the bestselling “Hillbilly Elegy” and a political newcomer who is likely to mount a U.S. Senate campaign in Ohio next year, is singing a starkly different tune.

J.D. Vance
J.D. Vance in 2017. (Drew Angerer/Getty Images)

“Raise their taxes and do whatever else is necessary to fight these goons,” Vance tweeted Monday in response to a story about top corporate executives looking to fight back against the GOP’s push for stricter voting laws.

For decades, taxes have been a defining issue for the GOP. President Ronald Reagan lowered taxes significantly in his first term, which Republicans believe unleashed an unprecedented era of wealth and prosperity. And many conservatives have said for decades that President George H.W. Bush lost his 1992 reelection attempt in large part because he violated his promise to not raise taxes, triggering a revolt on the right and driving many GOP voters to support independent candidate Ross Perot.

“When the Republican Party became the party that would not raise your taxes, they became dominant,” Grover Norquist, president of Americans for Tax Reform, told Yahoo News. Norquist has been instrumental in enforcing the “no new taxes” dogma through his taxpayer protection pledge. The vast majority of GOP congressional lawmakers signed on to the pledge, which committed them to oppose any marginal tax hikes, from the 1990s through the Trump era.

Norquist insisted in an interview that opposition to tax increases remains “the one nonnegotiable” for Republicans.

But that’s looking less clear. Most Republicans are still hesitant to call for tax increases as Vance did, but they are flirting with the idea more openly. The fight over voting rights has prompted a flurry of anti-corporate rhetoric from GOP leaders, who have pledged to punish big companies, such as Coca-Cola and Delta Air Lines, that have become closely allied with the Democrats on social and cultural issues.

Rep. Jim Banks, R-Ind., when asked by NBC News about raising the corporate tax rate, said he would “fight like hell” to protect “individual rates,” indicating that his focus was not on protecting corporate rates. Multiple requests to Banks’s office for comment went unanswered.

Jim Banks
Rep. Jim Banks, R-Ind. (Elijah Nouvelage/Bloomberg via Getty Images)

The corporate rate was reduced from 35 percent to 21 percent in 2017 by a Republican Congress as part of a broadly unpopular tax overhaul. Biden’s $2 trillion infrastructure proposal would raise the corporate rate to 28 percent to help offset the costs of his recent spending spree.

Banks is at the vanguard of Republican politicians who are pushing for their party to embrace a breakup with big business in order to win over more working-class voters. The congressman wrote a memo last month on the subject that drew heavy media attention.

Banks, who lost financial support from in-state drugmaker Eli Lilly after he voted on Jan. 6 to overturn the 2020 election results in the hours after the assault on the U.S. Capitol, said he has recouped the $241,000 he lost with an influx of cash from grassroots Republican supporters. In his memo, Banks encouraged his fellow Republicans to follow his example by raising money in small-dollar amounts, and by attacking political opponents for the corporate donations they receive.

Like Banks, Sen. Josh Hawley, R-Mo., has done well with small-dollar donors in the wake of the Jan. 6 insurrection. Hawley has played a leading role in amplifying former President Donald Trump’s baseless and disproven lies about the 2020 election, and he raised $3 million in the first quarter of 2021.

Other Republicans have toyed with going after big businesses they don’t like in a more targeted way or with other types of weapons. Georgia Republicans sought to strip Delta of a $50 million tax break for fuel purchases, though they did not go through with it. The Georgia Legislature targeted that tax break in 2018 to punish Delta for taking a position on gun control that the GOP opposed.

And Vance himself, in a subsequent tweet, expressed a desire to use tax policy to punish businesses that displease the GOP, through selective tax increases for some and tax breaks for others.

“At this very moment there are companies (big and small) paying good wages to American workers, investing in their communities, and making it easier for American families. Cut their taxes. No more subsidies to the anti-American business class,” Vance wrote.

Mitch McConnell
Senate Minority Leader Mitch McConnell, R-Ky. (Tom Williams/CQ Roll Call via Getty Images)

At the same time, most Republicans are opposing Biden’s infrastructure package by framing tax increases as an economic dead end. Senate Minority Leader Mitch McConnell, a longtime ally of corporate America and a proponent of its ability to donate vast sums to campaigns, said the proposal “may actually be a Trojan horse for massive tax hikes and other job-killing, left-wing policies.”

Veteran conservative journalist Jonah Goldberg, who co-founded the Dispatch after two decades at National Review, pointed out the inherent contradiction in the competing sets of talking points on the right.

“How do you punish corporations and stay consistent with the idea that raising taxes is job-killing?” Goldberg said in an interview.

Democrats feel confident that they have Republicans in an uncomfortable position on the tax issue.

“We have pretty strong numbers across the board in terms of how people are viewing the tax argument,” Guy Cecil, chairman of the Democratic super-PAC Priorities USA, said in a recent call. Priorities released a study of new Biden voters in five swing states that the Democrats need to turn out again in 2022, and said the survey showed that 62 percent of these voters believe the GOP favors the wealthy.

A Morning Consult survey showed 65 percent support for higher taxes on corporations to pay for infrastructure, with just 21 percent opposed. Republican voters themselves were split on the issue, with 42 percent supporting higher taxes and 47 percent opposed.

These numbers are not a new phenomenon. In 2012, an American National Election Study showed more than 75 percent support for higher taxes on millionaires and nearly 60 percent support for raising taxes on corporations.

Protestors
Protesters march across the Brooklyn Bridge on March 5 to demand funding for excluded workers in the New York state budget. (David Dee Delgado/Getty Images)

As the GOP has changed, so too have corporations over the past decade. The American corporate sector has been increasingly influenced by the politics of its top executives, who increasingly lean Democratic, and affluent consumers who now want the brands they support to back various social justice initiatives.

Democrats have also sought corporate political donations with gusto ever since the Clinton presidency, and now outspend the GOP in presidential contests. Biden’s 2020 campaign, for example, was the first in history to collect over $1 billion in donations, although a fair chunk of that sum came from small donors.

The tax issue is now the clearest way to see how the Republican Party is stuck between its long-held fundamental views and the populist currents that are roiling politics in this country and around the world. But there are other areas as well, such as the GOP’s stance toward organized labor.

For decades, Republicans have demonized unions as nothing more than a tool of the Democratic Party. But last month, Sen. Marco Rubio, R-Fla., backed the push by Amazon employees in Alabama to unionize. “The days of conservatives being taken for granted by the business community are over,” Rubio wrote in a USA Today op-ed. “Here’s my standard: When the conflict is between working Americans and a company whose leadership has decided to wage culture war against working-class values, the choice is easy — I support the workers. And that’s why I stand with those at Amazon’s Bessemer warehouse today.”

Marco Rubio
Sen. Marco Rubio, R-Fla. (Bill Clark/CQ-Roll Call via Getty Images)

Numerous writers have pointed out that his rationale for supporting unionization seems perhaps to have a lot more to do with punishing Amazon than it does with a principled stand for workers’ rights. Rubio was angered by Amazon’s decision in February to pull a conservative book on the transgender movement from its online shelves and accused the company of having “wielded its outsized market share to silence an important voice merely for the crime of violating woke groupthink.”

Rubio also spoke out against Amazon’s decision to suspend hosting services for Parler, the messaging app that many Trump supporters turned to after Twitter shut down the former president’s account and many others for fomenting the Jan. 6 uprising.

“My view of it was this: Amazon is openly hostile to everything we would call conservatism, traditional values, traditional views,” Rubio said in a recent podcast interview with the American Conservative. “They are eager participants in the culture war against traditional thought, extending all the way to the censorship of ideas they don’t agree with.”

But Charlie Sykes, editor in chief of the Bulwark, another news and opinion website created during the Trump presidency by its critics on the right, argued that “a ‘working-class’ GOP has no interest in actually doing much of anything for the working class. It is unlikely to support significant increases in the minimum wage, more job training, paid leave, greater access to health care, labor rights or the creation of more blue-collar jobs through a major infrastructure bill.”

“Instead, when Republicans talk about the working class, they mean cultural warfare, racial anxiety and grievance against elites. In other words, more Dr. Seuss than economic uplift,” Sykes wrote.

Matthew Continetti, a fellow at the American Enterprise Institute, credited Rubio and Hawley for being “political entrepreneurs willing to push the boundary of conventional GOP policy-making,” but added that “they are outliers” in the party.

The chief characteristic of these policy innovations, however, seems to be to inflict pain on conservatives’ villain of the moment. That applies to threats about stripping Major League Baseball of its antitrust exemption because of its decision to move the All-Star Game out of Georgia, and to more talk of breaking up big tech companies like Facebook and Amazon under antitrust laws, which has been an intellectual project on the left for years.

This gets to the legacy of Trump himself, and whether there is any such thing as Trumpism other than the desire to lash out in revenge and anger at perceived enemies.

Grover Norquist
Grover Norquist, president of Americans for Tax Reform. (Mark Wilson/Getty Images)

Norquist downplayed it all. “These are unserious conversations. Luckily they’re limited. They’re people blowing off steam,” he said.

He also dismissed the one think tank on the right, American Compass, that is devoting a lot of energy to crafting proposals around the idea of what is known as “industrial policy.” The founder of American Compass, Oren Cass, wrote in his 2018 book “The Once and Future Worker” that “the central focus of public policy” should be “a labor market in which workers can support strong families and communities.”

Rubio and Hawley would say these ideas drive them, while their critics would say they are simply trying to use these ideas as a vehicle for their presidential ambitions. Regardless, most of the GOP is still a ways off from embracing them.

“I love it when public intellectuals think they play a role in politics,” Norquist said of this wing of the GOP.

On the other hand, many of the voters Trump pulled into the Republican Party couldn’t care less about long-held conservative views, particularly when it comes to economic matters.

Continetti pointed out that in the memo written by Banks, the Indiana congressman, “taxes, spending, welfare, and entitlements do not come up.”

Matthew Continetti
Matthew Continetti, a fellow at the American Enterprise Institute. (Paul Morigi/NBC/NBC Newswire/NBCUniversal via Getty Images)

And while it is true that Trump won higher numbers of Latino and Black voters than previous Republicans, Continetti pointed out an uncomfortable reality for the GOP: The cultural issues that animate Trump voters are toxic to many affluent suburban voters, and those voters are now fleeing the GOP in droves. This is a major problem for Republicans, as well-off suburbanites — once the party’s central base — are fueling Democratic victories in erstwhile red states like Georgia and Arizona.

“Conservatives like to position themselves as the representatives of the rural heartland against the cosmopolitan metropolis,” Continetti wrote. “True enough. But what about the majority of Americans that lives in the suburbs?”

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