TR2: A New Tea Party?

Another piece of evidence for an incipient tax revolt is the emergence of the ‘New American Tea Party’ (http://newamericanteaparty.com/), which we learned of via a Snopes.com check of a viral email urging people to mail a tea bag to 1600 Pennsylvania Ave. According to Snopes, the email campaign has nothing to do with the NATP (although they have posted a suggestion that people mail tea labels instead of bags, if they want to save money on postage and have any hope of their mail reaching the desired parties).

No surprises among the sponsoring organizations, which include American Spectator, Heartland Institute, Americans for Tax Reform, and National Taxpayers Union, so we aren’t making too much of it yet. But if their membership ranks were to swell and diversify, either directly or in sympathy, then we would infer that TR2 is gaining significant traction.  We think that could begin to happen in 2011-2014.

However, if the opposition party remains relatively impotent (insert Bob Dole/Viagra pun here), as it did in the late 1930s, then the revolt probably won’t get very far. Instead, the best hope for sensible tax reform might be a realization among some key Democrat constituencies that our corporate code is becoming an increasingly severe competitive disadvantage, and also hampers the government’s ability to fulfill on long term social promises. If that conversation were to unfold, it might be possible to extend it to personal and payroll taxes as well. We have no idea what the probability of that is – we suspect it’s not very high – but if it occurred, it would be a very bullish development.