Right Ideas, Wrong Country?

Since launching his campaign for the U.S. presidency, a large-scale tax cut has been a central feature George W. Bush's campaign strategy. With the motto of “returning the surplus to the people,” he has proposed a $1.3 trillion tax cut, spread out over the next decade. However, his proposal was met with relative indifference by voters, who seem to be more concerned with paying off the national debt and saving Social Security.

Moreover, voters are skeptical that Bush's proposed tax plan will benefit them as much as it will others. According to a recent Gallup poll, 48% of the public thinks Bush's tax cuts are more likely to benefit the wealthy, and only 17% believe it would mostly benefit the middle and working class. With 78% of American defining their own social status as either “middle class” or “working class,” it is not surprising that Bush is having a hard time selling his tax cut on the campaign trail.

But while Mr. Bush is having trouble selling his tax agenda to U.S. voters, it is quite possible that he would have little or no problem in many other parts of the world. For example, we suspect Mr. Bush’s tax reductions would be overwhelmingly popular in China, where the country’s farmers are yearning for tax cuts.

In early August, tens of thousands of farmers rioted in China’s Jiangxi province to protest government taxes and fees. Four consecutive years of declining rural incomes have paved the way for a Bush-like tax cut — if, that is, the cuts were actually directed at the farmers rather than China’s increasingly wealthy business elite.

Another venue for George W. is Pakistan, where tax reform has been a politically volatile issue ever since a general strike brought the country to a halt earlier this year. The strike was prompted by the government’s attempt to broaden the base of Pakistan’s taxpayers.

Currently, it is estimated that only 1% of all Pakistanis pay any income tax at all. When the government announced that it would get tough on those merchants who drive a Mercedes or two but evade their taxes, the population rebelled. Small business-owners engineered a strike that brought the country to a standstill, despite efforts by the powerful army to bring an end to the protests. The announcement by the Pakistani government that it would also introduce a general sales tax didn't help matters.

Not that any tax proposal — including George Bush's — could have fared well here. But, at the very least, this is a country where the people share Bush's apparent disdain for taxes.

Even in Europe, George Bush's tax proposal might have been welcomed. The recent massive demonstrations in protest of high fuel prices reflect the discontent among the Europeans about their high tax burden. But unlike George W. Bush, British Prime Minister Tony Blair has been unwilling to provide any tax relief.

But after ten years of strong economic growth in the United States, the lure of tax breaks is no longer as great as it used to be. Instead, voters are thinking about issues such as health care and the environment — issues that traditionally play to the benefit of Democratic candidates. And their suspicions about the effects of a large-scale tax cut are not likely to be eased by explanations that liberally mix up “billions” with “trillions,” as George W. did a few weeks ago.