Archive for January 7th, 2015

Because of the need to control the size and scope of government, it’s critically important to reject all tax hikes. Simply stated, once politicians think there’s a possibility of more revenue coming to DC, any commitment to spending restraint and entitlement reform will quickly evaporate.

It’s especially important not to let politicians get new sources of revenue. That’s why, for instance, the value-added tax would be a terrible idea. Politicians might promise to use the revenue to lower or eliminate other taxes, but the European evidence shows that the long-run impact is to finance a much larger burden of government spending.

And you also get more red ink, for what it’s worth.

It also would be a bad idea to give politicians a big, new energy tax. They’ve been salivating for something like this ever since Bill Clinton unsuccessfully proposed a BTU tax back in 1993.

But like other bad ideas (i.e., Keynesian economics), the notion of a national energy tax refuses to die.

President Obama’s former Chief Economist (as well as a Treasury Secretary for Bill Clinton) wants an energy tax imposed on America. Here is some of what Larry Summers wrote for the Washington Post.

With the recent steep fall in oil prices and associated declines in other energy prices…there should be no doubt that, given the current zero tax rate on carbon, increased taxation would be desirable. …While the recent decline in energy prices is a good thing in that it has, on balance, raised the incomes of Americans, it has also exacerbated the problem of energy overuse. The benefit of imposing carbon taxes is therefore enhanced.

In other words, he wants government to benefit from falling energy prices, not consumers.

And he also wants tax harmonization as part of an ideological crusade on global warming.

A U.S. carbon tax would contribute to efforts to combat climate change in other ways. It would be a hugely important symbolic step ahead of the global climate summit in Paris late this year. It would shift the debate toward harmonized measures to raise the price of carbon use.

You also won’t be surprised to learn that Summers wants a big tax.

What size levy is appropriate? Here there is more danger of doing too little than too much. Once the principle of taxation is accepted, its level can be adjusted. A tax of $25 a ton would raise more than $100 billion each year and seems a reasonable starting point.

A $100 billion tax is a “reasonable starting point”?!? I’m afraid to ask him for his definition of a “reasonable concluding point.” Probably with government consuming all the nation’s output.

But you have to give Summers credit for honesty. Most politicians would pretend that a new tax would be used for deficit reduction. But Summers is honest enough to say the money would be used to finance a new spending spree by Washington.

How should the proceeds be used? …An additional $50 billion a year in infrastructure spending would be a significant contribution to closing America’s investment gap in that area. The same sum devoted to pro-work tax credits could finance a huge increase in the earned-income tax credit, a meaningful reduction in the payroll tax or some combination of the two.

Gee, what wonderful ideas. More pork-barrel spending out of Washington and more income redistribution laundered through the tax code with the EITC.

I talked with Neil Cavuto about the merits (and lack thereof) of this proposed energy tax.

To elaborate on the interview, the left understands very well that their spending agenda requires more revenue. That’s why Obama is relentless in urging more revenue. It’s why the leftists at the Paris-based OECD endlessly urge higher taxes in America (even to the point of arguing that tax-financed redistribution is somehow good for growth). And it’s why the DC establishment is so enamored with “bipartisan” tax-hiking budget deals, which inevitably lead to bigger government and more debt.

Honoring the no-tax-hike pledge isn’t a sufficient condition to rein in big government, but it sure is a necessary condition.

Amazingly, top Democrats even admit that their top political goal is to seduce Republicans into supporting higher taxes, yet some GOPers seem willing to walk into this trap.

No wonder Republicans are sometimes known as the Stupid Party (as cleverly illustrated by Michael Ramirez).

P.S. Here’s an excellent video outlining seven reasons to oppose higher taxes.

P.P.S. The bureaucrats at the International Monetary Fund have proposed a massive energy tax on American consumers (in addition to all the other tax hikes advocated by that international bureaucracy).

P.P.P.S. An energy tax would be a levy on consumption, which is less destructive than higher income tax rates and more double taxation. But just as I wrote about the value-added tax, the issue isn’t whether we replace a horrible tax with a less-horrible tax. The debate is whether we add a less-horrible tax on top of the current horrible system.

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