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How part of the cycle of government dependency works
Posted by: McQ on Monday, December 15, 2008

Although I'm sure he doesn't know it, Michael Kinsley provides the latest example. He makes a plea for higher gas taxes, because, you know, it's the best way to forcibly wean us from our horrible addiction to oil. And, naturally, he (and government) know what is best for us and how to rescue us from ourselves.

Ironically, his idea is based in a type of tax the liberal left tells us it completely, utterly and unalterably opposes in general - a regressive tax which hits those who can afford it least the hardest.

Take a look at the machinations Kinsley goes through to make this tax he touts "acceptable" and give it the appearance of "progressiveness":
First, we have experienced the high energy prices that people in most of the rest of the world already live with, and we know we can live with them too. Four-dollar gasoline is no longer unthinkable.

Second, this is the perfect moment for the other part of many proposals for an energy tax, which is to give the money back to people by lowering the payroll tax. The payroll tax, or FICA, collects about 15% of your wages or salary — half from you and half from your employer. It is expected to bring in close to a trillion dollars in 2009. Using our windfall from plummeting crude-oil prices alone, we could cut the FICA tax by more than half. Including other forms of energy would bring in even more.

FICA is, in effect, a tax on job creation. It applies to the very first dollar earned by a minimum-wage worker, but most of it tops out at an annual income of about $100,000 and doesn't apply at all to income from investments. For most Americans holding jobs, FICA now takes a bigger chunk of their income than the income tax itself. And yet it rarely enjoys the tender concern of tax-cutting Republicans, who prefer to concentrate on tax breaks for capital gains. Cutting the FICA tax in half, for workers and for employers, would make it more affordable for employers to hire — or avoid layoffs — while giving everyone who makes less than $100,000 a 7.5% raise to spend and stimulate the economy even further. People making more than $100,000 would get a tax cut too — as big as anyone else's, though a smaller percentage of their incomes.
Got that? Raise the gas tax so we're paying $4 a gallon, but cut the FICA tax so that increase is "offset". Yes, that's right, we'll cut contributions to Social Security and Medicare to "fund" the gas tax. Why? Because, although he doesn't say it, Kinsley is most likely banking on the idea that government health care isn't really that far away. It's an easy tax to eliminate because at least half of it (that funding Medicare) won't be necessary soon anyway.

Cutting FICA, per Kinsley, will spur "job creation". And jacking up the gas tax will dissuade us from using petroleum based products - the wet dream fulfilled of every leftist enviro in the nation. It is a classic use of taxation - not to fund the functions of government, as intended - to modify behavior such that it conforms with the government's desires.

Coercion. I'm sure Kinsley and his ilk consider it to be a very benign form of coercion, however.

Of course, not mentioned is the fact that such a tax on fuel will disproportionately effect the transportation industry and prices on goods will rise on everything you purchase, to include food and other necessities. The same will hold true for businesses who are supposed to benefit from this little scheme as well. Think "the law of unintended consequences" with a vengeance.

That 60 mile round-trip commute you make in your 30 mpg car each day that presently costs you about $64 a month, will most likely cost you about $160 a month - more if you don't get that sort of mileage or drive further. Home heating oil? Through the roof. Aviation fuel? Yeah, same thing.

Energy costs? Well, as Mr. Obama said, they'll "skyrocket".

As prices rise, and they will, what are those on the lower end of the economic scale going to spend that whopping 7.5% "raise" on? Costlier food, fuel, energy and other necessities.

Government, of course, will then recognize the problem of its own making and ride to the rescue. It will "spread the wealth" with subsidies which require those most deeply effected by its scheme (the "poor") to go to them, hat-in-hand, and ask to be rescued. Meanwhile the propaganda arm, also known as Congress, will curse and blame "big oil" and "foreign oil" while further solidifying their "dependency" hold on another portion of our society. Etc., etc.
 
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What is amazing is that people buy this utter malarkey. No matter how much it hurts the poor, no matter how many times it is proven not to work, no matter how little support there might be for it, the left just keeps pushing it because, as if you didn’t know, they are all just f*cking bonkers.

And that’s while Paul Slugman won the Nobel Prize for Economics this year. If the prize was around in the 19th century, Karl Marx would have won it, too, for his "innovative way of distributing income to the hard-working masses while punishing the rich fat cats who actually worked to earn their money," or something like that.
 
Written By: James Marsden
URL: http://
"no matter how many times it is proven not to work"

Really? The higher gas prices recently had quite a marked effect of reducing consumption.

Taxing things that have an externality associated is good economics. The externality of the required middle east interventions is a quite expensive one. That isn’t counting global warming or other related stuff the jury is still out on.

Greg Mankiw, hardly a liberal is in favor of precisely this kind of tax offset.
http://gregmankiw.blogspot.com/2006/10/pigou-club-manifesto.html

This kind of tax is essentially a flat sales tax based on use. The idea was to use that to reduce one form of income taxes. I’m surprised to see such resistance from conservative quarters.
 
Written By: Tito
URL: http://
Really? The higher gas prices recently had quite a marked effect of reducing consumption.
Yup - a voluntary reaction/adaptation to a natural market occurrence. Now, let’s make it permanent, right - because "we" (those who can afford it and know better) liked the results?

And let’s not factor in the fact that the full ramification of such a hike never really had the opportunity to settle in because it was a spike in cost, not a permanent cost.

Yeah, no possibility of increased pricing becoming permanent across the board as well, is there? Nope, it’s a great idea - one which will effect the cost of the very necessities those on the lower end of the economic scale need to just get by.

I mean, what in the world can go wrong with an idea like that, especially in a time of economic hardship?
This kind of tax is essentially a flat sales tax based on use. The idea was to use that to reduce one form of income taxes. I’m surprised to see such resistance from conservative quarters.
Here’s a better idea - reduce the FICA tax by 7.5% - end of transmission.
 
Written By: McQ
URL: http://www.QandO.net
to pay for all the new entitlement programs sure to come out during the next four years look for all types of new taxes such as a VAT or value added tax on goods and services(currently 21.5% here in Ireland) and increased costs for licences and fees for everything imaginable.
If they pass new spending it will be paid for by the taxpayers,like it or not.
We’re now paying E 0.96.9 for a liter of fuel which works out to around $5 and change a gallon.
Socialism,democratic or otherwise: SUCKS
but the Mrs. is happy to be home here,so I’ve got that going fr me.
 
Written By: firefirefire
URL: http://
First, we have experienced the high energy prices that people in most of the rest of the world already live with, and we know we can live with them too. Four-dollar gasoline is no longer unthinkable.
I’m not even going to read the rest of his (what I am sure has to be)idiotic drivel.

Yes, we "know we can live with" $4 gas. Except for all the caterwauling and whining and panic about how $4 gas was ruining the economy, hurting small businesses, making it harder for Joe Average to live, etc etc etc

So which it?

If we CAN live with $4 gas, when gas hits $4 again I don’t want to hear 1 fu*king word about it.
 
Written By: shark
URL: http://
I agree that lower taxes are generally better, but as far as interventionist government goes, a tax on a solid externality (which gas is, not counting the environment, see the above link) is solid economics and a valid role for government. Externalities like this are by definition "market failure", and not in the ridiculous way that congress pushed through the various bailout nonsense to "fix" the market actually working.

Kinsley’s piece was patronizing, but really "weaning us off oil addiction" should have been "including the external cost of decades more middle east intervention into the price of the commodity".

A I also agree taxes are too high and government is too big. However, there does need to be some government, at least for defense, courts, etc. That means there needs to be some taxes. A gas tax is far better than most of the alternatives, like income, etc. Do I trust the govt to actually offset the taxes it raises in the gas tax? Not at all. But that isn’t a problem with the gas tax...
 
Written By: Tito
URL: http://
Taxing things that have an externality associated is good economics. The externality of the required middle east interventions is a quite expensive one.


The middle east intervensions were due to radical islamic terrorism, not oil. While oil does play a part in all this, even without oil we would have to intervien. Just consider Afganistan and the recent terrorist attacks from Pakistan in India.

Blaming oil makes for a neat leaftist meme, but it is wrong.
 
Written By: Don
URL: http://
I agree with Tito that if you do think gasoline brings some negative externalities you could consider taxing it and reducing FICA as good economics. (ceteris paribus)

With gas, you have pollution, traffic congestion, and (if you believe in that stuff) some carbon emission. I guess Saudi Arabian oil wealth funding Islamic terror could also be considered a negative externality of gas.

That said, we already do have taxes on gasoline. Do we need more to cover those externalities? I don’t know.

But what about if electric cars sell well, and they would with mandated 4 dollar a gallon gas? How will the government make up that shortfall they would have as gas sales plummet and thus their taxes?


I do think the Republicans should have also been working on reducing payroll taxes as part of their platform instead of just focusing on income tax, capital gains and the estate tax. Not only is it good economics, but also helps bely the image that they only want to help the rich. I’d have had any discussion of lowing capital gains come with a lowering of payroll. Of course, we’re not in tax cutting times right now, except temporarily. GOP should be offering up these alternatives though.
 
Written By: Harun
URL: http://

 
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