This Prez '08 ad just keeps on bothering me...
From Dictionary.com
Free Market:
- An economic system in which prices and wages are determined by unrestricted competition between businesses, without government regulation or fear of monopolies.
- An economic market in which supply and demand are not regulated or are regulated with only minor restrictions.
- The production and exchange of goods and services without interference from the government or from monopolies.
There is a 20-something here in NH, Gregory Chase, that is supporting Mike Gravel, Democrat, for President. Smart guy: two physics degrees from Harvard, a financial quant that used to be a trader and now owns his own trading firm. Lots of money; successful. And is using his own money to support his candidate totally separate from the official campaign. So, he's just started to run newspaper and TV ads here in NH.
I glanced at one in the local paper. It included the following text (emphasis and "white space" added by me):
The path is clear but we need strong leadership. Most candidates pay lip service to alternative energy and only talk about the big government solution: alternative energy subsidies. Subsidies put legislators and regulators in the position of playing favorites with technologies, individuals, and companies.
Taxing carbon in general and gasoline in particular, on the other hand, is the free market solution to our oil woes.
A higher gas tax doesn’t mean bigger government. We can cut other taxes in parallel.
We need the price at the pump to match the true cost to our country of relying on foreign oil. The burgeoning alternative energy sector would become a massive export driver. A serious gas tax will end our dependence on foreign oil while improving the economy, the environment, and our nation’s security.
Advocating for government to step in with larger taxes is antithesis of the free market. To say that adding taxes is the FREE MARKET SOLUTION? What is this guy thinking - "I'll just use my own definition and the rubes in "Cow Hampsha" will just believe this"?
And who in their right mind would ever think that a Democrat would be willing to institute a new tax and be tied to getting rid of others???
A SERIOUS GAS TAX (code for "this will knock yer sox off"?) will end our dependence on foreign oil by the simple reason that if the current level of taxes are raised just to that of Europe (where the price of gas is much higher SOLELY due to rapacious taxation levels) would problem knock our economy to a standstill. No economy means less energy needs, thus no oil needs (or, at least much of it). Solves the problem but at what price?
Look, run your platform - but stop redefining definitions. I have had enough of that as we've lost the word "gay" and "invest" or any other word used as a euphemism to make something sound nicer than what it really is.
No wonder Gravel has no popular support....do all Dems think we are this stupid?
He also ran another ad decrying the fact that Warren Buffet pays a lesser tax rate than his secretary:
Why did the 3rd richest man in the world pay a lower effective tax rate than his own secretary in 2006? You may be surprised to know that the reason is not tax loopholes.
The root of the inequity is that the majority of wealthy people's income is classified as long-term capital gains which are taxed federally at 15%. Going to work and receiving a paycheck, on the other hand, is classified as earned income and is taxed at rates up to 35%.
Our wealthiest citizens and their money managers endeavor to treat even their earned income as long term capital gains, cheating other taxpayers. Debates are raging in Washington as Democrats and Republicans alike are scared to take a firm stand on this issue because their campaign coffers are filled largely from wealthy donors.
I blogged this before here. I can tell you with almost certainty that the Democrat response to this is NOT to lower the secretary's tax rate to match that of Buffet's - naw, that would take money away from the government, right? No, they will want to knee jerk and raise the taxes of those that are productive in society.
Frankly, this class warfare infuriates me. These folks are not cheating the system - Congress makes the laws, the IRS tries to interpret them, and the rest of us spend time and money trying to comply in ways that MINIMIZE how much taxes we pay. I'm willing to go out on a limb and say that I bet Mr. Chase has a good accountant that helps him to avoid paying anymore tax than absolutely necessary.
I really wish these kinds of guys would just put their money where their checkbook is with respect to taxes - if you believe you are undertaxed, just write the check and send it in. Go ahead, conduct a press conference if you'd like - we will all politely clap and say thank you.
Comments
People hear a lot about oil but often don't know basic facts about it: the process of refining, US production, consumption, imports, etc. The Oil ad you refer to aims to lay out some of that basic information, and make the assertion that if we want to reduce our dependence on foreign oil a good way to do it is a fuel tax.
Almost every politician says they'd like to get off foreign oil. No debate there. When asked to quantify how much they want to get off foreign oil, i.e. what they are going to do about it, things either go silent or get excessively vague.
Huckabee is a great example. He's got a whole page devoted to the topic on his site: http://www.mikehuckabee.com/?FuseAction=Issues.View&Issue_id=21 . He decries the problem quite effectively (I wish I could write as well as whatever staffer put that page together), but then falls flat on a solution. He talks about knocking heads, pouring federal money at the problem, hoping or regulating that the private sector will pony up research dollars as well, forcing the federal government to purchase alternative energies, etc. This seems like a mildly souped-up version of what we already do.
Most people accept that our collective dependence on oil has the negative externalities of environmental damage and/or reduced national security. Options I see at the federal level to address energy independence:
1. Fund public research
2. Fund private research
3. Give tax breaks to chosen activities (drilling for fossil fuels domestically, hybrid car incentives, solar panel incentives, etc.)
4. Rhetoric: Nice talk about alternatives. We've done this for 30 years.
5. Regulate: Haggle with Detroit about fuel economy standards, mandate certain fractions of power come from certain sources, etc.
6. Tax the thing you want to discourage.
7. Bury head in the sand.
I think 6 is by far the "free-est" market solution. It simply encodes the externalities into the price of oil products. Nothing we do is technically free market with our federal tax burden.
Any tax both raises revenue and imposes incentives. We have annual federal government revenues of $2.6 trillion and expenditures of $2.9 trillion, on a GDP of $14 trillion. If you want a smaller government (I do) then promote reductions in spending, don't strangle the beast. The latter strategy gets us deficits and contributes to a tanking currency. Refusal to look at new tax schemes leaves us mired in an archaic tax system which discourages labor, drives business overseas, has 60,000+ pages of code, is costly to comply with, and has rampant evasion (AKA "the tax gap"). Would it be hard to get politicians to cut other taxes at the same time? Sure. That's why I'm talking about it. I'd prefer that fight to options 1,2,3,4,5, and 7.
The view that a revenue-neutral fuel tax will cripple the economy is bogus. Don't forget, our current tax code taxes the heck out of labor. I'd say labor is a pretty integral part of the economy. Matter of fact, labor is more indispensable than energy.
As for whether an oil tax would produce results, I think the mobilization of private capital would be tremendous and efficient. I also think our private sector is substantially more innovative than that of Europe. It's not just the tax, it's the public support for it so it's understood to be a public agenda, not some temporary tax credit that will be rehashed by lobbyists in the next congressional session. That's why this ad is in newspapers and minimizes mention of Gravel, rather than spending resources funding some backroom lobbying group.
I'm not a Dem, and to answer your question I don't think you're stupid, but I do wonder what specifically you would support doing, if anything, about our dependence on foreign oil?
As for perceived bastardization of the English language: Apologies. That irks me too. When I get upset about that type of thing, though, I always catch myself and remember how feeble I find it when the French are dogmatically protective of their language.
A discussion of taxation would follow a similar arc. I find it odd that you suggest people who think their taxes are too low should just write a bigger check to the IRS. By similar logic anyone who thinks consumption of foreign oil is a severe national problem should drive around a moped and call it a day.
As for the specific phrase "cheating other taxpayers" I'm referring to successful (to my amazement) lobbying efforts by private equity and hedge fund managers to continue treating their "carried interest" (performance based compensation) as long term capital gains rather than earned income. It is legal, but it does cheat other taxpayers, IMHO. Most legislators did not intend for this tax treatment, and they hesitate to fix it for the reasons mentioned in my ad.
I've tried to match the tone of your post. Please don't take my response the wrong way. I do sincerely appreciate the entry and respect your views. These issues seem quite challenging to me, but not to be ignored.
Best regards,
Greg
Posted by: Gregory Chase | December 27, 2007 1:18 PM
Posted by: tepstolog | January 3, 2008 7:59 AM
Posted by: tepstolog | January 3, 2008 8:00 AM