Impending Tax Increases

http://www.futureofcapitalism.com/2010/11/impending-tax-increases

The Republican Study Committee, a group of conservative Republicans in the House of Representatives, is circulating a three-page document warning of what it says are "Impending Tax Increases If Congress Takes No Action."

A press release from the committee, chaired by Congressman Tom Price, quotes Mr. Price as saying, "Allowing taxes to rise next January would compound the job-killing mistakes the majority party has already made. "

So what are some of these taxes set to increase?

• "Five year depreciation of farm business machinery and equipment will expire."
• "Business property on Indian reservations will no longer be depreciated at an accelerated rate."
• "The tax credit for first-time DC homebuyers will expire."
• "No longer will individuals be able to receive a credit to purchase energy efficient home appliances."
• "The tax credit to hire unemployed veterans and disconnected youth will expire."
• "The credit for electric drive motorcycles, three-wheeled vehicles, and low-speed vehicles will expire."
• "The tax credit for cellulosic biofuel producers will expire."
• "The special depreciation allowance for cellulosic biofuel plant property will expire."
• "The tax credit for the production of Indian coal will expire."

With all due respect to the Republican Study Committee, the principled move here is to let all these special tax breaks expire. If any "job-killing" happens as a result, it'll be the jobs of the lobbyists employed to keep these special tax breaks around from year to year, and of the accountants and lawyers that businesses and individuals and Indian tribes employ to keep track of all these special programs. Perhaps they could turn to more productive activities.

Regular readers of this site know that as a general matter I'm against tax increases. But there's a difference between a tax and a special favor created by politicians to encourage certain behavior. A lot of these programs are just subsidies masquerading as tax cuts. If Democrats proposed to spend millions of federal dollars on buying tractors for farmers, giving electric motorcycles for anyone who wants one, and paying salaries to "disconnected youth" to work at private companies, Republicans would probably object. But dress the programs up as "tax cuts" and the Republicans all of a sudden line up to support these ideas.

Why should the federal government give someone a tax break for buying a house in the District of Columbia rather than, say, Virginia, or Maryland, or New York? Why should farm equipment or cellulosic biofuel plant property be subject to different rules on depreciation than anything else?

If the message of the recent election, as Governor Christie says, is that voters are asking for "smaller government and less intrusive government, lower regulation," doesn't it follow that Americans don't want Congress taking sides on whether they drive "three-wheeled vehicles," unicycles, or 13-wheeled vehicles, and or on whether those vehicles are powered by "cellulosic biofuel," "Indian coal," or plain old-fashioned gasoline? How many of those taking advantage of the "tax credit for first-time DC homebuyers" are congressional staffers employed by the congressmen who voted for the credit?

I appreciate the Republican Study Committee's desire to defend Americans from tax increases, but the whole thing is an example of how screwed up Washington is — not just the Democrats, but also the Republicans. The Republican Study Committee is supposed to be among the best of the lot, the thoughtful, principled, free-market conservatives in Congress. Yet there they are at the ramparts defending special tax breaks for cellulosic-biofuel-powered three-wheeled vehicles driven by first-time homebuyers on District of Columbia-based Indian reservations. Guys, this is what voters want you to fight against, not for.

by Ira Stoll  |  Nov 8, 2010 at 9:54 pm Related Topics:  Energy, Politics, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list