Debt Free

Rep. John Dingell (D-MI) has unveiled his latest strategy to suck money from your wallet (and mine) in the form of a comprehensive tax increase package that promises to strip away one of the last tax breaks enjoyed by average Americans. To add insult to injury, he's proposing to increase federal gas taxes by an astronomical 272% for good measure. Of course he's doing this using the second favorite excuse of those who would raise your taxes, behind “it's for the children”, using instead, ”it's for the environment”.

Ostensibly Rep. Dingell is manufacturing this legalized robbery as an incentive for Americans to reduce that bane of human existence; carbon emissions. In reality it will burden the average taxpayer and the economy unnecessarily. A tax on fuel will hurt not only the driving public right in their wallet, but also every business that relys in any way on transportation. That covers just about every business. You know who will end up paying that increase in costs; again the average taxpayer, as businesses are forced to raise their prices.

Although many politicians are, on the surface about creating more jobs for their constituents, this increase will do quite the opposite. Every small business that will be forced to shoulder the burdensome gas tax will have to make a choice; where to cut back in order to pay the additional fuel cost. In many cases they will have to cut employment. Labor is the highest cost for almost every business, hence labor offers the largest potential for savings, as can be seen form the way many businesses rush to cut jobs at the first sign of an economic slowdown. This tax increase package will do it's best to create such a slowdown.

As many an environmentalist will attest to, economic activity invariably creates carbon emissions. What better way to decrease those emissions than to reduce economic activity? The problem is that the economic activity also creates the wealth required to develop technological solutions to environmental problems. In this case it will give the government a short term revenue increase. Long term, the huge gas tax increase will cause economic contraction, which in turn will cause reduced federal tax revenues. Fuel tax revenues will increase, even with the reduction in fuel use this tax will engender. Federal income tax revenues, both corporate and personal, will be hurt by this tax increase, however. If a rising tide raises all boats, the boats in this case will be doing their best Exxon Valdez impersonation.

I haven't even started in on that last tax refuge for the average American, the mortgage interest deduction. At a time when many Americans are finding it hard to meet rising mortgage payments, the esteemed Rep Dingell proposes to eliminate the deduction for the interest on those mortgages.Oh, those that can afford to will be able to buy their way out of it with that favorite refuge of wealthy environmentalists, the carbon offset credit.  Yes, he's proposing the phased reduction, to zero of tax deductions on mortgage interest, beginning on homes of 3,000 square feet. Of course Dingell is saying this is one way to reduce carbon emissions not only from the construction and operation of large homes, but also from the suburban sprawl that causes larger commute distances.

If he wants to reduce suburban sprawl, how long before he proposes a tax on large yards? After all, that contributes to sprawl and even causes increased carbon emissions due to greater mowing requirements. I'm legislation on that front won't be too far behind. Homes and yards, bad idea, stacks of condos with people living like chickens on a factory farm in the inner city, great idea in their view. Never mind that many small businesses, the source of most employment in this country, is located outside the inner city and never likely to relocate.

This is another attempt to grab the mortgage interest deduction, a tax deduction that some Federal lawmakers are loathe to allow Americans the privilege of keeping (much like their money). These legislators have been after the deduction for years, this time they're using the environmental angle to go after it. 3,000 square feet is hardly a castle, and I'm sure if this bill ever makes it to law, we'll see a flood of 2,999 sq foot homes and creative ways to circumvent the tax increase. Never underestimate the creativity of Americans, after all. Some of these may very well have the exact opposite effect that Mr. Dingell is trying to achieve. For example, there will be appearing many more detached garages with home offices and mother in law apartments above the garage, thereby removing them from the square footage of the home. Ironically, this will require larger lots, force homes farther apart, and create larger suburbs. Just another example of the more lawmakers meddle, the more they screw things up.

If you'd like to keep your mortgage interest tax deduction, and avoid the economic problems created by such a huge gas tax increase, write your legislator at once. You can find your congressional representative's contact information here: http://www.house.gov/writerep/