In reading comments from Republicans on this and other forums, I've been struck by the party loyalty that remains even when the party isn't true to its professed principles. To examine the limits and consequences of that loyalty, I'm starting a new series - "What's a Republican?". Today's topic is tax cuts.
Republicans believe they own the high ground on taxes. Democrats, they argue, are constantly advocating policies that lead to higher taxes, and they oppose tax cuts because they prefer "big government". This line of attack has been effective in the 29th, most recently in a set of campaign commercials launched immediately before the 2006 election.
Cutting taxes can only go so far: even the most libertarian Republican must come up with a way to pay for roads, schools and the military. So Republicans have to argue that their tax cuts generate more revenue (and hence more taxes) because they stimulate the economy.
Tax cuts are generally targeted against income taxes, which are considered unfair because those with higher incomes pay a disproportionate amount of tax. Cuts are rarely aimed at use taxes, because they're almost universally considered equitable.
Use taxes are levied on users of a particular government service according to the amount of that service used. The textbook case of use tax is the gasoline tax. Those who make more use of roads will buy more gasoline, and the gas tax they pay will help finance their proportion of road construction and repair. It's not perfectly fair, but it's pretty close.
Since almost everyone thinks use taxes are fair, it comes as a bit of a surprise that Randy Kuhl's solution to the problem of high gas prices is to introduce a a bill that will cut gas taxes when the price of gasoline reaches $3,00/gallon. Kuhl's proposal would decrease the federal portion of the gas tax from 18.4 to 8.4 cents per gallon as long as gas costs more than three bucks.
Never mind that Kuhl's proposal won't have an impact, since a dime difference in the cost of gas won't change anyone's driving habits. The real question is how a staunch Republican made the transition from the notion that some tax cuts are good, to the use of tax cuts as the remedy for every social ill.
Before answering that question, let's see how Kuhl plans to pay for his tax cut. Because the gas tax is vital to the maintenance of our deteriorating highways, recouping the shortfall caused by the cut is critical. Since he doesn't want to raise taxes on anything else, Kuhl's press release makes the following claim:
The reduction in the gas tax will not hurt money that is directed to the Highway Trust Fund for valuable highway infrastructure as the lower gas prices will send more people to the pumps and generate similar revenue for the Trust Fund.
In other words, he's saying that the dime reduction in federal gas tax, coupled with a possible (though not mandated) reduction in the state gas tax, will bring so many people to the pumps that the shortfall in tax revenue will be made up in volume of gas purchased. Stop and do the math and you'll realize just how unrealistic this is: since the bill would more than halve the tax, the volume of gas sold would have to more than double to make up the shortfall. Kuhl's faith in tax cuts is so strong that he seriously argues that a dime reduction in gas prices will make people fill up over twice as often as usual.
This bill is the only energy-related bill Kuhl has ever introduced, and it's clearly a PR stunt timed to coincide with the inevitable rise of gas prices over Memorial Day. Even so, I think this bill follows a pattern we've seen quite often from Republicans: real cuts in taxes coupled with fairy tales about how the income will be recouped. This kind of thinking has let us into massive deficits.
My question isn't why most of the public accepts this kind of reasoning, since almost everyone appreciates a lower tax bill. Instead, I wonder how serious, intelligent Republicans can still claim that their party stands for "fiscal responsibility" when reasoning like this has been the best their party has had to offer for almost a decade.
Comments
I agree that it's bad logic, but why do we have a federal tax on gas in the first place. It's all part of being taxed to death, especially in New York. Believe me, there are plenty of places to find that money in the bloated federal budget. Cut that tax. Cut every other tax on gas on gas except the sales tax. It's nothing but a cash grab anyway. Here's hoping that one of our 2008 Republican presidential candidates has the guts to bring up the idea of a flat tax.
I think the federal gas tax makes sense, since we have a federal highway system. I'd rather have those who drive more pay more than have all money for roads come from a general fund.
Tax code simplification - including possibly a flat tax - is worth serious consideration.
I certainly can't defend Kuhl's math. Republican voters like tax cuts for two reasons; 1. It puts more money in people's pockets and 2. In theory it will cut down on pork (yes even republican pork). By the way, I think about 15% of the federal gas tax goes to subsidize mass transit in larger cities.
#2 has been in theory not in practice for the last few years. That's my objection to Republican advocacy of tax cuts -- they don't come with fiscal discipline.
You're right about the federal gas tax: 15.5% goes to mass transit. Here are a couple of good links: History of the Federal Gas Tax and Gas Taxes by State. By the way, New York has the highest gas taxes.
So….every time I fill up my Jeep, I send $1.15 (about $60 per year) to Rochester to help pay for your bus system. It isn’t fair, but I do believe in mass transit and if it is run properly, it cuts down on the need for oil. I guess I’ll keep on sending my money to you.
I'm sure I'd appreciate your $1.15 if I ever used our mass transit system. But very few residents of the 29th ride the bus system, since it runs on only a few routes in the suburbs. Louise Slaughter's constituents are the main beneficiaries of mass transit in Rochester.
I kinda figured you weren't a mass transit type of person - just my poor attempt at humor.
Not to continue diverting the conversation into mass transit land, but I wish Rochester had a better system. When I worked in Pittsburgh, they had a kick-ass bus system that went everywhere and had frequent runs.
I used it to get to work, avoided traffic, got reading done, and didn't have to worry about DUI/DWI coming home from happy hour or after a night on the town.
Plus I wasn't aware of it at the time, but I wasn't funding terrorism. A good deal all around.
"Went everywhere and had frequent runs" - that's the opposite of the Rochester system. In the last dozen or so years, Rochester has had two huge "if we build it they will come" projects - High Falls and the Ferry - that have been huge failures. If some of that money had instead gone into expanding the bus system, perhaps with smaller buses on "pioneer" routes that were more frequent and had broader reach, then we would know today if the area could support a more robust mass transit system.