21 February 2009

OF SHOES AND SHIPS AND SEALING WAX...AND MILAEGE TAXES

Over at Reformed and Loving It, there is a great discussion of the new Administration’s floater of the idea of a “mileage tax,’ i.e., a tax of $.0025 on every mile driven by every citizen. The White House was quick to scotch the idea, but let’s think about that from an historical aspect.

When Secretary of Transportation Ray La Hood brought up the idea, it was one of those "no good deed goes unpunished" moments. As we have been asked to do by the government, and forced to do by gas prices, we have been driving more gas efficient cars and fewer miles. As a result, the gas tax revenue has plummeted, something that is anathema to government, especially liberal government.

Now, when my income diminishes, I have to curtail my spending. I have no choice. But when government's income decreases, it has no compunction about dipping further into my pocket to fund bread and circuses for those who pay no taxes and have no stake in efficiency and hard work. "We'll tax 'em just a little more."

I am probably paranoid, but I also see the hands of the unions--especially the UAW--in this. If people buy fuel efficient cars rather than the gas guzzlers coming out of Detroit, that is bad news for Ford, Chrysler, GM . . . and the UAW. A mileage tax does not reward efficiency--I pay the same tax for my Prius as another does for his Escalade.

I thought it was interesting that it was La Hood, the only Republican in the Cabinet, who was chosen to float the trial balloon on the mileage tax. The immediate negative public opinion led to a White House disavowal of the Secretary's statement.

I suspect that this is just a first effort to begin "educating" the public about the government's "need" for more of our money. I remember two salient historical facts:

1. Social Security started with a very small income base. Only the first $3,000 of income was taxed at 1%. The maximum tax was supposed to cap at 3% on the first $3,000 by 1949 according to documents issued by the Social Security Administration in 1935.

In 2009, that figure has grown to 6.2% on the first $106,800.

Now, a person earning $106, 800 can afford to fund a respectable retirement savings account, subject to his or her personal investment strategies. So, why the high level?

It’s a Ponzi scheme to transfer wealth. The first recipient of a monthly social security check, Ida Fuller, paid in a total of $24.75 in social security taxes between 1937 and 1939. In January 1940, she received her first monthly payment of $22.54. In February, 1940, she exceeded her total “contribution”, on her way to a total lifetime payment of $22, 898.92—all paid by the folks who came after her.

So the suggestion that the mileage tax will be a mere .0025% per mile is just talk. The tax can, and will, increase as the “needs” of the taxing body increase.

2. Americans are historically loath to accept taxes on items necessary to their existence, as they define existence. In general, the Sugar Act of 1764 was not opposed in the colonies because we produced our own sugar. The Stamp Act of 1765 (repealed in 1766) taxed our daily lives and we screamed. The Townshend Act (1767, repealed 1770) taxed lead, paper, paint, glass, and tea—none of which were produced in any great measure in the colonies. Again the people were aroused. Then there was the Tea Act of 1773. We know how that turned out. (Think a dark night in Boston and a tea party for the ages.)

So, smokers wail at higher and higher cigarette taxes, while non-smokers shrug. But in a post-WWII economy that rearranged America so that people needed cars and roads, nearly everyone drives. So the mileage tax will probably find its way to the dustbin of history, but if not, there remains in the national DNA an aversion to government that taxes necessities just so it can get the people’s money.

King George III, God bless him, ignored that fact. Will the President and the Congress?

5 comments:

Reformed Catholic said...

The problem is Mac, that while we hate giving money to the 'guvmnt', we love the services the 'guvmnt' provides.

Good highways, a well equipped military, and other local, state and national services need to be paid for.

That's not saying that there aren't pork barrel projects, but even Reagan tried to reign in government services, and never was able to do it.

And although I agree that Social Security is a large Ponzi scheme, that scheme has kept many Americans from worrying about their income during old age. The only flaw in the scheme is that we're living longer than when the scheme was created, and the birth rate has declined.

Unfortunately, I'm not sure anyone has an answer to that. I'm just worried when I have to go from Tricare to Medicare (sigh).

Kevin said...

Thanks for the reference, Mac. I think you and I were looking at the same problem from two perspectives. I am annoyed by the notion of a VMT. I am outraged by the continuing erosion of our Constitutional freedoms.

Taxation may have been the spark in 1775, but Liberty was the powder keg.

Great post.

Rev Kim said...

Thanks for this. As usual, you make excellent points.

The stimulus package(s) and much else about this new administration is breaking this Reagan Republican's heart.

Strode said...

Thanks Mac,
You haven't included the employer's "contribution" to the SS tax for each employee. A hideous scheme to hide from the worker the full extent of the SS burden that is based on their wage. An old friend (R.I.P.) used to say that things would be different if each employee received their total pay at one window, went to the next to hand back the SS portion, another window to hand back the Fed tax portion, another window to hand back the State portion, etc.

Michael said...

Excellent post. I am glad I am not the only one noticing this outrage.