I'll start by quoting myself to explain. I know, just as everyone else does, that our current federal tax system is used to control individual behavior. We give tax breaks and "incentives" for activities we want people to participate in. We also have tax penalties and increases for activities we don't want people to participate in. But rather than just legislate what we want people to do or not to do, we choose to disguise it in the tax system rather than just put it out there for and up or down vote, of congress and for that matter, our society.

Our society isn't moral, because we use the tax code to influence and control individual behavior. That is a whole lot easier to do than to actually write legislation against or for a certain activity. Because if we legislated based on specific activities, it would be seen as an incursion into individual freedoms. However, if we try to regulate people's lives via the tax code, we don't have to deal with arguments about individual freedoms. Now it becomes a pay to play issue, which is more stinky and dirtier than just coming out there and writing leg. about activities.

If you want more domestic oil, we have to drill for it. We also have to have the capacity to refine it. So that means eliminating restrictions on new drilling sites, and eliminating restrictions on the creation of and expansion of refining. If we choose to do neither of these, more domestic oil can't happen. We have to make it economically viable for refiners to build new and expand their refining capacity. If they don't think they can make a profit at it, they won't do it. So, if you want to change oil policy, change it at the supply end, not the consumption end.

 

The equation describes an economy. Individual choice doesn't matter because any tax will have an impact on the entire economy. The T in the equation represents all the tax dollars collected and factors that impact into the entire economy. If you take T (tax dollars before proposed increase) and then T' (tax dollars after increase) and you calculate your GDP/GNP for T and then for T' you will see that GDP/GNP has reduced because of the increased tax burden in the economy you are analyzing.

Suggesting that taxing (or rather putting a tariff) on foreign imports of oil will force distributors to change their behavior is not realistic either. Bear in mind that corporations and businesses do not really pay tax. They take their tax burden and factor it into the price of their products. So, we pay the tax for them, in the price of the products, and we then pay tax on that (sales tax). So, we are double taxed on our consumer purchases.

Now, take the concept of oil. If there is a tariff on foreign oil imports, the importers or distributors won't pay that, we the consumer will. The cost of that tariff won't affect the oil companies or distributors, it will come down to us. The cost will be a pass through.

To the admins, sorry for posting twice in a row, it was the only way I could organize my thoughts.

 

First, The fuel companies are not limiting themselves, the government is the one that has caps on their production (bush wouldnt want to upset his saudi friends).

I agree that in a normal circumstance, we as consumers take on the burden of an extra tax. In this situation though, with the tax only on imported oil, companies would move to local oil that would be untaxed, and with a surplus of oil on the market (because we as american figure out after an increase of .50 a gallon we can find alternatives to our driving habits, and we reduce our usage), base prices on fuel would fall, making up for the additional tax and while we wein ourselves off of foreign oil we are building funds to focus back on fuel efficiency as a nation.

 

What kind of caps does the government have?Please tell me I am wondering?Kevin

 

This sounds like a work buddy of mine. While the Bush Administration and the oil industry are friendly, I don't picture deals that remind me of the Dallas TV episodes. If they had that kind of power, hybrids would not be allowed to be sold. Having said that, they need a more serious energy plan....

 

The following are some views from my father, whom I respect and find very intelligent:

"No Society has ever taxed itself into prosperity?" I disagree totally with that! Just travel to any third world nation where taxes are low and you will quickly want to return to the magnificent infrastructure of the first world where people constantly moan about high taxes. Just saying something does not make it true... a habit that many bloggers seem to think works.



"No moral society uses taxes to control behavior." Uh... tobacco, alcohol, food, etc. We have direct taxes and hidden taxes (subsidies) on all these products and that is how we keep our consumer economy humming. Food and fiber in America is cheap by world standards not only because of our farmers. We plow huge subsidies into almost every aspect of our food production system from price supports to cheap fuel for transportation and a transportation system that was built with taxes to a marketing system built on mass pruduction and competition that enables consumers to walk into airconditioned stores and buy refrigerated fruit from South America. Once again just saying something does not make it true.

America has subsidized cheap oil since WWII with any number of schemes. Tax breaks for investment in new wells, ships, refineries, transportation, pipelines and new jobs. We have provided military support to oil friendly countries to the tune of billions. And once agian the Bush administration is giving tax breaks to the same huge oil companies who are reporting record profits.

The answer is to burn less fossil fuels and to do that we must either let the price move by the real forces of the market or install a tariff that accomplishes the same net effect.

I call that ivory tower gobbledigook. If the formulas work why is Greenspan confused about how the economy is behaving? The formula treats the extra cost per gallon as a tax but doesn't take into accountt that it is a tariff to regulate trade. If you are interested, read more by Tom Friedman (NY Times International Business and Affairs Columnist) he proposes much the same concept in his new book the World is Flat.

One thing I know is Pay no attention to economists with formulas

 

For one, anwar...I know thats not what you are looking for...I will try and find the story that I was reading about government limitations on oil production and storage.

 

Thank you if you are able to find one.Kevin

 

You are ignoring a significant portion of Western Europe, which has created for itself a welfare state. The Nordic countries have some of the highest taxes in Europe and their unemployment rates are also some of the highest. Those who are not employed are given a meager and degrading existence through the reappropriation of incomes of the employed to those who are not, thus perpetuating the cycle of poverty. A class of "entitlement" citizens who have no reason to work, no need to work, so long as they have no desire for self improvement or individual honor or progress. At the same time, those who are employed have significant chunks of their income ripped away from them (upwards of 60% of their income). That income is no longer at their disposal to spend and invest as they wish, thus reducing the amount of money that is circulating in the economy because it has been diverted in taxes. [reference economic equation here]

Third world nations, with low tax rates, which have rampant poverty are usually that way due to the lack of integrity, honesty, structure and guaranteed rights and protections in their governments. Simply put, there is no rule of law and no process of law. Their "leadership" is either a president for life (read: dictator) who was elected in the one election the nation has had since 1966 or some kind of military leader who uses the military of said nation to keep the citizenry in check. There are also situations like Mexico where corruption, bribes and nepotism is rampant in government and as such a party with strong connections can control most areas of government for year and years and years.

Your conclusion regarding third world nations and their tax structure as you choose to relate to country wealth and its citizenry is patently false and without significant depth of understanding of world economies, individual economic conditions in western nations, other than the U.S. and other effects of government policies and structure on economies.

Apparently you are not reading my posts. I said that our nation was not moral because we use taxes to control behavior rather than using direct legislation. Please re-read my previous posts prior to making outlandish tangential comments.

I live in a significantly agricultural area of my state, and the last time I checked tree fruit did not enjoy subsidies. It is a "make it or break it" industry, which usually causes the local economy to be in a state of perpetual recession. The last time I checked, the average farmer out here had to make it on his own without help from the fed. Considering that tree fruit is basically a luxury item and not an essential staple, I recognize the subsidies on staples, such a wheat. However this particular administration is reducing agricultural subsidies with just about every new ag bill which is signed. I distinctly recall the wailing and gnashing of teeth when the most recent subsidy cuts were announced.

The era of small family farms is over with. As subsidies dry up, corporate farming and corporate food production will become the norm; it basically is already but certain elements of our society continue to wring their hands over the loss of the family farm. It is happening in tree fruit now. It has been happening with wheat, corn and staple crops for 25 years or more. ConAgra, ADM, Cargill all dominate the mid-western staple crop markets. The reduction of subsidies is causing farming to be concentrated on those who can keep prices low, and keep production high with little government assistance.

I have no issue with tax money being used to pave our roads and provide a transportation system. It doesn't do us much good to grow food but have no way to get it to market. I'm not sure how you link behavior oriented tax measures to providing a transportation system? Infrastructure is so broad range in impact and scope that it doesn't make sense that it is related to behavior oriented taxation.

Sure, the U.S. has protected its foreign interests in oil through any number of means. I don't agree with all of them, but at the same time when the U.S. was going through the political and administrative abomination of the 1960s and 1970s, creating laws that stifled domestic oil production, let alone economic prosperity, we saw the Middle East as the source of oil, and as such we didn't need to worry about local production and refining. Now we are being hit on the head with our own mistakes from 30 and 40 years ago. The only way to solve it now is to resend those mistakes, acknowledge that dependence on foreign sources of oil was foolish, and try to do it on our own. ANWR is a start, but we need refining capacity, which we do not have right now. We need to get serious about nuclear power production. And sure we need to find energy efficiencies in everything we do, however creating additional artificial forces, such as you are suggesting will not solve the problem. Individuals in an economy can only respond to the effects on their pocketbook within the constraints of the needs of their lives.

The last time I checked Greenspan wasn't confused about what the economy is doing. It is pretty clear to me. If fuel costs were not an issue, our economic growth rate would be much higher than it really is, our unemployment rate would be lower and commentators and talking heads wouldn't be saying that the economy is "ok, but not great".

It is your loss for not paying attention to "economists with formulas". Rather than close your mind to ideas which conflict with your views of how the world should work, and of course casting off historical perspective, you should take into consideration the history of the world and compare the effects of government policy with regard to economic performance.

Oh, and tariffs are taxes specifically designed to control imports and favor domestic production, even when domestic production is inefficient. That is the major reason that world economies tend to strengthen when trade barriers drop and individual societies find the tasks and products they are best at producing.

The NY Times is the last place I will go for balanced and responsible news and reporting. If I were you, I'd try to read alternate news sources in addition to the Times. Perspective is everything.

 

A lot of people absolutely love to say "look at europe" when talking about higher fuel prices....come on, you didn't really think they had "free" healthcare....did you? <smirk> If you want me to pay over $5/gallon due to taxes you better start building some Autobahns and let me cruise at 120+ mph when I feel like it. Don't worry I'll still get atleast 35-40 mpg while doing it on my motorcycle.