Friday, August 28, 2009
COP: Exclusive: The Pending Tax Nightmare of ‘Cap and Trade’
C. Austin Burrell
Our Congress is pending receipt of legislation that will produce the most egregious and regressive tax ever levied on the American people and our economy. This is coming at a time when no one can afford the escalation of all energy prices such a tax will produce in every area of the American economy, from top to bottom, front to back. The proposed structure of this tax would be to impose a consumption tax of 45 percent on all carbon based energy uses, from buses and trucks, to autos, to energy production. According to Congressional Watch, the price of every vehicle manufactured to the new emissions standard would be upped by $1,300 per vehicle, the price of gasoline would jump by 76 percent, and the price of electricity would jump by 95 percent.
In addition, the estimate is that the GDP would be reduced by $2 trillion – minimum –every year beginning with its implementation. Approximately 1.1 million jobs would be lost, before application of economic magnification to a multiple of these losses.
Overall, every American family would be paying over $3,100 a year for these new programs best case, a staggering number for the average family, a hit they can’t absorb.
Tax revenues are crashing all over the country as jobs are lost, and opportunities are de-materialized. California’s tax base loss is putting it into crisis as we speak. It is one of a vast majority of states and municipalities that face similar losses.
We are seeing a fantasy focus on job creation, one that has no connection to reality. We have to hope that our legislative processes moderate the extreme elements out of this. If this program isn’t done gradually, this economy will implode: period, no hedge.
I am hard pressed to find any element of our economy not in crisis, and as the financials improve, many looking for simple solutions think this will revive our economy by itself, only to run into taxation policies from Sweden and the old Soviet Union.
This is such simple economics that it’s hard to imagine that the American people can be taken in by this logic, but anyone making that systematic bet for the last hundred years would have been systematically wrong.
Our leaders want us to believe it is different this time. Is it ever, or has it ever been?
This simply manages to touch literally every sector of the U.S. economy, but puts the greatest burden directly on those least able to afford it.
More importantly, this is the Obama equivalent of Bush Sr.’s legendary quote regarding the promise of (read my lips) NO NEW TAXES.
Obama ran on a platform of no new taxes for anyone earning less than $250,000. Given that, is this cap and trade thing going to be called by another name? It doesn’t matter what they call it; it will fall like a ton of bricks on those least able to afford it. How many middle class and marginal poor citizens can afford to pay 45 percent more for gasoline and diesel fuel, or 45 percent more to heat and cool their homes? How many will be able to afford our products whose production and shipping costs will jump also by at least 45 percent?
This goes to the fundamental issue of practical micro-economics. What are we missing here? I think we miss nothing except for those who bury their heads in the sand, hoping for a miracle. To me, miracles are like coincidences: I don’t believe in either. Neither should the American people.
At a time when it appears our government can’t find $49 billion worth of assets stolen by Bernard Madoff and when they have shown themselves to be total clowns about monetary economics, how can they ask us to trust them with a straight face? The Federal Reserve, working with the Treasury, recently injected $1 trillion into the economy in a SINGLE DAY. That was the deficit incurred for the entire World War II era.
Many people have missed this staggering new tax and its implications. This includes some of my wealthiest and most successful friends and acquaintances, well-educated, and presumably rational and logical. As one person said to me, the new tax rate for those earning over $250,000 is only going up five to 10 percent. But that is before they exclude certain previous allowed deductions, or reduced charitable contribution rates.
This is a bad time to engage in social engineering. What is it about this recession and corruption that four consecutive administrations have been unable to understand?
We that are involved in trying to stop this enormous manipulation of our entire financial system on a treasonous level, through the mechanisms of fraud and counterfeiting of commercial securities, know what is going on. We have no excuse to remain silent, as with silence goes consent.
I will say something here that has no place in our courts today. This is about the duties of citizens in a democracy. Right now, they are allowing these duties to be defaulted to others who have demonstrated no commitment to the values consistent with these duties.
Shame! This shame will be visited on our children, but only too far after anything short of a revolution can correct it.
FamilySecurityMatters.org Contributing Editor C. Austin Burrell is a corporate finance generalist with over 30 years of Wall Street and related experience, He is a 1968 Graduate of the U.S. Military Academy and a graduate of the Army’s Finance Officer Advanced Course.