A Tale of Two Tax Thoughts…

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In surfing the web this morning I came across two stories that when viewed side by side generated a buzz in my mind. The stories were the upcoming US State of the Union Address and rumblings in Canada about a carbon tax.

The Two Stories

President Obama is expected to call for increases in taxes/fees on big money banks and a modest increase in the capital gains tax. Also included is what seems to be the more controversial closing of a loop-hole on inherited assets.

In Ontario there is heightened talk proposing that the lower oil prices offer an excellent time to implement a long wanted carbon tax. It is believed that such a tax would spread across the other Provinces and would of course not be temporary in nature. The Ontario tax is especially focused on putting up to 7¢/litre tax on gasoline.It would be in addition to other taxes on the fuel and unlike the British Colombia carbon tax as of it offers no neutrality hopes.

The Reality

I think the preemptive spin from the GOP is heinously dishonest and exactly the kind of stuff I expect from them in their inevitable pursuit of destroying their mid-terms victories. In their first salvo of stirring the “class warfare” bullshit they gloss over,nay completely ignore the actual rates and points where the taxes kick in. Talk of hurting the middle class by taxing the family farm is a lie as is the thought that small family businesses will be overburdened.

Carbon taxes are coming one way or the other to us all. I dare say carbon taxes and roads taxation based on mileage are two of the key forms of taxation in the coming decade. What this will mean for economies and personal freedom is a bit of guesswork.

The valleyviewpoint

As I said earlier the rates and cutoffs of Obama’s proposal are being glossed over by the opposition. In many ways the call for the elimination of some of the taxes looked at is fiscal suicide for our nation but the GOP clearly doesn’t care about that. The GOP is no stranger to spending so I think it is past time for the fucking elephant to remember the bill needs to be paid!

The capital gains increase is indeed modest.In fact it merely returns to the heyday of Reagan. The closing of the trust fund inheritance loop-hole aka the “stepped up basis” rule is open to fair criticism of being confiscatory. I readily concede that but that doesn’t mean it can’t be put on the table of some level of discussion. As far as targeting the interbank lending scam with a fee I don’t see the harm and I only see where both Republican and Democrat grafters deny the security of the nation by opposing it.

An honest opposition with an iota of intellectual integrity would allow the discussion to be started and fight the good fight on some of the spending targets. For example although I am facing the double barrels of higher ed costs I can’t support free community college education. I say this because I know it will cost far more than the proposed $60 billion and will be rife with abuse and ultimately fail to deliver.Tax credits for couple with incomes up to $200K ?!?! If we can make that happen why the hell not?!?!

As I said earlier the realist in me knows mileage based roads tax will come sooner than later. This is true since many states all ready know they face a gasoline tax dilemma. The introduction of emerging technologies will also play a role in the implementation of this type of tax. The line in the sand for me is that a mileage based system MUST eliminate the existing fuel and sales tax on motor fuels.

Carbon taxes are not my favorite since I find the science and social calls behind them to be dubious at best. That said as a pure formulaic manner to consolidate a myriad of taxes they are not off the table non-starters for me. Mush like the mileage tax however existing fuel and sales taxes MUST be eliminated if they are implemented.

I obviously have other caveats to supporting these forms of taxation. First the mileage based system must not interfere with personal freedoms. This is a very real concern since the two prominent sciences behind them either require your car tracking you or the infrastructure tracking you. Reporting mileage annually during an inspection or voluntary disclosure is batted around but these are stupid and fails to embrace the positives emerging technology offers. Second the tax funds MUST go to the infrastructure and nothing but the infrastructure. Part of the reason the US infrastructure is in such a substandard state is the raping of the funds meant for it.

As for carbon taxes I believe a neutrality clause must exist to offset what will surely be skyrocketing rates in the future. I personally also believe political greenness expenditures cannot be financed from this tax. I could support investment in hydrogen being the sole exception to this.

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