Doing Tax Reform Right Precludes Singling Out Energy for Tax Increases
Let’s hope Congress isn’t mesmerized by the approaching fiscal cliff and lulled into making some bad decisions that could leave our economy in something akin to Wile E Coyote’s freefall.
Congress isn’t known for moving quickly, so it’s doubtful any comprehensive tax reform will become law during the lame-duck session. After all, Congress is scheduled to only be in session about three weeks before recessing for the holidays.
The best outcome may be to establish a framework for fixing the debt and avoiding sequestration, making some good down payments and then committing to meaningful tax reform early next year.
The worst case would be for lawmakers to make knee-jerk decisions that would haunt us for months and years to come. One such example would be increases in energy taxes. Taxing energy more would not solve our debt problems on its own, but it would hurt the economy and everyday Americans.
We’ve written before about some bad proposals from the administration to take away energy credits for job creation and to punish energy companies’ success overseas by double taxing their profits. These measures would put American companies at a disadvantage worldwide while stunting job growth – both moves that would hurt us more than any net tax increase would help the country.
When energy taxes go up, prices at the pump rise as well. That hurts the pocketbooks of middle class Americans. It drives up the cost of food (takes energy to plant and harvest), as well as every product that is delivered to the local mall or market. Higher energy taxes leave American companies with less money to invest in new energy sources and production, thus affecting jobs. It means less return for the shareholders, many of which are pension funds and retirement accounts depended upon by millions of Americans.
Raising taxes on energy will not help anyone in this down economy. And singling out one industry does not make for comprehensive tax reform. We only have one chance to do this right, so we better not botch it.