When the Rich are Worried!

It’s easy to understand the need to encourage economic growth and other socially beneficial outcomes with tax breaks. The problem arises when tax policies have unintended outcomes or provide an unfair advantage to one group over another. And oft-times a tax policy starts out working fine but over time it no longer makes sense.

Take our duties on imported sugar. We have driven the price of sugar in the United States to astronomical levels. In addition to impacting the cost of sweetening one’s “morning-joe,” this has greatly sweetened the lives of a handful of sugar plantation owners. Worse, these tariffs have driven nearly every major candy maker out of the country.  Just take a drive up the Queen Elizabeth Way between Fort Erie & Toronto; you can see where much of the candy we enjoy is now made. Oh, and by the way, the Canadians are thrilled with the tens of thousands of jobs we pushed their way.  

On a different note, some of the laws enacted over the last +/-100 years (yes, they go back to 1913) intended to encourage oil exploration are no longer in our interest. We are giving the oil companies billions of taxpayer dollars to do what most companies do with their own funds.

High oil and gasoline prices have suddenly focused attention on these perks; especially when the mega oil companies are reporting spectacular profits. Understand, there is nothing illegal about any of this, but there is a clear ethical line that seems to have been left in the rear view mirror. No one questions any business’s right -even their responsibility- to seek out the help of their elected representatives when they need help.

On the other hand, once the need has passed, don’t they have a responsibility to advise their government contacts that they no longer are in need? Instead the oil companies are fighting to keep billions in tax breaks. That’s not need, that’s greed. They are all quick to say that they are not causing the run up in oil prices. In fact everyone connected with oil has disavowed responsibility. Furthermore, there is no shortage of oil; nor has there been any interruption in the supply chain.

Then why is this plentiful resource so expensive? The experts seem to agree that the culprit is speculation. It appears that the super wealthy seized on the unrest in the Middle East and rushed into the commodity markets creating a price tsunami in oil. While the speculators are lining their pockets, they are emptying ours at the gas pumps. Worse, increased fuel costs are hitting us everywhere from the grocery store to the home store and threatening to derail the recovery.

Some of the well intended deregulation efforts and tax policies of the last two decades are whipping through our economy with devastating impact on the little folks. When you have large numbers of the very wealthy calling for an end to tax breaks for the rich – shouldn’t we listen? It isn’t that they don’t want the money; the rich see this imbalance endangering our economy. It’s too bad this viewpoint escapes those in charge of setting tax policy.