As Tabitha Hale noted yesterday, there seems to be no shortage of ways that this administration and the Democrat party can think of to tax away every bit of our nation's prosperity. But the "car tax" simply defies logic and begs the question, "What are they thinking?"
Aside from their apparent love of taxation, what is the underlying reason this administration would want to levy more taxes on America's driving? Environmentalism? Money for infrastructure investment? Justify more hires at the IRS?
Actually, it's because the treasury is starting to lose money. In a glaring oversight about how taxing behavior works, the administration seems to believe that taxing driving will increase revenues as opposed to simply decreasing driving. As Steve Maley pointed out today, it's not as though the Democrats are in favor of doing much to bring the cost of oil down and the administration is no different. In fact, part of their hope had originally been that higher gas prices would encourage the pursuit of more fuel efficient vehicles and of course green technology has played a huge role in every energy decision the Obama administration has made. Whether they addressed the fact that lower gas consumption would result in lower revenues is hard to say. They could very well have assumed a tax of this nature would address that problem. Either way, here we are, revenues going down, and of course the government can't get more efficient as cars do, so we are expected to pick up the tab.
One thing is certain, this is not good for the lower and middle classes of America. Hybrid and electric cars are already more expensive than regular cars. As such, not only would poor people have the increased cost of gasoline, which President Obama seems to be offering no indication he will do anything about, as well as the gas taxes that already exist and take as much as $0.70 per gallon already, but now they will need to pay an additional tax for simply driving the car at all. One assumes that the high political cost of taxing the poor on such a basic necessity will introduce new progressive tax legislation that more than likely will exempt that same percentage of Americans that don't pay income taxes from this newest burden as well.
But that will not shield the administration from all political cost when implementing a driving tax. President Obama risks isolating and angering the segment of the population he is most dependent on for re-election in 2012. The vaunted swing states may not take kindly to having to dig deeper into their pockets during a recession. This is a big problem when job one is reconnecting with them:
Democratic officials are intently focused on three states that Obama won last time – Virginia, Colorado and Nevada – that provide different paths to victory as an alternative to the traditional dependence on Ohio and Florida.
Nevada is a traditional swing state whereas Colorado and Virginia had histories of going GOP until Obama made the scene. It seems an odd time to be testing the patience of voters while simultaneously vowing to "focus" on them.
And what of people that drive for a living? Truck drivers, realtors, and salesmen would all be affected. City and country government costs would go up unless they are exempt which would be equally infuriating to the public. I foresee a series of waivers and tax credits further confusing our already confused tax code in order to give favors out to those that the Democrats want to excuse from punishment.
I've long said that the best way for tax reform to take hold in the national dialogue is for everyone to have to pay their taxes themselves as opposed to having them withheld. The government has been very clever for years to hold people's anger at bay by hiding these taxes: withholdings on paychecks, the payroll tax which creates the illusion that it's paid by the employer (when in actuality we calculate that when determining your salary), or the gas taxes which are rolled right into the total with no differentiation between gas and tax. These are ways to create an out of sight, out of mind mentality among the electorate. I'm not sure yet how this administration thinks that they can pull this off with how closely the public keeps an eye on the cost of driving their car.
I'll be surprised if this car tax happens before 2012 given the political cost associated. However, President Obama has shown in the past his desire to punish American's to fulfill his green dreams. If he wins in 2012, all bets are off.