Tax Policy

Does tax policy have an affect on the economy? You bet it does, both positively and negatively. To clear all impressions, I don't like paying taxes. Thats one of the reasons why I drive a 50 MPG Prius. I pay about one third less gas tax than most people.

Just looking at the gasoline tax, we all benefit from good roads. My friend who drives a pickup truck averages 15 miles per gallon. He pays three times as much tax as I do per mile driven. At some point he will wise up and drive a vehicle that gets as good mileage as I do.

And the tax debate will start. How do we create highway infrastructure with sixty six percent less tax revenue if we all drive cars that get 50 MPG. We would have to raise taxes. (Actually my buying the 2010 Prius had another negative impact on tax revenues. It was designed and built in Japan, not by American engineers and auto workers who pay taxes.)

Cutting taxes can improve tax income to government. A case in point, as part of the stimulus a special tax credit was given for a lithium ion battery factory in Michigan. This factory will sell 80% of its production to power the new battery powered Volt car from GM. The employees will pay taxes and income spent in Michigan will raising the economy and will more than offset the reduced taxes.

We need to have a comprehensive discussion that goes beyond the present tax cut politics. We must talk about investment, like the battery factory in Michigan.