Just a little over a month ago, we reported that House Republicans on the Ways and Means Committee had called off a hearing on a natural gas boondoggle that would have lined the pockets of T. Boone Pickens and George Soros with taxpayer dollars. We were proud of the GOP for taking a step back and reconsidering a plan that could have been an unqualified disaster as government funds were directed not to programs that would assist in the development of market-friendly alternative fuels, but would have forced demand- and supply-side subsidies for natural gas, creating an unstable and unnatural market.

This week, unfortunately, House Ways and Means leadership has placed these energy subsidies and “tax credits” back on the agenda.

On April 6, 2011, Rep. John Sullivan (R-OK) introduced H.R. 1380, the New Alternative Transportation to Give Americans Solutions (NAT GAS) Act of 2011.  The bill currently has 184 bipartisan cosponsors, although a number of Members of Congress have removed their names as cosponsors.  Referred primarily to the Ways and Means Committee, H.R. 1380 includes tax credits related to compressed and liquefied natural gas (CNG and LNG), including credits for the fuels themselves, credits for the purchase and production of vehicles powered by CNG and LNG, and credits for refueling property related to CNG and LNG.  Whether such credits represent good energy policy or an intrusion into the free market has been the subject of vigorous debate.

In announcing the hearing, Chairman Tiberi said, “Energy security and comprehensive tax reform are two of the most important priorities we can pursue to create jobs and ensure the long-term strength of the U.S. economy.  As the committee with jurisdiction over energy tax policy, the Ways and Means Committee should examine whether there sometimes can be tension between these priorities, and how this Committee can design tax policies that achieve our energy security goals while also staying true to the principles of simplicity, fairness, and growth that drive the Committee’s tax reform agenda.”

Anyone paying attention to Big Government would know the “tax credits” contained within this act are only tax credits because Congress chooses to define them as such. These tax credits are really heavily disguised taxpayer subsidies, doled out to people who choose to make radical, impulse decisions about which engines they put in their large vehicles without considering the long term effects of their actions. One Washington report explained the bait-and-switch rather nicely:

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In the wake of the debt ceiling negotiations that paralyzed Washington for weeks and the ensuing last-minute deal that has been criticized by many on the right for failing to change the way Washington spends money, it looks like Republicans supportive of pending natural gas subsidy legislation are eager to avoid shining too much light on the bill – which makes sense considering it distorts the energy market by using taxpayer money to pick winners and losers in the natural gas industry.

Last Wednesday, the House Ways and Means committee abruptly cancelled a scheduled hearing on the NAT GAS Act. From Politico’s Morning Energy:

NOT ON TODAY’S AGENDA
House Ways and Means has postponed its hearing on energy tax policy, putting off a potentially testy intra-Republican squabble over the NAT GAS Act to subsidize natural gas vehicles.

What is the NAT GAS Act? Well, it’s right in line with the Obama Administration’s overreaching regulatory agenda, but because some Republicans favor it the blame can’t be laid at the foot of Obama and the Democrats. From an earlier post on Washington’s war on businesses:

-An item that’s technically legislation, not regulatory rulemaking, but stands to pack the same economically ruinous punch is the NAT GAS Act (H.R. 1380) which heavily subsidizes businesses and consumers who switch to natural gas-fueled vehicles directly benefiting billionaires T. Boone Pickens and George Soros at the taxpayers’ expense. The subsidies – ahem, ‘tax credits’ – come in at a whopping $7,500 per passenger car, $64,000 for heavy-duty trucks and 18-wheelers, and up to $100,000 for gas stations installing natural gas pumps.

Referring to government subsidies as ‘tax credits’ is the oldest trick in the book to rally Republican support for a liberal proposal, and in this case it worked. Although some Republicans have pulled their support for the bill, over 70 GOP Members of Congress are on record as still supporting the bill.

So, qui bono?

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The debt negotiations raging on in Washington have given Democrats a rare chance to do two of their favorite things at once: (1) Blame straw men for the problem, and (2) Declare class warfare and bloviate about the need for higher taxes on “the rich.”

In their desperate effort to find a way to increase revenue without having to make real spending cuts, Congressional Democrats are mining the tax code for quick fixes. Now, there are some things they could do that would make sense, like tackling federal subsidies and tax credits that involve the government picking winners and losers in the private sector, but those actions would make too much sense and could hurt them politically. So, they are regurgitating a previously failed idea that would do severe damage to the U.S. economy under the guise of “closing a loophole.”

Carried interest refers to the share of investment profits allocated to the manager of a private equity fund. Carried interest is not the manager’s primary compensation for managing the fund; rather it is an additional, investment-based sum, which the tax code classifies as a capital gain. Capital gains are taxed at a lower rate of 15 percent, as they are the fruit of risk-laden investments and not primary sources of income.

Liberals in Congress, realizing that ‘investment fund managers’ are not a very sympathetic-sounding group to the majority of Americans, have sensed an opportunity to paint a straightforward part of the tax code as a loophole benefiting the afore-mentioned evil straw men.

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South Carolina is one of the few states where school choice supporters have been working to pass a great education tax credit program that’s broad-based and well-structured (please excuse me if I sound like a cattle-breeder or wine-taster).

Senator Jim DeMint has been a real champion of choice for SC and the country, and he has a great new video promoting education tax credits (brought to you  by South Carolinians for Responsible Government, the guys in the trenches for good policy there).

The lead-in hits it perfectly; school choice is about self government, and public education means an educated public, not government-run schools.

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Sunday begins National School Choice Week, the annual seven-day period in the middle of winter when kids all over the country dream of either: (1) having the freedom to stay home from school on account of snow, or (2) moving to Florida.

Well, actually, kids dream of those things all the time.  But their parents ought to spend this week dreaming of Florida because the Sunshine State now boasts some of the most forward-looking school choice policies in the country.

In fact, last year a remarkable bipartisan coalition – which included most of Florida’s black and Hispanic state legislators – passed a major expansion of the Sunshine State’s landmark Tax Credit Scholarship Program.  This prompted The Wall Street Journal to marvel at “Florida’s Unheralded School Revolution.”

And last year, not coincidentally, Florida’s student achievement test scores continued to rise, catapulting the Sunshine State into the nation’s Top Five states in K-12 education, according to the American Legislative Exchange Council’s annual rankings.  (Not bad for a state that used to place in the bottom third of annual student achievement rankings.)

While there is much to celebrate in the Sunshine State’s schools, Florida still has its share of education policy problems.  For example, last year Florida’s politically-opportunistic former Governor (Charlie Crist) decided to curry favor with the powerful teachers’ unions by vetoing a merit pay for teachers’ bill that he had previously pledged to sign.

Crist’s political strategy ultimately backfired – he got trounced by Marco Rubio in the U.S. Senate race.  Yet, interestingly, his flip-flop on merit pay would not have even won Crist the 2010 prize for Most Unseemly Behavior by a Floridian in the merit pay debate.

That dubious honor, sadly, would have gone to a government teacher at East Ridge High School in Clermont who sent the Florida Senate President a packet of nearly 100 letters – all of them opposing merit pay for teachers – which his students had written as a class assignment.  In a cover letter, the teacher claimed that he had presented the bill (S.B. 6) to the students with “a neutral connotation.”  And the teacher also expressed “total amazement” that every single one of his students wrote a letter opposing merit pay.

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Yesterday, the Supreme Court of the United States heard arguments in an appeal of a 9th Circuit decision, Winn v Garriott, a challenge to one of Arizona’s education tax credit programs. It’s been getting more press than I’d expected, in the New York Times, the Washington Post, USA Today. That’s great news, because the case is far more important than just saving a program that improves education and expands educational freedom.

The 9th Circuit’s reasoning arrogates to the state all property , dissolving the distinction between public and private funds as well as public and private choices. It is a disturbing, dangerous decision.

They assert that tax cuts are the equivalent of government funds, a conclusion possible only if one assumes that all personal income belongs by default to the state rather than to the individual who earned the money. It asserts as well that when taxpayers and parents privately choose to support religious educational organizations, they are in violation of the First Amendment. This reasoning blatantly ignores the logic and plain meaning of the 2002 Zelman decision upholding school vouchers, among others.

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I’m a bit puzzled by Democrat Roy Barnes’ accounting methods here. Funny how an accounting error can lead to his allegedly owning a home for tax break purposes, when he didn’t actually own it. On top of that, he now claims to be due a $30,000 refund over a failed bank in which he had invested. Yet, last week he was only due approximately a $20,000 refund.

It’s unclear to me if making bad investments, seeing personal tax breaks that don’t exist, while seeming to have no real handle on one’s personal finances, is what Georgia voters want in a governor.

ATLANTA — Roy Barnes claimed federal and state income tax breaks in 2008 and 2009 for depreciation on a house he doesn’t own, his campaign acknowledged Thursday.
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Cobb County property records show Barnes’ daughter and son-in-law have owned the house in Marietta since 2007 when Barnes gave it to them. Barnes, the Democratic nominee for governor, owns several properties on the road.

Barnes campaign spokesman Emil Runge called it an accounting error and said, as a result, the former governor had underpaid about $7,500 in taxes for the two years. His accountant is amending the  returns to remove the tax break.

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If you ask people on the street (outside of Chicago) if they have ever heard of ShoreBank, the answer would likely be “no.” While ShoreBank isn’t a Goldman Sachs, a Bank of America, or a JP Morgan, to the Progressives, this “little” bank is in many ways every bit as big and important as the aforementioned “large banks.”

Why?

One of the core components of President Obama’s fundamental change for America is to create clean energy jobs, also known as “green jobs”.  During his campaign and as recently as his State of the Union Address, President Obama continues to talk about the need “green” jobs. In fact, during his State of the Union 2010 speech, the President stated, “We should put more Americans to work building clean energy facilities –  and give rebates to Americans who make their homes more energy-efficient, which supports clean energy jobs. “

In a speech given by the President in Virginia on Dec. 15, 2009, he said, “The simple act of retrofitting these buildings to make them more energy-efficient — installing new windows and doors, insulation, roofing, sealing leaks, modernizing heating and cooling equipment — is one of the fastest, easiest and cheapest things we can do to put Americans back to work while saving families money and reducing harmful emissions.”

In the  stimulus package last year, President Obama devoted nearly $60 billion of his plan for building a new green-based economy.

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The definition of insanity is to keep doing the same thing over and over again and expect different outcomes.  The different versions of the jobs bills circulating in Washington DC these days are perfect example of that point.

See for instance, the  jobs tax credit for hiring new workers idea. What a brilliant example of bipartisan nonsense that is. Pushed by President Obama during his State of the Union address earlier this month and most recently picked up by Senators Schumer and Hatch.

Still no one seems to wonder, why would employers pay a new worker $40,000 to earn a $5,000 credit unless that worker generates at least $35,000 of revenue? Even when the advice comes from economists at the National Federation of Independent Businesses, the largest association of small business owners in the country, it is ignored by the President and Congress.

This about it this way:

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As mentioned earlier (here ), the financial crisis was fueled by the government’s obsession with home ownership. Yet, last year the Bush administration decided that it was wise to continue to encourage people to buy houses that they couldn’t afford. That’s why it came up with a refundable tax credit, worth up to $8,000 for the purchase of a first home.  Refundable tax credit means that the claimants will get cash back even if they paid no taxes.  The low level of documentation required to get your credit makes it also a low hanging fruit for potential scammers. Is anyone surprised?

“The Treasury’s inspector general for tax administration, J. Russell George, recently told Congress that at least 19,000 filers hadn’t purchased a home when they claimed the credit. For another 74,000 filers, claiming a total of $500 million in credits, evidence suggests that they weren’t first-time buyers.

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