Conservatives Suggest we Should Emulate Canada

At least some conservatives have been suggesting that we should look north of the border for a model of fiscal down-sizing.  This is fascinating given that Canada’s spending has always been greater than ours as a share of GDP and they offer a much more expansive social safety net–most notably, “socialized medicine” available to all Canadians with no out-of-pocket payment responsibilities by patients.

For example, the American Enterprise Institute is sponsoring an event on September 18 titled “Fiscal sanity and political success: Canada proves you can have it all.” Here is their summary:

In the 1990s, Canada suffered from the same economic malaise that plagues the U.S. today: slow economic growth, heavy government spending and a rising national debt. Canada’s remarkable turnaround relied relatively little on raising taxes; instead, federal program spending was cut by nearly 10 percent over a two-year period to restore its budget to balance. Its federal government also devolved greater responsibility to provincial governments, leading to a decade of strong growth in employment, gross domestic product and investments. Despite the political challenges of reform, the governments responsible were consistently re-elected both federally and provincially.

To say that the causes of Canada’s debt problems in the 1990s and ours now have similar origins is at best disingenuous.  In the mid-1990s, the world economy was booming, whereas the recent run-up in debt has come during a massive economic recession.  Canada’s deficits reflected simple political failure to face fiscal constraints whereas our current deficits are largely the consequence of what most economists would view as a necessary response to the recession.  Indeed, we were reducing deficits in the 1990s –through a mixture of spending cuts, higher taxes, and the economic boom–at the same time that Canada was adopting their vaunted fiscal adjustments.

And Canada’s spending at all levels of government in the early 1990s was around 50 percent of GDP.  Ours was around 36 percent before the Great Recession.  (I’m citing OECD numbers, which are somewhat higher than the official US statistics, so as to allow comparison between the two countries. Kathy Ruffing of Center on Budget and Policy Priorities cogently explicates the differences here.)

You may be surprised to know that Canada’s spending, which some conservatives are now citing as a model of government efficiency, is still higher than spending in the US (measured as a share of GDP) and likely to remain so for the foreseeable future. This raises the question of whether conservatives would be happier with the size of our public sector if we’d only started with a much higher base level of spending.

The idea that devolving spending to lower levels of government (provinces in Canada, state and local governments in the US) represents fiscal constraint also strikes me as very odd, although it is clearly part of the US conservatives’ plan to fix our budget problems. Paul Ryan’s budget would shift a large and growing share of government spending onto the states over time–by block-granting Medicaid, for example. There are arguments for and against devolution (the main argument for is that lower levels of government may be more responsive to constituents; the main argument against is that states can’t support an adequate social safety net because high-income taxpayers will flee to lower-tax/lower-service jurisdictions), but the mere act of shifting spending from federal to lower levels of government does not make government smaller.

One way that Canada does appear to be the model of efficiency is in the provision of healthcare.  Canada spends about 11 percent of GDP on healthcare whereas US spending is about 18 percent for far less than universal coverage. (Source: Worldbank)  Although I’m not aware of conservative endorsement for the Canadian version of socialized medicine as a cure for our fiscal woes, GOP presidential candidate Mitt Romney did seem to endorse the Israeli model during his recent visit there.

When our health care costs are completely out of control. Do you realize what health care spending is as a percentage of the GDP in Israel? 8 percent. You spend 8 percent of GDP on health care. And you’re a pretty healthy nation. We spend 18 percent of our GDP on health care. 10 percentage points more. That gap, that 10 percent cost, let me compare that with the size of our military. Our military budget is 4 percent. Our gap with Israel is 10 points of GDP. We have to find ways, not just to provide health care to more people, but to find ways to finally manage our health care costs.

Maybe the divide between conservatives and liberals is smaller than we imagine.

(I know this isn’t true, but sometimes there are these tantalizing hints of reasonableness before the orthodoxy vigilantes intervene.)

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GOP Establishment's Shameless Attack on Nonpartisan Think Tank

The GOP establishment is in full attack mode after a Tax Policy Center report concluded that Mitt Romney couldn’t offset the effect of his proposed tax cuts by simply closing loopholes benefiting the rich. Either he would have to raise taxes on middle- and/or lower-income households, or his proposal will increase the deficit.

The Obama campaign ran with the first possibility and started saying that Mr. Romney was proposing a giant tax increase on the middle class. The Romney campaign attacked the study–perhaps not surprisingly (TPC was attacked from both sides for their analysis of the 2008 campaign proposals) and then its various surrogates started attacking the credibility of the TPC.

I’ll admit that I am certainly not unbiased on this issue as I was a co-founder of the TPC and served as its director until 2009, when I moved to Syracuse University. I’m enormously proud of TPC and think it has done a great deal to shed light on the tax policy debate, which had previously been incomprehensible to all but a few Washington insiders and academics. I’m still on TPC’s advisory board and occasionally write for its blog, Taxvox.org, but I have nothing to do with its day to day operations. Obviously, I’m only speaking for myself here.

First, some background. Here’s how the TPC’s Howard Gleckman summarized their analysis:

[T]he study highlights … [t]he deep contradictions embedded in Romney’s tax platform. Like most candidates, the former Massachusetts governor has made many promises. And like most, he cannot keep them all.

In this case, Romney has promised at least five big things. They are:

• To start, he’d make all of the 2001 and 2003 tax cuts permanent but repeal the 2009 Obama tax cuts and the tax increases included in the 2010 health reform law.
• After that, he’d cut tax rates by 20 percent across the board and eliminate both the Alternative Minimum Tax and the estate tax.
• He’d eliminate taxes on investment income for couples making $200,000 or less (individuals making $100,000 or less) and keep current low rates for those with high incomes.
• He’d do this without increasing the budget deficit (beyond the cost of extending the 2001-2003 tax cuts) by curbing some tax preferences.
• He’d do it in a way that retains the progressivity of today’s tax system.

Romney’s problem is he cannot possibly achieve all of these goals. He is doomed by both political reality and simple mathematics.

Romney himself never says how he will make all this happen. Indeed, his tax platform includes a gaping hole. He says he’d finance these rate cuts by broadening the tax base–that is, by reducing some of the tax preferences that litter the Revenue Code. But he never says which of these deductions, credits, or exclusions he’d scale back—or how.

Thus, the real question is not whether Romney is proposing a huge middle-class tax increase (he isn’t). It is which of his ambitious campaign promises he will fail to keep.

As I noted a few days ago, the nonpartisan Tax Policy Center did what it’s always done, which is try to pierce the smoke of campaign rhetoric to reveal logical inconsistencies in Governor Romney’s proposal.  TPC often tries to answer the question: What does all this mean?  In this endeavor, TPC has been an equal-opportunity gadfly.

TPC’s critics had no problem when a couple of years ago, a TPC analysis pointed out that President Obama couldn’t possibly get the deficit under control by simply raising taxes on the rich.  Right-wingers’ favorite tax talking point is that nearly half of households pay no federal income tax.  They rarely note that this fact was first reported by the “liberal” Tax Policy Center.  Urban Institute Fellow, Rudy Penner, a former CBO director appointed by Republicans, wrote a pointed critique of the value and usefulness of the kind of distributional analyses that TPC produces and redistributive tax policies. It was TPC discussion paper number 13.

Conservatives seem to think the TPC epitomizes objectivity when its analysis comports with their biases, but is a liberal shill when the other side finds TPC’s conclusions useful.

For example, the McCain presidential campaign was not always happy with the TPC, but they were happy to cite “a report from the nonpartisan Tax Policy Center as evidence that Obama’s tax plan would amount to more government giveaways. The Tax Policy Center analyzed Obama’s tax proposals (as described by his economic advisers) and concluded that in 2009, his plan would, in fact, result in $100-billion in government outlays to people who have no income tax liability.”

As many have noted, Mitt Romney viewed TPC as nonpartisan and credible when he used TPC’s analysis to attack primary opponents.

I should also point out that there has never ever been a political litmus test for employment at TPC, although there is a very high bar for competence.  Several top TPC affiliates, including director Donald Marron, have held high level  Republican appointments in the executive branch and CBO. Several have held positions in Democratic Administrations.

What about the specific complaints about TPC’s study.  One is that TPC made up details that Romney never specified.  Yes, that’s true. TPC did the same thing to Obama and McCain in 2008.  Both campaigns found it annoying, but we didn’t think that political campaigns should be able to hide behind magical unspecified details to make their plans sound implausibly rosy. Tax and budget policy involves trade-offs and the public should be in a position to weigh in on which difficult choices they most favor (or least object to).  The public can’t evaluate those trade-offs unless the numbers add up and if the politicians won’t produce fully specified plans, it’s perfectly appropriate in my view for TPC to try to fill in the blanks as best they can given what the candidates have said–and make clear what their assumptions are.

But one line of attack is that tax policy doesn’t involve difficult trade-offs: cutting tax rates produces a surge of economic growth and more tax revenues. I wish that were true, but it’s not supported by evidence. TPC explained why revenue-neutral tax reform is not likely to produce a large macro response.  But they also gave the Romney campaign the benefit of the doubt by doing a simulation assuming the comparatively large macro response predicted by prominent Republican economist (and Harvard Professor) Greg Mankiw.  It did not change the qualitative conclusions.

Romney’s economic advisers are apparently predicting that GDP growth will surge to 4% per year, which over time would produce a massive increase in GDP due to the power of compounding.  (Historical GDP growth has averaged about 3 percent per year.) A scathing Wall Street Journal editorial said this was completely reasonable given that Obama’s OMB was projecting 4% growth in 2014 and 2015.  The Journal is probably right that such short-term growth is unlikely, but it’s not implausible.  The economy is far below capacity right now and it is normal for growth to exceed trend levels as the economy recovers from a recession.  Sustained growth of 4%, however, is completely outside the range of historical experience.  It is pure wishful thinking, or ”voodoo economics” in President George H.W. Bush memorable phrase.

The critics argue that the Tax Reform Act of 1986 was able to achieve a top tax rate of 28% without sacrificing revenues or shifting tax burdens onto the middle class.  The Bowles-Simpson commission and the Bipartisan Policy Center proposals would have accomplished something similar.  But all of those plans taxed capital gains and dividends at the same rate as other income (currently, the top rate on such investment income is 15%) and cut back on subsidies for retirement and other savings. TPC assumed, I think correctly, that Mr. Romney would not support such changes based on statements made by the candidate and campaign staffers.

If Mr. Romney is willing to tax capital gains and dividends at the same rate as other income, that would be big news (and a huge tax hike on the GOP candidate). In that case, by all means, TPC should update its analysis (and applaud the candidate for proposing something no Republican since Ronald Reagan has had the courage to support).

If not, maybe we should talk about whether Mr. Romney’s or Mr. Obama’s plan would be best for the economy.  The TPC analysis makes that assessment more feasible.

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TPC Removes the Veil from Romney Tax Plan: The Governor is not Amused

The Tax Policy Center (TPC) caused a kerfuffle on Wednesday when they released a studythat showed that the mostly unspecified parts of Mitt Romney’s tax cut proposals would amount to a giant tax increase on low- and middle-income households. The problem is that Romney has promised large tax cuts that would mostly accrue to the well off and also that the plan would close enough unspecified loopholes so that it doesn’t increase the deficit. However, the only tax breaks and loopholes large enough to offset the cost of the high-end tax cuts disproportionately benefit the middle class. Thus, their taxes would go up on balance.

The Romney campaign responded by calling the TPC “biased” and the study “a joke.”

As Yogi Berra would say, it’s déjà vu all over again. In 2008 (when I directed the TPC), we published a study which, among other things, concluded that Senator McCain’s proposal to allow taxpayers to opt for an alternative flat-rate tax system would add trillions to the deficit and convey a huge tax cut to millionaires. The McCain campaign insisted that the optional alternative tax would be revenue neutral, which could only be true if millions of people would opt for the alternative even though they would pay more tax. That defies logic, but logic has never been a hallmark of political campaigns.

In 2008, both candidates complained that TPC had made up stuff to fill in the giant gaps in their tax plans—all clearly labeled as our assumptions, but still not the actual plans. (Both campaigns, however, were also willing to fill in many, although not all, of the missing pieces when we pointed them out). The critique was that we made assumptions that were not part of the campaign proposals, but the campaigns would not tell us what assumptions we should have made. It’s kind of a Catch-22. Both sides criticized us for making unwarranted assumptions, but the campaigns would not tell us what the actual policies were beyond the unrevealing sound bites.

It is happening again. Governor Romney has done what politicians like to do, which is talk about how he plans to cut our taxes. His plan would cut tax rates by 20 percent across the board (the top rate would fall from 35 to 28 percent and the bottom bracket from 10 to 8 percent); he’d repeal both the AMT and the estate tax; and he’d exempt investment income from tax for couples making under $200,000 (singles under $100,000).

So far, it just sounds like President Bush’s tax plan on steroids, but unlike President Bush, Mr. Romney promises that his plan would not increase the deficit or make the tax system less progressive. He says that he would close unspecified loopholes to make up the lost revenue. He also proposes to eliminate the Obama tax cuts, which disproportionately help those with low incomes, but insists that low-income people won’t see an increase in tax burdens.

The Tax Policy Center on Wednesday basically said that the plan doesn’t add up. TPC tried hard to find loophole closers that could make up the revenue lost from Romney’s plan while preserving the current distribution of tax burdens. They assumed that tax breaks such as the deductions for mortgage interest, charitable contributions, and state and local taxes, and the tax exclusion for employer sponsored health insurance would be entirely eliminated for high-income people. This would be difficult or impossible to implement, but the study’s authors were trying to craft the best possible scenario for the Romney plan. Nonetheless, high-income taxpayers still got a substantial net tax cut under the plan, meaning that tax breaks would also have to be trimmed for those with lower incomes. TPC also gave Romney the benefit of the doubt by assuming (unrealistically) that the plan would significantly boost economic growth and thus produce more tax revenues, but, still, there were not enough high-end loophole closers to offset the super-sized tax cuts the plan would bestow on the rich. Thus, revenue neutrality would require tax increases on the middle- and lower-income groups. And, some really popular tax breaks—such as the mortgage interest deduction and the tax break on employer-sponsored health insurance—would have to be curtailed or eliminated. There are good policy reasons to cut those tax breaks, but those cuts are politically impossible.

There is, in fact, one giant tax break that could be curtailed to offset the effect of the rate cuts: the lower tax rates on capital gains and dividends. (They are the main reason Mr. Romney was able to pay an average tax rate of 13.9 percent in 2010.) Taxing gains and dividends the same as ordinary income, which Ronald Reagan’s Tax Reform Act of 1986 did and two bipartisan debt reduction plans proposed, might have provided the magic bullet to pay for the rate cuts without cutting overall taxes on the rich, but Romney has ruled that out. Indeed, his plan would set the tax rate on investment income to zero for those with modest incomes.

Aside from listing some tax breaks he would not touch, Mr. Romney is mum on which large tax expenditures he would like to eliminate to make his plan work. An advisor said that “it would be up to Congress to help fill in the blanks.”

Well, TPC has given them a head start on the job, and it’s just not possible to do it in a way that meets all of Mr. Romney’s promises. Either the plan will raise taxes substantially on low- and middle-income households or it would balloon the deficit.

TPC’s blogger Howard Gleckman explains that TPC’s analysis really just shows something not too surprising—that Mr. Romney will not keep all of his campaign promises.

Thus, the right question to ask Romney is not whether he wants to raise taxes on the middle-class. The right question to ask is which of his campaign promises he will abandon.

Romney won’t, of course, answer that question.

But his campaign’s attack on the TPC’s credibility is unlikely to stick either. Doug Holtz-Eakin (John McCain’s policy director in 2008) chose Donald Marron, TPC’s director, as his deputy at the CBO and George W. Bush appointed him to the Council of Economic Advisers. Donald is also off-the-charts smart and scrupulously honest, characteristics he shares with the study’s authors and the other TPC scholars.

As David Firestone of the New York Times pointed out:

The Tax Policy Center, if anything, comprises a gang of raging moderates from both parties who have infuriated ideologues for years by simply telling the truth about the tax system.

Good work, TPC.

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The Hidden Taxes of Underfunded Government Services

Waiting in line to get a number to wait some more at DMV.

I am writing this while waiting at the DMV in Syracuse, NY. More than half of the service windows are closed, hinting that there was once a time when more people worked here and lines were shorter. I know the state has cut services to deal with a budget shortfall without raising taxes, but I view my time here as a particularly onerous tax. I know that I'll be working late tonight making up the time spent here and I'd be willing to pay a lot to avoid that. That's the hidden tax my political leaders imposed on me to avoid an explicit tax. Right now that looks like a bad deal.

There are other hidden taxes. Crumbling roads create hassles and wear and tear on vehicles. I once ruptured an oil pan when I hit a deep pothole, which cost hundreds of dollars to repair, plus towing costs, plus the time my wife wasted coming to fetch me and I spent waiting for her and, later, the tow truck. And for bicyclists like me, potholes can cause injury or death. I'd pay a lot to avoid those hidden taxes.

Underfunding education lowers our productivity, as does skimping on basic research and development. And cutbacks on law enforcement can entail huge financial and human costs.

By all means, we should make government more efficient and cut wasteful programs and services.  We absolutely have to figure out how to cut spending on entitlement programs like Medicare.  But we should be spending more money on some programs and services because they'd save taxpayers much more in hidden taxes than they cost in explicit taxes.

Put differently, we are the richest country in the history of the world.  Why do we aspire to third world public services?

[When my number was finally called, I asked the DMV person whether staff had been cut.  She was surprised by the question, but, after a moment's hesitation, said, "Well, when people retire they aren't replaced. So I guess that's a cut."]

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Gov. Romney: Just Release the Tax Returns

Mitt Romney is right that the Democrats’ attack on him for not releasing his tax returns is a diversion from real policy issues that should determine who the next president is, but he’s not going to win this battle and it’s painful to watch it play out in slow motion.

I don’t know why Gov. Romney released fewer tax returns than previous candidates. Possibly he believes that he’s entitled to something like the privacy of ordinary citizens, whose tax returns are completely confidential.  But that would be incredibly naive.  Candidates’ lives become an open book when they decide to run for president and anyone not willing to tolerate that shouldn’t run.

Possibly, he has something to hide. The White House is peddling that line. Washington Post blogger Greg Sargent talked to tax lawyers and economists who said it’s possible that he could have sheltered much of his income from tax using offshore tax havens or other techniques.  University of Virginia law professor George Yin said that you’d expect somebody with a lot of wealth to hire good advisors to minimize taxes, all presumably in compliance with the law. Would it shock and appall the American public to see how that’s done?

It’s remotely possible that Governor Romney avoided US income tax entirely in some years. The IRS periodically looks at the returns of high-income filers who pay no income tax. Some returns are nontaxable in the US, but have foreign income that is taxed abroad at rates at least as high as would apply in the US.  That’s unlikely to be Gov. Romney’s situation.

Among tax returns with no net tax liability anywhere, the most common tax shelter is tax-exempt bonds.  That was the prime factor explaining tax avoidance in 2009 according to the IRS. (See chart.)  But it’s hard to imagine that the former CEO of Bain Capital would be happy with returns of 3 or 4 percent, even if they were tax free, and extremely unlikely that all the various sources of income on the governor’s 2011 return would have been absent in prior years.  Although much has been made of Romney’s lightly taxed capital gains, he had $10 million of income from interest, dividends, and partnerships.

Source: Internal Revenue Service,."High-Income Tax Returns for 2009," SOI Bulletin, Spring 2012. (Public Domain)

Taxpayers can reduce tax liability through charitable contributions, but they can’t eliminate it.  If Romney avoided income tax altogether, my guess is that his partnership holdings generated large losses.  That was the most important factor on 5.7% of nontaxable returns in 2009.

There might be a hint on the governor’s 2010 return.  In that year, the Romneys reported a $280,000 partnership loss.  In 2011, the partnerships produced income of over $2 million.  Was this the end of a process where the partnerships were converted from tax shelters into income generators–possibly in anticipation of the scrutiny that would accompany the Romney tax returns when he became a candidate? Who knows?

Of course, there’s also the $10 million of capital gains on the Romneys’ 2011 return ($5 million in 2010). It is fairly easy to avoid paying tax on capital gains if you are wealthy.  Don’t sell assets with gains.  When you have to sell assets with gains, also sell some with losses so your net gain is close to zero. It’s possible that the capital gains that played so prominently on the Romneys’ released returns are largely absent in earlier years.

It’s also possible–even likely–that seeing the returns would not tell us that much.  If much of the income is parked in offshore entities, it might not be reported at all on US income tax returns until those entities pay a dividend.

But assuming that whatever the Romneys did was legal, it’s hard to imagine that his tax returns could be more damning than the speculation surrounding their suppression.  Mr. Romney is rich and he doesn’t pay much tax.  We already know that.

Is it possible that the earlier returns would reveal some real chicanery? That seems extremely unlikely. As Romney supporter Michael Gersonpointed out, “Romney — though he has his weaknesses as a candidate — does not fit the part of a sleazy businessman or a Nixonian liar.”

When your supporters are saying that you’re not a Nixonian liar (great bumper sticker), it is time to change the narrative.  Release the returns and let’s move on to the real debate.

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Obama is Again Backed into Corner on Tax Cuts

President Obama has proposed to extend the middle class "Bush era" tax cuts for another year.  My first reaction was "Wow, that's a big surprise." (That was sarcasm.) My second was that the euphemistic "Bush era" sounds like a time when humans were wandering around in loin cloths seeking shelter in caves and under shrubs.

As part of my ongoing series, "I told you so!", I'll point out that the current impasse was completely foreseeable when President Obama and Congressional Republicans agreed to a "temporary" two-year extension of the expiring Bush tax cuts in 2010.  The following is from "Will Dems fall for temporary tax cut gambit (again)?", which I published on December 8, 2010.

In the short term, there's a certain logic to giving in. Yes, passage of the middle class tax cuts and extended unemployment benefits won't happen without Republican support. Yes, the Democrats will be even less able to control the political agenda when the Republicans take control of the House in January [2011]. And, yes, letting all the tax cuts lapse would hurt the fragile economy.

But in the long term, the consequences of the "deal" could be devastating. Here's my nightmare scenario:

Think ahead two moves, to 2012, when this temporary deal expires. Many forecasters think the economy will still be fragile, so you can expect Republicans to argue that it is no time to raise taxes. 

And it's very possible if the economy remains weak and/or Obama doesn't find his mojo, that there will be a Republican president and a Republican senate. 

At that point, Republicans might well not agree to another temporary extension of the tax rates. Instead, they'll wait until they control government to introduce HR1 in the 2013 Congress -- a permanent extension of the Bush tax cuts that the new president will sign triumphantly.

That is exactly where we are today.  The president has proposed a one-year extension of the middle class tax cuts, which he defines as incomes under $250,000.  The Democrats in Congress apparently would like to ratchet up middle class to include everyone earning under $1 million.  The Republicans are insisting that all the Bush tax cuts be extended permanently.  And, by the way, we are several trillion dollars closer to insolvency than we were in 2010 and the economic recovery seems hardly more secure than it was then.

Since the economy is weak, the Republicans have a plausible argument against tax increases and a decent chance of regaining the White House so they won't compromise.

This plays nicely into the Democratic narrative that Republicans only care about rich people and the Republican narrative that Democrats want to raise taxes.  It's a very tiring and unenlightening debate.

Obama's original sin was never seriously proposing a tax reform plan.  Replacing the Bush Tax Cuts with Bush Tax Cuts Lite is just bad policy.  Over the long term, we simply can't afford even the middle class part of the Bush tax cuts, and the tax code is unfair, inefficient, and incomprehensible.  It badly needs an overhaul.

The president has talked a lot about tax reform--he asked Paul Volcker to put together a plan (which was more of a set of guidelines than actual legislation) and his debt reduction commission  proposed eliminating most tax breaks and cutting tax rates.  Volcker's plan went into the same impregnable file drawer as President Bush's tax reform panel report. President Obama said that the Bowles-Simpson proposal had "made important progress" on tax reform, but apparently not enough to prompt an actual presidential proposal.

The president has also proposed corporate tax reform, which isn't a bad idea, and the "Buffett Rule," which is, but nothing resembling comprehensive individual income tax reform, or even a coherent alternative to the Bush tax plan.

So we'll dance to the edge of the fiscal cliff and, more likely than not, we'll temporarily extend all the Bush tax cuts after the election.  Even if Mr. Romney wins, I wouldn't be surprised if the extension is only temporary.  Getting to play the Democrats for suckers every year or two must be a lot of fun--and a great source of campaign contributions--for the GOP.

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Jindal Fears Higher Taxes on People Who Don't Buy Chevy Volts... Like in Louisiana

Louisiana Governor Bobby Jindal and Santa Claus both punish the naughty and reward the nice. (Photo credit: Wikipedia)

Louisiana Governor Bobby Jindal inadvertently illustrated the point I made in my last post when he explained why he wasn't going to implement Obamacare.

“It really raises the question of what’s next, what’s allowable,” Jindal said on a Republican National Committee Conference Call. “Taxes on people who refuse to eat tofu or refuse to drive a Chevy Volt…this whole ruling I think is ridiculous. It’s a huge expansion of federal power.”

Well, bad news, governor.  People who don't own a Volt already pay higher taxes. Purchasers of hybrid and electric vehicles in 2012 got a $7,500 tax credit.  Put differently, I paid $7,500 more in taxes because I didn't buy a Volt or some other qualifying car.

I'm not a big fan of this credit, even though I would love for people to use less fossil fuels, because I don't think the government is smart enough to pick the right technologies to subsidize. A carbon tax would make much more sense. But the government taxes us more for doing stuff not on the approved list all the time.

Ironically,Louisiana also offers a state tax credit for alternative fuel cars (including Volts), which Governor Jindal signed into law in 2009 .

I guess he wasn't such a freedom lover back then.

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