Saturday, April 22, 2006

Bush Slides Down Slippery Tax Analogy Slope

April 22, 2006

Dear President Bush,

In your effort to demean taxes you created a slippery slope for the business community. Equating increased gasoline prices to taxes may come back to haunt you.

The Bush Energy plan does not include any measures that would reduce gas prices in the short term, the White House acknowledges. But with Republicans worried that the increasing cost to drive could hurt them in the voting booth this year, Bush said he understands Americans are hurting.

"I know the folks here are suffering at the gas pump," Bush told an audience Friday in San Jose. "Rising gasoline prices is like taking a - is like a tax, particularly on the working people and the small business people."

But to address the immediate problem, Bush offered only a pledge that "if we find any price gouging it will be dealt with firmly."

Is your hand’s off approach consistent across your administration? The Bush healthcare plan aims to leverage market forces, yet this week Medicare announced large reimbursement cuts for implantable cardiac device procedures for hospitals. This equates to price fixing for the manufacturers of pacemakers and implantable defibrillators.

Your admiration for markets and the way they work is long standing. Rising prices are a result of demand exceeding supply, which happens to be the state of healthcare as far as the eye can see. In a perfect capitalistic economy, imbalances would correct themselves over time. Many business leaders support this notion. Why might they be upset over your phrasing rising gas prices as “a tax”?

For the business rising product prices are a plus, as it means more revenue should demand remain at least constant. You are speaking to the impact of rising prices on the household’s overall pocketbook. What else is taking a hit out of that family sized wallet? High deductible health plans and the need to cover that huge annual deductible either straight up or with tax free money placed into a health savings account. Are rising health care expenses like a tax?

For some employees, their wages are falling. Delta’s pilots are voting on a contract that cuts their pay 14%. Is that like a massive tax increase, Delta just levied on their pilots?

For those employees in frozen pension plans, their future retirement income has been capped. Is this like a monstrous lifetime tax increase?

Anything businesses do to raise product prices could be construed as a tax hike from your perspective. Likewise, anything they do to cut wage and benefit costs are long term tax hikes.

In your fervor to cut taxes, it appears you haven’t cut them at all. You have just joined with American corporations to impose a different burden on the average worker.

My guess is the average citizen is fed up with the toll of your taxing leadership. Only time and the next few election cycles will tell.

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