Weekly Column:   –  “Taxes are on everyone’s mind this time of year – in the months between the arrival of tax documents at the end of January and the IRS deadline of April 15th for income taxes, everyone is thinking about their federal tax burden.

It is no coincidence that this is also the time of year that the president submits his budget to the U.S. Congress.  Interestingly, the framework document the president issues looks ten years into the future, far beyond the time any single president can serve or set policy.  The federal budget is immediately torn apart in committees of varying jurisdiction throughout the Capitol, but it is valuable as an insight into how the administration would like to spend (and raise) taxpayer funds for the coming fiscal year 2010.

The rhetoric around the FY2010 budget – that it counts on only raising taxes on two percent of American households – is undone by the truth of the numbers in the federal budget document. 

This budget for FY2010 is $3.55 trillion.  It raises a full $646 billion using climate change taxes – which would be levied on lots of American businesses, but would hit energy producers particularly hard.  The effects will pass straight through to consumers.  If this idea becomes law, the costs of electricity will climb dramatically.  Electric power will experience the same price shocks we see today with gasoline.  Products that use petroleum fuels, from cars to combines, will instantaneously become more expensive.

Defenders of the president’s budget say that the increased costs of energy will be offset for middle class families by new tax credits, and that the top two percent of households will really bear the costs of this new tax.  I find a serious flaw in the reasoning, however, that gives a tax credit to hardworking families with one hand and takes it away with the other.

Moreover, the American businesses we rely on in rural America to grow and to reclaim our talented workforce are based primarily in manufacturing and agriculture.  For two of the most energy-intensive sectors of our economy, a cap-and-trade carbon tax equates to an incentive to reduce output or even to close their doors in order to save energy and resell emissions permits.

There is no doubt that America needs a national energy strategy.  We need cleaner, more reliable power in our homes and businesses.  We need new battery technologies, and we need to incorporate wind and solar energy alongside alternative fuels.  The $646 billion plan to heavily tax the energy we use today in order to hasten the energy technologies of tomorrow puts the cart far before the horse.

Our economy relies primarily on fossil fuel energies today, and it will for decades to come.  We cannot tax our way to energy independence. 

We can, however, speed the technologies of tomorrow while we expand the use of domestic resources at our disposal today.  It doesn’t take a tax to promote this behavior, it takes hard work and entrepreneurship from multiple sectors of our economy.  By unfettering American businesses and empowering American consumers, we can get to energy independence much faster and cheaper than with a new tax on every American who flips on a light switch.”