• Tag Archives Trump

  • President Trump Reportedly Wants to Double the Federal Gas Tax

    Posted on by Azrael Comment

    The federal government imposes a gasoline tax of 18.4 cents per gallon. Lobby groups are pressing for an increase, and President Trump has suggested he may support one. But a federal gas tax increase makes no sense.

    State governments own America’s highways, and they are free to raise their own gas taxes whenever they want. Indeed, 19 states have raised their gas taxes just since 2015, showing the states are entirely capable of raising funds for their own transportation needs. State gas taxes average 34 cents per gallon.

    Also consider that gas taxes used to be a more pure user charge for highways, but these days gas tax money is diverted to inefficient nonhighway uses such as transit. Politicians say, “We need a gas tax increase to fix our crumbling highways,” and then they spend the money on other things. It is a bait-and-switch.

    Federal fuel taxes and vehicle fees raise about $41 billion per year. About 20 percent of those funds (about $8 billion) are diverted to transit and other nonhighway uses.

    The diversion is even larger with state fuel taxes, as shown in this Federal Highway Administration table. In 2016, state governments raised $44 billion from fuel taxes, and they diverted 24 percent—14 percent to transit and 10 percent to other activities. Texas, for example, diverts 25 percent of its fuel taxes to education spending.

    The states also raised $38 billion from vehicle fees. They diverted 34 percent of those funds—13 percent to transit and 21 percent to other activities.

    In total, states raised $82 billion from fuel taxes and vehicle fees. They spent $59 billion (72 percent) on highways and $23 billion (28 percent) on other activities. If the highways in your state have congestion and potholes, it may because your government is taking money raised from highway users and diverting it to other activities.

    The chart below shows the shares of state fuel taxes and vehicle fees diverted to nonhighway uses. South Carolina, for example, diverts 31 percent.

    Last year, South Carolina Governor Henry McMaster vetoed a gas tax increase. He objected to his state’s diversion: “Over one-fourth of your gas-tax dollars are not used for road repairs … They’re siphoned off for government agency overhead and programs that have nothing to do with roads.”

    As a rough user charge, gas taxes are a good way to fund highways, and our highways do need more investment. But motorists should be skeptical of gas tax increases until policymakers stop diverting funds to inefficient transit systems with declining riderships.

    Many transportation experts say the rise of electric vehicles will be the end of the road for gas taxes, and they are eager to impose new vehicle miles traveled (VMT) charges to fund highways. However, governments are diverting more than $30 billion in fuel tax revenues and vehicle charges a year to nonhighway uses. If that diversion were ended, these revenues could continue to be America’s highway funding source for years to come.

    More on highways and the gas tax:

    https://www.downsizinggovernment.org/transportation/federal-highway-policies

    https://www.downsizinggovernment.org/infrastructure-investment

    https://www.downsizinggovernment.org/chamber-commerce-misguided-gas-tax

    https://www.cato.org/blog/federal-gas-tax-increase-misguided

    https://www.cato.org/blog/federal-gas-tax-lahood-makes-no-sense

    Source: President Trump Reportedly Wants to Double the Federal Gas Tax – Foundation for Economic Education


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  • Trump’s Lumber Tariffs Hurt Hurricane Recovery

    Posted on by Azrael Comment

    As the flood waters from Hurricane Harvey dry up, the residents of affected areas are turning to the task of rebuilding their storm-ravaged communities.

    Early estimates of the damage suggest they have their work cut out for them. The Texas Division of Emergency Management reports that the storm destroyed 9,407 single family homes. Another 44,013 experienced major damage. Moody’s Analytics estimates that the cost of the hurricane will be in the $51–$75 billion range.

    President Donald Trump has pledged $1 million of his own money to Harvey relief efforts, along with a $15 billion aid package for areas affected by the storm. But he’s also pushing protectionist policies that will raise the cost of the basic building materials, making recovery a longer, more difficult, and more expensive process.

    The Price of Protectionism

    In April, the Trump administration imposed countervailing trade duties averaging 20 percent on imported softwood Canadian lumber, a common material in home construction. In June, he hit them again with anti-dumping duties of 6 percent.

    The initial application of these tariffs aggravated consumers of Canadian lumber, says Kevin Mason, managing director of ERA Forest Products Research (a timber market analyst firm), and the damage done by the storm has only made those consumers’ situation worse.

    “Some people who’ve just gone through this devastation—they’ve had their house flooded or it’s been destroyed,” Mason says. “To the degree that they’ve got to go out and get lumber to do some repairs, they’re going to be paying close to record high prices. And part of the reason prices are as high as they are is because of these duties.”

    Tariffs Are Hurting Importers

    The U.S. has imposed tariffs on Canadian lumber imports periodically since the mid-1980s. What makes the latest round of tariffs unusual, Macon says, is the degree to which U.S. consumers have eaten the costs of those trade barriers.

    “Historically the Canadians have had to absorb half if not the bulk of the duties,” says Mason. “This time the U.S. consumer has borne the entire brunt.”

    According to a pricing index put out by the timber market publication Random Lengths, lumber prices hit a peak of $430 per thousand feet of board in April, the month countervailing duties were first imposed. That’s 20 percent over where lumber prices were in January, and nearly 25 percent higher than where prices were in April 2016.

    The increase has not gone unnoticed by builders, including those in areas affected by Hurricane Harvey.

    “A lot of our distributors, and lumber companies that we deal with, were buying a lot of that imported lumber because they got a much better price, and that rolls over into the prices that we pay,” says Patrick Mayhan, vice president of purchasing for the Houston-area company Westin Homes.

    That dependence on cheaper Canadian lumber meant that Mayhan’s company was particularly vulnerable to Trump’s tariffs.

    “It was a significant hike at the time. It was a 20 percent increase,” he tells Reason, adding that “we had no choice but to pass that along to our retail pricing for the home. And that’s a significant amount, because lumber is a big part of the cost of building a home.”

    Adding Insult to Injury

    Increased demand from the storm would push up prices regardless. But thanks to the tariffs, that price increase is starting from an artificially inflated baseline. For some, that could be the difference between a new home and no home at all.

    “Currently for each $1,000 that you tack on to the price of a new home, about 150,000 people nationwide can no longer afford homeownership,” says David Logan, director of tax policy analysis for the National Association of Home Builders (NAHB). Logan says the tariffs have increased the costs of lumber for NAHB members by 15 to 20 percent, increasing the cost of a new home by some $1,700.

    Zoltan van Heyningen, executive director of the pro-tariff U.S. Lumber Coalition, disputes the numbers coming from the NAHB, saying the impact of tariffs on home prices and homeownership has been overhyped.

    “The impact on consumers is negligible to none. The impact on producers is life or death,” he tells Reason.

    But builders like Mayhan are quickly approaching the point where they cannot pass added costs onto the purchasers of homes. Though it’s still too early to tell, the expected price increases coming in the wake of Hurricanes Harvey and Irma might push them past that point.

    For some builders, that pressure to contain retail prices will lead them to compensate for higher lumber prices with lower profit margins. For others, particularly those operating at lower margins, reduced returns might mean forgoing new construction projects.

    That’s particularly true for people planning to rebuild in the aftermath of Harvey and Irma. In addition to near-record-high lumber prices, the costs of other materials—drywall, sheetrock, siding—have gone up as well.

    Trump told reporters recently that the response to the recent storms is “gonna cost a lot of money.” Without his tariffs on imported lumber, the cost could be considerably less.

    Reprinted from Reason


    Christian Britschgi

    Christian Britschgi is a reporter for Arizona Watchdog.

    This article was originally published on FEE.org. Read the original article.


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  • Amazon Destroys Jobs? Really?

    Posted on by Azrael 1 Comment

    While the country was consumed with the Charlottesville debacle last week, President Trump was busy reigniting his PR campaign against an American retail staple: Amazon.

    In a tweet composed last Wednesday, Trump said:

    “Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!”

    This anti-Amazon rhetoric is of course, nothing new for the president. During his campaign he made his opinions of the company well known. Going as far as to threaten the company before even being elected to office, the then-presidential candidate said, “believe me, if I become president, oh, do they have problems. They’re going to have such problems.”

    Now, seven months after taking office Trump seems to be living up to his menacing promise. But is there any truth to Trump’s claims that the Amazon is both destroying jobs and “stealing” money from the taxpayer?

    The Ultimate Job Destroyer?

    The American people are not united on much these days, or so it would seem. However, if you wanted to give Americans a reason to unite against their leader, threatening their Amazon Prime accounts would be a surefire way.

    Earlier this year, a report produced by the Consumer Intelligence Research Partners (CIRP) found that over 80 million people in the United States hold Amazon Prime memberships. A number worthy of recognition especially considering that it has doubled in less than two years.

    Amazon has revolutionized the American retail experience. Not only do Prime members get free two-day shipping on essentially any item they wish to purchase from food to electronics, but members also have access to Amazon’s library of streamable films, shows, and music at their fingertips. Need an item in less than two days? No problem! Amazon Now offers delivery services in under an hour for participating products. Even more amazing, Amazon Prime now also dabbles in the restaurant delivery service business competing with the likes of Uber Eats and GrubHub.

    And yet, in spite of all these subcategories, each requiring its own set of employees, Donald Trump has accused Amazon of inhibiting job growth in the United States. As of January of this year, Amazon had 306,800 employees and a promise to hire an additional 100,000 full-time employees by mid-2018.

    On their own these numbers are impressive, but they do not account for the additional employees who will find future part-time employment via Amazon’s participation in the sharing economy.

    Amazon Enters the Sharing Economy

    Receiving an Amazon Prime package as an adult is akin to opening up a Christmas present from Santa Claus as a child. You don’t know how the package arrived, but it doesn’t matter. You asked for it and 48 hours later it appeared on your porch as if by magic. Unfortunately, there is no mythical Amazon being responsible for delivering these packages. There is, however, an army of Amazon delivery personnel who operate on the sharing economy model.

    Like the “Uber of packages,” Amazon couriers work when they want. As with the rest of the sharing economy, this allows millennials interested in side hustles or others looking to get ahead financially the opportunity to work around their own schedules.

    In the few years since the sharing economy has grown in the United States we are already seeing the benefits it brings both in job creation and consumer satisfaction. Amazon’s restaurant delivery service works the same way.

    As Americans are generally discontent to live mediocre lives with mediocre salaries, these side hustles have become essential to living a full and prosperous life. Amazon’s contributions to the sharing economy as well as the overall job creation in the country is something worthy of praise. Yet instead, the company’s reputation is being eviscerated by the President in very public social media posts.

    Why All the Condemnation?

    Trump has made the claim that Amazon hasn’t paid its fair share of taxes and is thus, stealing money from the American people. This is entirely untrue, but what Trump is implying by this comment hits at the core of his real problem with the company: he’s a brick and mortar enthusiast.

    After Trump’s tweet, Politifact dissected the president’s post to decipher which, if any, of his claims were true. According to the site:

    ”While Amazon takes advantage of tax breaks and loopholes, it pays federal corporate tax, and charges sales taxes in 46 U.S. jurisdictions. Last year, Amazon paid $412 million in federal, state, local and foreign taxes.”

    So if it’s not about destroying jobs or stealing tax dollars, what is Trump so mad about?

    Trump is a traditional businessman who made much of his money through the real estate business. By nature, the virtual business realm is almost completely foreign to him. Trump has made his living buying and selling physical space. Subscribers to the belief that Amazon is the boogieman of the brick and mortar world will appreciate this, as they see Amazon and other online retailers as a threat to their existence.

    As Jeffrey Tucker says:

    “It’s not just about ideology; it’s a battle of economic interests. Trump is joining an emerging war between old-style economic institutions, rooted in brick-and-mortar and nation-state loyalism, vs. new-style digital institutions that span the globe and empower producers and consumers directly

    But it is not and never has been the president’s job to decide which companies succeed and which ones fail. That power rests with consumers who utilize the power of their own purses at their own discretion. Unfortunately for Trump and other brick and mortar protectionists, Amazon is constantly proving that consumers prefer to use its retail platform above all other options. For a president to openly condemn a company for outperforming the competition is antithetical to the free market that Trump pretends to support.  

    At the end of the day, Trump is worried about his own interests, not the interests of consumers.

    Hitting the nail on the head perfectly, Tucker explains the situation:

    “Consider that Trump is the consummate physical-world capitalist. He builds towers, casinos, hotels, country clubs, all rooted in real estate, and all with a gawdy 1980s-style aesthetic. With that comes “the art of the deal.” The deals are done on golf courses, in “old boys” clubs, through personal networks. It’s about meeting in board rooms with mayors and city planners and trading favors. He hires contractors to dig and build and rent. He puts his name on large structures and they reach to the skies to proclaim his personal glories.”

    But there is another layer to Trump’s disdain for Amazon. And like many of Trump’s stances, this one is also rooted in personal drama.

    Facts have never meant much to our president, but any criticism cast in his direction has quickly garnered his attention. Jeff Bezos, the CEO of Amazon, recently purchased the Washington Post, a publication that hasn’t shied away from attacking Donald Trump.

    Addressing this issue head on, Trump has even made statements questioning Bezos’ motives:

    “I have respect for Jeff Bezos, but he bought The Washington Post to have political influence, and I gotta tell you, we have a different country than we used to have.”

    He later continues this line of thinking saying:

    “He owns Amazon. He wants political influence so that Amazon will benefit from it. That’s not right.”

    Unfortunately for Trump, he has chosen to attack a mighty monument of consumerism. Amazon’s services are just too good and too plentiful to fall victim to Trump’s attacks. In fact, Amazon Prime’s 80 million subscribers outnumber the 57.6 million people who voted in the 2016 election. Sorry President Trump, consumers have already voted with their dollars and they choose Amazon.


    Brittany Hunter

    Brittany Hunter is an associate editor at FEE. Brittany studied political science at Utah Valley University with a minor in Constitutional studies.

    This article was originally published on FEE.org. Read the original article.


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