January 29, 2010, Washington D.C. :  Federal tax policy is nearly as difficult to understand as the federal tax code itself, and President Obama and the Congress are doing little to bring clarity.  It should be understood that any change in tax policy is likely to create pain in some segment of the economy.  But when taxes are imposed on banks, for example, inevitably trickle down to consumers.

Some taxes are called user fees, emission credits, or other clever euphemisms that become so misleading they would make a magician proud. President Obama demanded during his State of the Union address that the Senate deliver to his desk the climate-change legislation already passed by the House.  The Senate version of this legislation is the Boxer-Kerry cap-and-trade bill (S.1733).  This bill would severely restrict greenhouse gas emissions that have become the environmentalists’ issue du jour .

The Senate has balked largely because of opposition first because of legitimate questions on the scientific data supporting the severity of the greenhouse gas issue; and second because of the significant impact passage would have on the economy and consumers. Setting aside the escalating scope of questions on the scientific accuracy of data on the human contribution to greenhouse gas emissions, the economic issues have attracted bi-partisan opposition in the U.S. Senate.

The goal of greenhouse gas emission limits is to drive up the cost of fossil-fuel energy, and since fossil fuels account for approximately 85 percent of America’s energy consumption, the cap and trade limits function as an energy tax on American consumers.  The underlying theory behind increasing prices on fossil fuel energy is to force consumers to reduce consumption because of the high prices.  Even President Obama admitted during his presidential campaign that "electricity prices would necessarily skyrocket."

The substantial increase in electricity prices without providing relief for seniors on fixed incomes to afford electricity, will endanger the health of seniors who rely on electricity for heat or cooling.  The caps will drive up the cost of gasoline by more than $1.20 per gallon, and the annual family-of-four energy costs will spike up by over $1,000.

This new tax will also have an adverse impact on younger generations because of the loss of jobs, some estimates pegging those losses at as many as 2.5 million in some years during the implementation of the greenhouse gas emission targets.  That produces crippling losses to the gross domestic product, increases the costs of goods and services used by American families, and erodes the net worth of families economic status.

All of this in the laudable effort to reduce pollution in the air.  It’s complexity proves that the solutions are not simple, or even easy to craft, even when the goal seems to be a good one.

In this case, it appears to be a good strategy for the Senate to refuse to act, and deny President Obama the opportunity to sign a tax bill that would have such disastrous consequences across all generations.