Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
07 July 13
basic economic principle is government ought to tax what we want to discourage, and not tax what we want to encourage.
For example, if we want less carbon dioxide in the
atmosphere, we should tax carbon polluters. On the other hand, if we
want more students from lower-income families to be able to afford
college, we shouldn't put a tax on student loans.
Sounds pretty simple, doesn't it? Unfortunately, congressional Republicans are intent on doing exactly the opposite.
Earlier this year the Republican-led House passed a
bill pegging student-loan interest rates to the yield on the 10-year
Treasury note, plus 2.5 percentage points. "I have very little tolerance
for people who tell me that they graduate with $200,000 of debt or even
$80,000 of debt because there's no reason for that," Rep. Virginia Foxx
(R-NC), the co-sponsor of the GOP bill, said.
Republicans estimate this will bring in around $3.7 billion of extra revenue, which will help pay down the federal debt.
In other words, it's a tax - and one that hits
lower-income students and their families. Which is why several leading
Democrats, including Senate Majority Whip Dick Durbin, oppose it. "Let's
make sure we don't charge so much in interest that the students are
actually paying a tax to reduce the deficit," heargues.
(Republicans claim the President's plan is almost the
same as their own. Not true. Obama's plan would lead to lower rates,
limit repayments to 10 percent of a borrower's discretionary income, and
fix the rate for the life of the loan.)
Meanwhile, a growing number of Republicans have signed
a pledge - sponsored by the multi-billionaire Koch brothers - to oppose
any climate-change legislation that might raise government revenues by
taxing polluters.
Officially known as the "No Climate Tax Pledge,"
its signers promise to "oppose any legislation relating to climate
change that includes a net increase in government revenue."
By now 411 current office holders nationwide have
signed on, including the entire GOP House leadership, a third of the
members of the House as a whole, and a quarter of U.S. senators.
The New Yorker's Jane Mayer reports
that two successive efforts to control greenhouse-gas emissions by
implementing cap-and-trade energy bills have died in the Senate, the
latter specifically targeted by A.F.P.'s pledge.
Why are Republicans willing to impose a tax on students and not on polluters? Don't look for high principle.
Big private banks stand to make a bundle on student
loans if rates on government loans are raised. They have thrown their
money at both parties but been particularly generous to the GOP. A 2012
report by the nonpartisan Public Campaign shows that since 2000, the
student loan industry has spent more than $50 million on lobbying.
Meanwhile, the Koch brothers - whose companies are among America's 20 worst air-polluters
- have long been intent on blocking a carbon tax or a cap-and-trade
system. And they, too, have been donating generously to Republicans to
do their bidding.
We should be taxing polluters and not taxing students. The GOP has it backwards because its patrons want it that way.
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