Bush seeks grass-roots budget support THE IMPACT Best protection from steeper taxes is a flat lifestyle

October 03, 1990|By Dan Fesperman | Dan Fesperman,Washington Bureau of The Sun

WASHINGTON -- Attention all you big-spending, beer-drinking, wine-sipping, liquor-swilling chain smokers who ride gas-guzzling limos from drafty, oil-heated homes to your luxury yachts: Be prepared to pay up if the new tax plan passes. Thousands of dollars, perhaps.

As for all you teetotaling, non-smoking, modest-living homebodies sitting before your wood-burning stoves with no place to go, relax. Uncle Sam would dip into your pockets in more subtle ways, and you'd hardly feel his pinch.

And what about Joe and Jane Statistical Average? Expect an annual cost of about $70 for consumer goods, and no increase in your income tax.

For everyone else, the added costs would depend on your way of life.

Some examples:

Edward Excessive III smokes two packs a day, drinks two after-work cocktails per day, drinks a half-bottle of wine with dinner every Saturday night and downs a six-pack every Sunday while watching televised sports. This year he will buy a new luxury sedan for $36,000, which he'll drive 15,000 miles while averaging 15 miles per gallon. He'll also trade in his old yacht for a pale imitation of the Trump Princess, worth $150,000, which will burn an additional 200 gallons of gas. His home, a rambling, poorly insulated Victorian rehab, has an oil furnace that will burn 3,000 gallons of heating oil (he never sets the thermostat below 72, of course). He does all this on an annual salary and income of $230,000, which means his adjusted gross income for purposes of income tax is about $200,000.

Now let's total his added tax bill.

Under the proposals before Congress, when all increases are fully phased in, cigarettes will cost an extra 8 cents per pack, liquor will cost 24 more cents for a 750-milliliter bottle, wine an extra 25 cents per bottle and beer an extra 16 cents per six-pack. Any car purchase will have an extra 10 percent tax bite for the amount exceeding $30,000, and for boats the bite will affect any amount above $100,000. Gasoline will cost an extra 12 cents per gallon, while heating oil will cost an additional 2 cents per gallon. Also throw in an extra $25 annual fee to the Coast Guard for the boat. And for all taxpayers with adjusted gross incomes exceeding $100,000 per year, fewer deductions will be allowed, which would mean that the tax rate for those incomes will increase by 0.08 percent to 1 percent, according to a group called Citizens for Tax Justice.

All of which means Mr. Excessive's added taxes would be about $58 for cigarettes, $120 for car gas, $24 for boat gas, $60 for heating oil, $10 for liquor, $6 for wine and $8 for beer. Then add $600 for the car purchase, $5,000 for the boat purchase and $990 in additional income taxes (unless his accountant found him some more tax shelters). Grand total: $6,876.

By contrast, consider Tom Treehug, who doesn't smoke, doesn't drink and drives only on short trips around town and occasionally to Ocean City -- about 8,000 miles per year -- in a 40-mpg compact, burning 200 gallons a year. He heats his modest home with electric heat and a wood-burning stove. His only boat is a canoe. His income is well under $100,000 a year.

Though the businesses he patronizes and the food he buys may increase in price somewhat because of higher fuel costs, Mr. Treehug would otherwise barely be affected. The extra 12 cents per gallon in gas taxes would total about $24 per year.

Then there's Mr. Statistical Average. According to the American Automobile Association, he burns 507 gallons of gas per year driving his 23-mpg car about 10,100 miles. Chances are he doesn't smoke, and various alcoholic beverage trade organizations calculate from annual sales rates that he drinks 2.21 gallons of liquor, 3.03 gallons of wine and 23.7 gallons of beer. He's not likely to live in a home or apartment with an oil furnace. If he buys a car it probably won't cost more than $30,000, and even if he bought a boat it would probably cost less than $100,000. His annual income is well below $100,000.

His total bill in new taxes is not much higher than Mr. Treehug's: About $60 for gasoline, $10 for alcohol. Grand total: $70.

The moral of these tales is simple and comes from an ancient Greek safe: "Moderation in all things."

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