34 



STATEMENT OF JAMES LUCIER, DIRECTOR OF ECONOMIC 

 RESEARCH, AMERICANS FOR TAX REFORM 



Mr. LuciER. Well, Mr. Chairman, I am Jim Lucier. I am here to 

 represent the sore-pressed taxpayers of America. I would like to 

 say that we are huge fans of the work you do at the Joint Economic 

 Committee and your studies on the importance of keeping the over- 

 all size of government small and the tax burden low, to long-term 

 economic growth, and the well being of all citizens. 



I think it is important to try to keep our discourse civil here and 

 on a very high plain because we are talking about important topics. 

 We are talking about conservation 



Mr. Saxton. Mr. Lucier, could you pull that microphone just a 

 bit closer please? 



Mr. Lucier. Certainly. We are talking about conservation of nat- 

 ural resources. We are talking about what may be necessary to al- 

 leviate the regulatory burden — the property rights burden on land- 

 owners in the West. But the key point here is that the tax proposal 

 put forth today is not really a good way of addressing any of those 

 things. In fact, I must say it is a silly proposal. I am astonished 

 we are even talking about this today. 



The user fee point has been perhaps beaten to death in testi- 

 mony already. What distinguishes a user fee from a tax? A clear 

 one-to-one link between buying a good or service and demanding 

 some sort of service in return. In other words, if I buy a hunting 

 rifle, I know I am going to go hunting. If I buy a fishing rod, clearly 

 I am going to go fishing unless, of course, I want to decorate my 

 wall with it. 



With this broad range of products though, there is really no one- 

 to-one link between trying to buy a backpack and necessarily de- 

 manding fish and wildlife conservation services. Suppose I want to 

 use the backpack to go to school? 



The real issue here is the nature of an excise tax and the fact 

 that if you want to raise money for any reason whatsoever, excise 

 taxes are uniquely damaging and a uniquely inefficient way of rais- 

 ing that money. To begin with, excise taxes are distortionary, and 

 the cost of excise taxes ripples throughout the economy. When you 

 put a five percent excise tax on something — an arbitrarily defined 

 range of goods — what you are doing is interfering with the supply 

 and demand signals in the marketplace, the price mechanism that 

 connects supply and demand. 



Excise taxes can lead to inefficiencies all over the economy as 

 people begin gaming the system, substituting goods, and buying 

 things they would not have bought otherwise because they are try- 

 ing to avoid an excise tax on a particular product. 



The system also tends to be arbitrary. At what point does a CD- 

 ROM become a CD-ROM about wildlife, as opposed to say. Bill 

 Gates's encyclopedia on everything in the world? Why apply a five 

 percent tax to CD-ROMs? Why apply a five percent tax to cameras? 

 To photographic film? Why not tax doorknobs too? If you are going 

 to go use the great outdoors, you can have a five percent tax on 

 doorknobs because people that are going to use the outdoors will 

 be going outdoors using doors as well. 



Why not put an excise tax on glasses so that we can fully fund 

 the nation's art museums? It is arbitrary and when you don't really 



