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57 IRET Policy Bulletin 1 (1992)

handle is hein.taxfoundation/iretpbul0016 and id is 1 raw text is: July 3, 1992 No. 57 DON'T TAX THE ENTIRE COAL INDUSTRY TO SUBSIDIZE ONE PART OF IT As the Economic Growth Acceleration tax bill (H.R. 4210) moved through the Senate Finance Committee, Senator John Rockefeller of West Virginia succeeded in attaching a proposal that he had previously introduced in Congress as stand alone legislation (S. 1989). The Rockefeller amendment would establish a federal program for guaranteeing the health benefits that the Bituminous Coal Operators' Association (BCOA) had agreed to pay in the past, or may agree to pay in the future, to retired coal miners belonging to the United Mine Workers of America (UMWA) and to their dependents. The subsidy would be accomplished by means of a new federal payment-guarantee program and financed with a tax on all domestic and imported bituminous coal. The new agency could also obtain funds by borrowing directly from the U.S. Treasury, a power which, if exercised, would increase the national debt. Although the President temporarily blocked the payment-guarantee program from becoming law when he vetoed the tax bill, the issue is far from dead. Senator Rockefeller has succeeded in attaching the measure as one of the Senate Finance Committee's revenue provisions in the Comprehensive National Energy Act, H.R. 776. Accordingly, it remains prudent to take the measure seriously and to be cognizant of the economic damage it would cause, both in its own right and because of the precedent it would set. The Rockefeller proposal is troubling in a number of respects. Most coal producers have not been party to the BCOA-UMWA agreements. Is it fair for the federal government to make non- participating producers and, indirectly, their employees and customers, subsidize the labor contracts of competitors? Is the payment-guarantee scheme fair to the American public who would be exposed to the potential liabilities arising from the new program? If coal producers and coal-using businesses are burdened with higher production expenses thanks to a tax increase, they would have less incentive to expand output and employment and be less capable of doing so. How is that consistent with a public policy focus on lessening the government's drag on productivity and job creation? Institute for IRET is a non-profit, tax exempt 501(c)3 economic policy research and educational Research organization devoted to informing the public about policies that will promote on the economic growth and efficient operation of the market economy. Economics of 1730 K Street, N.W., Suite 910 * Washington, D.C. 20006 Taxation (202) 463-1400 * Fax (202) 463-6199 e Internet www.iret.org

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