Two U.S. Congressmen, who know nothing about tax policy, have introduced a bill that will dramatically increase federal taxes on guns and ammunition. The Congressmen are Democrats Danny K. Davis from Illinois and Bill Pascrell from New Jersey. The bill cleverly called the Gun Violence Prevention and Safe Communities Act of 2013, would not prevent violence nor ensure safe communities. What it would do is impose a 20 percent tax on all firearm purchases and a 50 percent tax on ammunition. The bill would also increase transfer fees and licensing fees for gun dealers, manufacturers, and importers. Because they would like the pain to keep pace with inflation, all of the new taxes and fees would be indexed. The revenue from the bill would be set aside for law enforcement and to fund research on gun violence. I am not sure what happens if someone's research shows that increased gun ownership leads to lower crime. But researchers from Harvard found that last week.
If their public pronouncements are any indication, Davis and Pascrell hate guns and view the Constitution as a nuisance (at least that pesky Amendment Number 2). It is not surprising they are pushing this asinine position. There is no widespread support for banning more guns. There is little support for even further restricting gun purchases. If the goal is to harass gun rights supporters, the next best thing is to impose an onerous tax. This is petty politics at its finest. And it represents horrible tax policy.
Davis, Pascrell and their gun control buddies obviously don't understand some basic concepts of tax policy. They're proposing a special tax, an excise, on a particular product. Everyone who has ever studied tax policy will tell you that those taxes are warranted only in limited circumstances. The idea is that an excise is appropriate when it's used to compensate society for the external costs of using a product. In basic tax school, we call those costs externalities. Say I live in rural Virginia, far from any high-crime area. I own a .22 rifle because I like to shoot empty beer cans. And maybe I own a .45 automatic in the unlikely event of a home invasion. I've never committed a crime. And let's stipulate that I'll never commit a crime because most gun owners never will. And I don't hunt because I'm a vegetarian and don't like to shoot critters.
Exactly what externalities am I responsible for? Neither I, nor my firearms, nor my ammunition has ever been to a high-crime area. If I'm not causing harm (and my inanimate pistol and bullets aren't causing harm), what's the rationale for the tax? It's not externalities. The rationale is that Davis and Pascrell don't like guns. They probably don't like gun owners, hunters, preppers, and guys with the Second Amendment tattooed on their forearms. But the truth is they want to impose a tax where none is warranted. Davis and Pascrell want to tax law abiding gun owners (who constitute about 99 percent of gun owners) because of the actions of violent criminals. There are many things in life we don't like, and people we don't like. But that's not a reason to impose a tax. I wish politicians understood that.