Netzero gas tax

Aug 082009

It’s about time for us to get a new car to replace our one-and-only car, a venerable 1998 Toyota Corolla. But thanks to idiot politicians and their cash-for-clunkers program, now is a bad time to buy. Not only do we not get in on a cash-for-a-clunker deal, but we have to pay extra taxes so other people can trade in their clunkers. Not only that, but the people who ARE trading their clunkers in are causing shortages of new cars. It isn’t that we want a new car. We want a low-mileage used one. Just the same, this program is not going to drive prices down at the dealers. It isn’t going to motivate them to sharpen their pencils to sell to us.

On the other hand, I suppose if more people buy new cars instead of used, it might actually work a little bit in our favor if it causes a glut of used cars. But I expect the net result will be more to the dealers’ benefit than ours. The clunkers are going to the dumpster, and will not be going to the used car lots.

So it might be best for us to hang on to our car until just before the massive inflation that will be required to pay for all these stimulus programs starts to kick in. We’ll see.

In the meantime, the program probably does not a thing to motivate people to cut their carbon emissions. Having a fuel-efficient car does not motivate people to burn less fuel.

Jul 312009

I wish I had a 15MPG clunker to trade in for a new 30MPG car. Then instead of driving 10,000 miles this year I could buy twice as much foreign oil and get in 20,000 miles — maybe afford to move farther away from work and contribute to urban sprawl. But even if I didn’t get to do that, at least I was able to contribute some of my tax dollars to help other people burn through foreign oil in better style.

That method works with beer, too, as Tom McMahon points out in the following diagram (used with permission).


BTW, one thing I like about the cash-for-clunkers program (really, no sarcasm) is that it’s limited to a fixed amount of dollars. When the billion dollars are used up, the program is over. It’s no use having President Obama call in the director of the CBO and intimidate him into providing estimates that are more optimistic. When the money is gone, it’s gone. No open-ended entitlement here.

Well, at least not so far. I’ve seen headlines suggesting that Congress is trying to make it into something resembling an entitlement after all.

Mar 222009

Alex Harrowell at A Fistful of Euros provided me with some new examples of why cap-and-trade systems are a really bad idea. I’m not sure he’s against cap-and-trade like I am, but he makes the point that a carbon tax is a lot simpler to enforce, and a lot less prone to political influence trading. For one thing, with a carbon tax there are a lot fewer entities to keep track of:

Further, how many SKUs (Stock-Keeping Units – individual products) does the Chinese export sector produce? It’s got to be in the tens of thousands at the least. Under this proposal, each one would have to be carbon-audited accurately and regularly and assessed for taxation on that basis. It is far from clear whether the importing state or the exporting state would do this. Just taxing fossil fuel, already, involves less than a dozen SKUs, which happen to be bulky, smelly, heavy, or black and dusty, and therefore difficult to hide on a big scale.

Of course, the governments of the world have little motivation to institute a simpler, easier-enforced scheme that would deal with the problem of carbon emissions directly.

If tens of thousands of carbon-emitting products need to be audited and assessed, that will create lots of jobs for government employees, which directly or indirectly will create lots of rewards that can be offered to political supporters. And it would provide lots of reasons for lobbyists to come, hat in hand, to the governing officials to make sure their products are treated well in the process.

If global warming was really an important issue, we’d go with the carbon tax instead. But unfortunately, there are very few people out there who think it’s more important than an oportunity to expand governmental power.

[spelling correction, 24-Mar]

Jan 262009

Speed Gibson points out that cars don’t guzzle gas, people do. That’s a good argument for a netzero gas tax vs CAFE standards.

Speed says “The market regulates all this just fine, or would if the government would stop interfering.” I don’t completely go along with that, as it doesn’t take care of regulating the external costs of fossil fuel consumption. But a netzero tax would harness market forces to do the parts that markets do best.

Dec 292008

For years — maybe even decades — I’ve been talking up the idea of a net-zero gas tax. Except I didn’t know it should be called “net-zero” until I read Charles Krauthammer’s article in the January 5 issue of The Weekly Standard. And it hasn’t been until recently that I’ve decided in my own mind that the countervailing tax reduction should definitely be in the FICA tax.

For most of these years it has been like talking to a brick wall. LeftLiberals don’t like the idea, because for the most part they don’t really care about the environment. What they care about is growing the government and increasing the opportunities for power and corruption, all of which can be accomplished much better with CAFE standards and carbon-trading schemes (and more recently, with big bailouts). Conservatives until very recently haven’t liked the idea because their heads have been stuck firmly in the sand. Libertarians don’t like the idea because of the word tax and because it requires government action. They can’t get it through their heads that you can’t have free markets without government action. (LeftLiberals also sneer at the idea using the same words: “What? I thought you people were against all government regulation.” But that of course is not the reason they oppose it.)

It has been in just the past few weeks that I’ve been reading a few articles here and there in which conservatives have been talking up the idea. And now Krauthammer has explained the case in full.

I would add just one point to Krauthammer’s suggestion of reducing the FICA tax to pay for it: I would take Barak Obama up on his idea to expand the FICA tax to include all income; however, it too should be a net-zero increase. This would really give lower income people the tax cut that he talked in favor of during his campaign, and it would remove a regressive tax from our system. Obama probably didn’t mean to keep his campaign promise, but let’s pretend that he really did and let’s hold him to it.

One additional reason is that the Social Security system is underfunded, much like the Madden Madoff system was. There will be a temptation to enact a big gas tax with countervailing reductions in FICA, and then to increase FICA to pay for Congress’s fraudulent promises on Social Security. Maybe that will have to happen to some degree, but I want all the wealthy, influential people to have a stake in that decision, and not to be sitting out the issue because it doesn’t concern their own pocketbooks.