VESPAS OF THE WORLD, UNITE.

VESPAS OF THE WORLD, UNITE.
WHERE’S MY FREAKING TAX BREAK?[i]

Is, as Vice President Dick Cheney once said, energy conversation just a personal virtue and not a credible and wise policy choice? The Author believes that energy conservation is both-a personal virtue that places concern for the planet’s future above profligate consumerism and a wise policy choice. But Cheney’s personal and political loyalties aside, federal and state governments are making some tax incentives available for hybrid vehicles and other high-mileage vehicles. So watch what the government does, not what Cheney says.

For a roundup of some of these incentives, see the link below:

http://go.ucsusa.org/hybridcenter/incentives.cfm

Should tax breaks be extended to other vehicle types? Scooters, motorcycles, bicycles used in commuting? The Ducati Kid states in his Weblog that his Piaggio scooter and other such vehicles should receive some tax preferences and there are some good policy reasons to support his position. And conversely, should those Americans that drive low mileage SUVs and log-hauling sized pickup trucks suffer tax disincentives for their Keith Richard size oil addictions? The Author says yes, but he is not running for office. And he drives semi-econo. And his 140hp race-bred Ducati motorcycle still gets better mileage than nearly every car or truck on the road. [ii] Even at unlawfully high rates of speed.

TAX POLICIES AFFECT ECONOMIC ACTIVITY

Government’s craft tax policies to accommodate at least three goals. Unless you are an elected senator or congressmen with the power of deficit spending, your first goal as a unit of government is to raise enough revenue to cover the cost of government. Secondly, you will reward your political contributors with tax breaks and punish your opponents with tax increases, real and/or nominal. And finally, you will usually enact some provisions to encourage “good conduct” and discourage “bad conduct”. So-called “sin taxes”, high taxes on alcohol and tobacco, are a common example of taxes designed to discourage certain conduct.[iii]

So-called “good conduct” tax incentives would be charitable contribution deductibility, education tax credits, and the automobile hybrid incentives. Taking that argument further, if lower US energy consumption were the universally desired goal, American politicians might consider expanding that favorable tax treatment to vehicles that get over 40 mpg, motorcycles, scooters and mopeds. The results would be less fuel consumption, cleaner air, lower CO2 emissions and less road congestion. So where’s the catch?

BREAKING THE LAW OF “REASONABLY FORESEEABLE” CONSEQUENSES.

If fuel consumption goes down and fuel supply remains the same, the cost of fuel will fall. The value of the tax incentives on efficient vehicles will fall somewhat, and there will be a smaller financial disincentive to drive larger vehicles. Enter a targeted tax to maintain fuel price, a sliding tax to maintain conservation incentive parity.

REMEMBER PAUL TSONGAS?
HE WOULD HAVE MADE A DARN GOOD PRESIDENT.

Paul Tsongas was a Democratic candidate for the US presidency in 1992. One of his proposals was a $.50 per gallon tax on gasoline to encourage conservation and combat pollution. Let’s take Mr. Tsongas’ idea a bit further. Make the tax approximately $1.00 and aim it at a determined conservation price of $3.00 per gallon. If fuel spikes and rises above $3.00, the tax would be temporarily decreased to keep fuel at or near $3.00. If gasoline falls in price, the tax increases to raise the price to $3.00. The parity price of $3.00 could be adjusted yearly for overall inflation, conservation goals and could contain outliers for extreme situations.

Consumers would get higher, but more predictable prices. Environmental and conservation goals would be explicitly addressed. And government needs the revenue. What’s to stop it? Nearly everything that is wrong with a government run by industry lobbyists and their congressional stooges.

The oil industry, the auto industry, anti-tax (anti-fiscal responsibility) zealots, and many owners of gas-guzzlers. And maybe that it is the test of a good proposal. If it works as intended, inflicts economic pain in a way that will encourage salutary conduct, and has predicable outcomes, it is a good proposal. But a good proposal that is condemned to political death in the cesspool of American politics.

WHATEVER COMES, WE WILL WALK INTO IT ARM-IN-ARM IN THE DESERT OF THE REAL!

[i] So asks The Ducati Kid, a New York City Ducatista, Piaggio scooter owner and blogger. www.theducatikid.blogspot.com
[ii] But even if the Author did not own a motorcycle he would still support such a proposal. The Author is absolutely committed to separating his own personal financial and economic interests from his analysis and his recommendations. And he always discloses his personal financial interests when he discusses individual investments.

You get it straight and unglossed in the Desert of the Real. We may be the last of a breed of commentators and analysts here in the Desert of the Real. Poor (unsponsored) but honest. And the Author aims to keep it that way. Unlike syndicated columnists (i.e., Kathleen Parker, that have contracts) bloggers have only the credibility.they have earned from their readers.
[iii] Or these taxes could be a way for the government to profit from addictive behavior. Can you say Powerball? Or ten scratch off tickets, please?