Mother Jones - Comments for "Yet More Cap and Tax"

GA-Sen Watcher: time is short: both are needed. but the reason for a rising carbon price is to encourage current producers to work transition plans into their business. with clean-tech subsidies alone, big polluters with low operating costs have some incentive to sit tight.

there's also the matter of those who profit from pollution paying for its mitigation....

Can someone please tell me why subsidizing renewables isn't superior to taxing carbon?

gyfalcon: What kind of mileage do you imagine farm tractors and other heavy machinery get?

Fuel for ag equipment is generally exempt from the taxes on road fuel.

You wonder why diesel consumption doesn't go down, it's because in the U.S., diesel is almost exclusively used for vehicles doing actual work

Like using trucks instead of freight trains? Just because it's used for actual work, doesn't mean it couldn't be used more efficiently.

Raising the gas tax enough to get you self-indulgent suburbanites out of your cars once in a while would quickly push the remaining small and medium farms into extinction and completely vacate rural areas of all but very wealthy vacation home owners.

First, why would this affect small and medium farms more than large farms?

Second, what percentage of the rural population lives in rural areas because they do work that has to be done there (e.g. farming), and what percentage lives there just because they like it there, grew up there, etc.? I don't know the answer, and would like to hear from anyone who does, but I wouldn't be surprised if the latter category is pretty big.

As such, should people in the latter category be subsidized, or viewed as somehow more noble than suburbanites?

Markets are great tools, but so are screwdrivers.

Posted by: alex on 12/31/08

In a country of free people we know markets have free people doing things for their own benefit.

In this other scenario you suggest, who's going to use the screwdrivers and who's going to get screwed? Inquiring minds want to know.

Compare the issue of cap & trade to income tax systems! If you want to tax consumption you can tax at the gas pump same as you'd tax at a cash register. But, if what you want to tax is overuse of carbon, then you need some way to specifically focus on that and it isn't going to get done at a cash register. If you want to tax over-accumulation of wealth (relative to everybody else in society) then you don't tax at the cash register. You focus on the thing which you consider a problem -- the huge wealth.

But, there's another thing. Government should regulate and protect and sometimes enable, but a tax on something which is pretty necessary doesn't feel like regulation you could get out from under by buying a different car or using non-existent public transportation. It just feels like an onerous theft by government.

If I have a choice of alternatives which are acceptable, then at least I could change my behavior. Clearly we need more public transportation in some places and lots more alternative fuel vehicles. Governments should probably go first to prime the pump of production.

Markets are great tools, but so are screwdrivers.
True, but one should not dismiss the usefulness of a gin and tonic, either.

gyrfalcon,

That's a valid point. Any gas tax proposal would have to take the needs of real rural folks, as opposed to pretenders like myself, into account -- through some sort of rebate or exemption program.
But there's got to be some disincentive for me and my non-farming neighbors to drive our Ford Extinctions (or even my little Subaru) so much. Relying on their good sense ain't going to do it.

Any of you gas tax enthusiasts live in a rural area? No, I didn't think so. Any of you ever even seen an actual small farmer? No, didn't think so on that, either.

You urban and suburbanites have options. Folks in the country don't. What kind of mileage do you imagine farm tractors and other heavy machinery get? You wonder why diesel consumption doesn't go down, it's because in the U.S., diesel is almost exclusively used for vehicles doing actual work, not optional trips to the mall or the kids' soccer games.

Bruce Webb: To me this is part of the problem, self-styled 'progressives' who came of age under Reagan (or later) have simply internalized certain aspects of Chicago School Economics and in their own way still have this fetish for market solutions.

Hear, hear!

As the old unix saying goes, "if the only tool you have is a hammer, then every problem looks like a nail". Markets are great tools, but so are screwdrivers.

Why Pricing's So Cheap: Here's why (almost) everyone gets confused by cap/tax carbon pricing. They think: (1) jack up the gas price by 50 cents. (2) not much happens. (3) Uh-oh that's too expensive for what we got.
The Great Cost Confusion Has Struck: Everyone thinks the cost was 50 cents a gallon as if that money went down the drain. No way!! It's not gone at all. How to get it back? Easy. Use The Famous James-Hansen 100% dividend and send it back in the mail, like the Alaska Permanent Fund -- equal per person. This way the total cost is almost nothing. That's why pricing is cheap -- the money is not gone like it is when you subsidize.
Next confusion: If we send it back, people will spend it all on gas. Nonsense -- read about it in my new book: Carbonomics: How to Fix the Climate and Charge It to OPEC. Google "carbonomics" for a free PDF, or buy in on Amazon.

"Still, generally speaking, taxes and carbon trading are more efficient regulatory mechanisms than command and control, so the more you can rely on them the better."

Who says? To me this is part of the problem, self-styled 'progressives' who came of age under Reagan (or later) have simply internalized certain aspects of Chicago School Economics and in their own way still have this fetish for market solutions.

I am old enough to remember this country before Earth Day, before the Clean Air Act and the Clean Water Act, before the establishment of the EPA. And the place was filthy in ways inconceivable to younger people today. Lake Erie was a dead lake, possibly because rivers flowing into the Great Lakes were so polluted that they could and did catch on fire (google Cayahoga River). Back when I was growing up you couldn't even see across a metropolitan area. Inn the seventies I had the opportunity to both fly into the LA basin and enter the metro area by sea. In the former case you literally descended into a bowl of brownish-yellow air, the inversion layer being perfectly, visibly delineated. From the sea it was like approaching a big brown wall. And the only reason the SF Bay area was in places in better shape was because of 'night and morning' fog that cleaned the air of SF and Berkeley (but didn't do a hell of a lot for San Jose).

These acts did not achieve the results they did by tinkering with the tax code, instead they implemented a set of policies that said 'Thou shall or thou shall not'.

This tendency to demonize 'command and control' as if there was no difference between a Soviet style 5 year plan or a Maoist 'Great Leap Forward' and the imposition of CAFE standards mystifies me. Sometimes I get the sense that people who should know better go around screaming "If this goes on we'll be no better than SWEDEN". To which I reply 'From your lips to Congress and the Administration's ears'.

In any event 'generally speaking' is just a lazy way of asserting a particular ideological preference, there is no rigor there at all. Can you provide some real world examples which clearly demonstrate superior efficiencies from a market strategy over a regulatory one in side by side situations? Because it seems to me that too many people in this country simply rule out Social Democratic solutions (i.e. Nordic style policies) based on little more than outmoded notions of American exceptionalism.

aidan: Not to beat the miles traveled idea to death, but I probably should have mentioned that the assumption is that the fee schedule would indeed favour fuel efficient vehicles.

Whose assumption? Seriously, no snark, just an observation that the devil is always in the details. I only read one article on this proposal, but it made no mention of favoring fuel efficient vehicles. In fact the whole purpose seems to be to tax vehicle miles regardless of fuel consumption.

Strict privacy controls would need to be put in [with GPS]. But I imagine there would be a lot of suspicion on this score.

That's putting it mildly. It's like routing all Internet traffic through the NSA with the promise that they'll implement strict privacy controls.

Ok, now I'm beating this to death. And I think that some congestion pricing schemes might even make sense - depending on the details. For example, Mayor Bloomberg's proposed congestion pricing for Manhattan would have been ok if, for example, they put into law that all revenues would be used to improve mass transit. But they refused. Which means that it would just be a regressive tax. No problem for people who could easily afford the $8 fee (they'd get less congested roads), but a serious tax on the peons.

P.S. No personal sour grapes about the Bloomberg proposal, as when I do go into Manhattan during the business day I always take mass transit anyway. Nevertheless, it was a seriously flawed proposal that amounted to "let the peasants walk so the nobility can ride on less congested roads".

Some municipalities in Conecticut put a property tax on cars. Probably trying to stick it to the renters or free up a few parking spaces.

Kevin has discussed the mileage tax before. As far as I can tell it's an inelegant system designed by folks who are hamstrung to simply raise the gas tax. A gas tax is incredibly simple and takes 0 infrastructure to implement. No reason you couldn't design it so a six year old could calculate it. In fact, if you simply taxed crude oil you'd only need one six year old for the whole nation.

Putting GPS units in every car in America and instituting an accounting system would cost a lot. Easily in the 10's of billions with ongoing costs year after year.

BTW that's a great photo, Kevin. Not that I think you took it (although kudos if you did) just that it's a good and compelling image.

Someone explain to me how a "tax on miles traveled with a fee schedule to favor more efficient vehicles" is preferable to a gasoline tax?
I could, in theory, take my fairly-good-mileage compact and, with a combination of poor maintenance and bad driving habits, reduce its gas mileage dramatically. A gas tax would penalize that. A tax based on my car's theoretical efficiency wouldn't.

Here's a real simple, elegant idea: put a higher sales tax on gas-guzzling vehicles.

If you want to be revenue neutral, then adopt a "fee-bate" structure -- higher sales tax on gas guzzlers, and lower the tax give a tax rebate on gas sippers.

To take this idea a step further, apply it to the annual car registration fee.

What's not to like?