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I was finishing Greenspan's book today, and came across a modest proposal that might actually work to reduce CO2.

Greenspan suggested implementing a gas tax of $3 or over, over the course of 5-10 years in order to decrease consumption and drive emissions down while extending reserves.

BUT, to reduce the effect on the economy and the individual, the gas tax would be offset by a decrease in general taxes.

In essence, it would be revenue neutral while increasing the attractiveness of FE vehicles without having to factor in complicating formulas for annual miles or whether a Prius owner should get more back than a Suburban owner.
It would also avoiding the complaints about "legislating impossible FE" the Big 3 love.

I've been looking at it, and the only downside I can see is that the very lowest tax bracket would be squeezed. Unfortunately, I can't see anyway to reduce consumption that isn't ultimately going to have the same effect without allegations of "handouts".

Greenspan suggested implementing a gas tax of $3 or over, over the course of 5-10 years in order to decrease consumption and drive emissions down while extending reserves.

BUT, to reduce the effect on the economy and the individual, the gas tax would be offset by a decrease in general taxes.I've been saying that for a couple of years - great minds think allike. :D

I think there are numerous strategies that can work. There just needs to be a critical mass of support for the goals. If a leader could get a majority to get on board with the idea that decreasing consumption is in everyone's benefit for several reasons, then the political will is there to come up with the details.

To get the left on board, you'd need a revenue-neutral reduction of an existing federal regressive tax, since the gas tax would be the introduction a new federal regressive tax. Reducing dividend rates for Teresa Heinz Kerry or income tax rates on high salary earners to offset gas tax increases on Joe Six Pack ain't gonna fly.

The closest you have at the Federal level is FICA, and that might be close enough. Reduce FICA from 7.65% to something lower, with lower SS/Medicare revenues supplanted by the gas tax revenues.

But then conservatives would say "fine, but the gas tax revenues can be used as either entitlement or general revenues", to which liberals would say "no, you're trying to defund SS again". And the politics would ensue.

And conservatives might justifiably balk, given that in general conservatives drive more as they live in less urban, lower population density areas. It might be a "red state tax". I just made this up; somebody prove me wrong so I can learn something.

But yes, anything which (1) keeps revenues neutral, (2) does not re-allocate the existing burden on income groups, and (3) sticks it to dirty fuel is a great thing.

I'm on board. ;)

I've been saying that for a couple of years - great minds think allike. :D

Maybe. If so, I probably missed it. The crux of the idea would be to have the whole thing be revenue neutral or nearly so for the majority of the people AND the gov. Obviously, the gov may take a minor hit to get the support it needs.

If this happened, I wonder

1) How long the Mid East will stay politically relevant?

2) How fast the Expedition line can be retooled for the Mazda2? :D:D:D

Even if the total outgoing stays the same for most people, the sudden jump in $ going to one spot may open a few eyes.

Lets see: 15,000 miles at 20MPG= 750gal/year
15,000 miles at 40MPG= 375gal/year
375 gal diff @ $8/gal = $3000/year. Basically, a new car payment paid for almost solely by gas savings.

I actually think its a good idea. You'd have to do something for poor folks though-- for instance, something on the order of gas stamps (but I'd like the incentive for them too, for instance, extra stamps for gas saver type vehicles or something?)

--des

To get the left on board, you'd need a revenue-neutral reduction of an existing federal regressive tax, since the gas tax would be the introduction a new federal regressive tax. Reducing dividend rates for Teresa Heinz Kerry or income tax rates on high salary earners to offset gas tax increases on Joe Six Pack ain't gonna fly.


The broad strokes as I understand it.

Year 1- $0.50/gal tax on gas with general tax rates across the board cut by 10% or whatever a dollar to dollar swap in the macro evaluation would be. Or partial tax credit plus a lower tax rate. Funding goes to same fund as general tax revenue (which will decline).

Year 2- $1.50/gal tax with further 25% tax rate cut across the board. Or lesser credit and tax rate cut.

Year 3, 4, 5...- Steadily higher taxes while cutting general rates.

Basically, the fed gov says "We're going to take more and more at the gas pump, so that consumption and CO2 drops. And we will ATTEMPT to work it so that every dollar in gas taxes comes back from general taxes." There will be some minor winners and losers.

The oil companies would b*&^$, new car sales would soar, and energy independence would be bolstered.


PS- regarding new car sales- A savings of $300/month in gas means that people could park their FSPs while paying the note on a new FE car. Or buy used and save money.

PPS- regarding very poor people. There could be some mitigation with gas stamps giving X gallons or whatever where the FE considerations would work themselves out, but there will be some pain. The driving question is: a little now or a lot later?

Seems like a great idea. I've been in favor of this idea for decades. Strongly. Problem is, I think we're in a pretty small minority here.

Churchill said that you can always count on the American people to do the right thing ... after they have exhausted every other possible option.

Americans will get behind a big carbon or energy tax only after our coastal cities are starting to float and we still haven't figured out how to stop sucking so much fuel.

Hi All,

The westerner's would screem bloody murder. Not the West Coasters, but everybody between Denver and Sacramento. They tend to drive ungodly distances out there to work. And many out there have below national average reportable wages, so they do not have the tax to give back.

Here is an op/ed that proposes not to make it revenue neutral.

http://www.nytimes.com/2008/03/25/opinion/25prasad.html?_r=2&th=&oref=slogin&emc=th&pagewanted=print&oref=slogin

Here's the compressed version.

The one country in which carbon taxes have led to a large decrease in emissions is Denmark, whose per capita carbon dioxide emissions were nearly 15 percent lower in 2005 than in 1990. And Denmark accomplished this while posting a remarkably strong economic record and without relying on nuclear power.

What did Denmark do right? There are many elements to its success, but taken together, the insight they provide is that if reducing emissions is the goal, then a carbon tax is a tax you want to impose but never collect.

This is a hard lesson to learn...if we want lower emissions, the goal of a carbon tax is to prompt producers to change their behavior, not to allow them to continue polluting while handing over cash to the government.

Denmark avoids the temptation to maximize the tax revenue by giving the proceeds back to industry, earmarking much of it to subsidize environmental innovation. Danish firms are pushed away from carbon and pulled into environmental innovation, and the country’s economy isn’t put at a competitive disadvantage.

The second lesson is that the carbon tax worked in Denmark because it was easy for Danish firms to switch to cleaner fuels. Danish policy makers made huge investments in renewable energy and subsidized environmental innovation. Denmark back then was as reliant on coal than the other three countries were (but not more so than the United States is today), so when the tax gave companies a reason to leave coal and the investments in renewable energy gave them an easy way to do so, they switched. The key was providing easy substitutes.

...if we want to reduce carbon emissions, then we should follow Denmark’s example: tax the industrial emission of carbon and return the revenue to industry through subsidies for research and investment in alternative energy sources, cleaner-burning fuel, carbon-capture technologies and other environmental innovations.

I agree in concept but I don't know that the carbon tax had anything to do with Denmark's strong economy. After all Denmark sells a lot of carbon to the world currently and is enjoying high prices, and is injecting co2 to get more oil.

Hi All,

The westerner's would screem bloody murder. Not the West Coasters, but everybody between Denver and Sacramento. They tend to drive ungodly distances out there to work. And many out there have below national average reportable wages, so they do not have the tax to give back.

Yeah, and not only do westerners have longer commutes (generally) but they drive more SUVs. I don't know if I can prove that, but my "SUV dar" says so.


I don't think it would be necessarily bad for really poor people. You could build in some safe guards and that sort of thing. For instance, anyone who gets food stamps gets gas stamps. Anyone who gets earned income credit would get them. You could put down include the registration info on your car and get more if you have a lower emissions vehicle.

But I don't see anyone for you to get westerners to go along. This one would. But we know there are exceptions to everything. (Europeans have always paid much steeper taxes for gas, you see that there are more economical cars in Europe too.)

--des

Yeah, and not only do westerners have longer commutes (generally) but they drive more SUVs. I don't know if I can prove that, but my "SUV dar" says so.

But I don't see anyone for you to get westerners to go along. This one would. But we know there are exceptions to everything. (Europeans have always paid much steeper taxes for gas, you see that there are more economical cars in Europe too.)

--des

I don't really see a particular problem with westerners. Assuming most of them pay taxes, this shouldn't affect them more than anyone else. If not, gas stamps or something could cover them.

Also, if they do drive more than elsewhere in FSPs, isn't that an opportunity to dramatically increase FE and maybe game the lower taxes for some extra $$?

Granted, the SUVs and P/Us may have to go, but if we're arguing that few people really need them, that may be a necessary evil. The few people that do need them would mostly recover that money in taxes. Farms may be an issue, but given all the special tax provisions already in force for them, not an insurmountable one.

From a pragmatic viewpoint, I don't think they'd have the votes to stop something like this.

If you cut my current income taxes 25% and put a $1.50 gallon tax on gasoline, i could more easily afford an H2+gas than in my current situation. Way to go Greeny, another win win for the rich...the richer the better.

(You can only use a finite amount of fuel for driving....say 6 gallons/hr for an H2 x 24 hrs day x 365 days year which is impossible, but i like to show impossibilities. Thats 52k gallons x $1.50 tax, $77K extra. Ok i make 10 million, thanks for cutting my fed taxes from $3.5 million to $2.8 million...now i can afford to run 10 H2's 24/7)

An across the board tax credit -- same amount if you earn $10,000/day or per year. Also, the same amount whether you get rid of your car or drive an Escalade 200 miles/day. I'ld keep most of mine.