Comments on: Gang-of-10, Part 3: More good stuff, some ugly http://climateprogress.org/2008/08/19/gang-of-10-part-3-more-good-stuff-some-ugly/ The Latest on Climate Science, Solutions, and Politics Fri, 09 Jan 2009 07:21:50 +0000 http://wordpress.org/?v=2.1 By: Earl Killian http://climateprogress.org/2008/08/19/gang-of-10-part-3-more-good-stuff-some-ugly/#comment-17798 Earl Killian Wed, 20 Aug 2008 17:19:49 +0000 http://climateprogress.org/2008/08/19/gang-of-10-part-3-more-good-stuff-some-ugly/#comment-17798 Joe wrote, "<i>These two would have no impact whatsoever on oil consumption</i>" Good point. Let's suggest to our Congress critters that they make this money available to any automaker who meets the California AB 1493 standards instead of the DOT standards. Joe wrote, “These two would have no impact whatsoever on oil consumption”

Good point. Let’s suggest to our Congress critters that they make this money available to any automaker who meets the California AB 1493 standards instead of the DOT standards.

]]> By: red http://climateprogress.org/2008/08/19/gang-of-10-part-3-more-good-stuff-some-ugly/#comment-17827 red Thu, 21 Aug 2008 05:09:59 +0000 http://climateprogress.org/2008/08/19/gang-of-10-part-3-more-good-stuff-some-ugly/#comment-17827 Joe: "These two would have no impact whatsoever on oil consumption ... So I would put a sliding scale of income restrictions on these credits." There are a number of questions/points I'd bring up about this. One Joe already mentioned - the possibility of excluding cars sold with the tax credits from CAFE calculations (or perhaps reducing the "weight" of such a sale). Another is the possibility that it turns out to be incorrect, because the auto makers wind up exceeding the CAFE standards (because of consumer demand brought by higher gas prices, the tax credits themselves, or any number of other possible factors). Such a scenario might play out for particular auto manufacturers that emphasize fuel efficiency more than others. In the opposite scenario, where consumer demand for fuel efficiency is lower, and auto manufacturers just make the fuel efficient cars to get by with the CAFE standards, the tax credits might still be helpful in encouraging the auto manufacturers to not lobby to reduce the standards. There are some problems with devoting the tax credits to low income car buyers. First, doing so would alienate the middle class, and make the whole compromise harder to pull off politically. Second, doing so would add more accounting complexity and overhead to the car purchasing transaction, indirectly lowering the value of the tax credit. Finally, getting these cars in the hands of one income level or another isn't, or shouldn't, be the point of the tax credit. The point should be to encourage the manufacturers to make the fuel efficient vehicles, and to encourage consumers to buy them if they're going to buy a car. The point shouldn't be to reward people for having a low income (whether that's because their circumstances were unfair, they were lazy, they made bad decisions, etc) or punishing people for having somewhat higher incomes (whether that's because they had some lucky breaks, studied and worked hard, made better decisions, etc). There are a lot of cases where a low income person deserves a break to get that tax rebate and a more fuel efficient car, but there are plenty of other cases where a higher income person deserves that break more. Joe: “These two would have no impact whatsoever on oil consumption … So I would put a sliding scale of income restrictions on these credits.”

There are a number of questions/points I’d bring up about this. One Joe already mentioned - the possibility of excluding cars sold with the tax credits from CAFE calculations (or perhaps reducing the “weight” of such a sale).

Another is the possibility that it turns out to be incorrect, because the auto makers wind up exceeding the CAFE standards (because of consumer demand brought by higher gas prices, the tax credits themselves, or any number of other possible factors). Such a scenario might play out for particular auto manufacturers that emphasize fuel efficiency more than others.

In the opposite scenario, where consumer demand for fuel efficiency is lower, and auto manufacturers just make the fuel efficient cars to get by with the CAFE standards, the tax credits might still be helpful in encouraging the auto manufacturers to not lobby to reduce the standards.

There are some problems with devoting the tax credits to low income car buyers. First, doing so would alienate the middle class, and make the whole compromise harder to pull off politically. Second, doing so would add more accounting complexity and overhead to the car purchasing transaction, indirectly lowering the value of the tax credit. Finally, getting these cars in the hands of one income level or another isn’t, or shouldn’t, be the point of the tax credit. The point should be to encourage the manufacturers to make the fuel efficient vehicles, and to encourage consumers to buy them if they’re going to buy a car. The point shouldn’t be to reward people for having a low income (whether that’s because their circumstances were unfair, they were lazy, they made bad decisions, etc) or punishing people for having somewhat higher incomes (whether that’s because they had some lucky breaks, studied and worked hard, made better decisions, etc). There are a lot of cases where a low income person deserves a break to get that tax rebate and a more fuel efficient car, but there are plenty of other cases where a higher income person deserves that break more.

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