Friday, February 05, 2016

What's wrong with the President's plan for a production tax on petroleum for starters, I'm not entirely against excises or even a carbon tax.  Since I've noted before that all taxes end up as taxes on consumption--and on the middle class and the poor--excises are really a simpler, less costly, and more effective way of taxing.  So it's not that it's a tax on petroleum at all.

What is at issue, however, is that it's a tax on domestic oil production, but not on imported oil, and that President Obama wants to spend the revenues on "green" transportation and infrastructure. 

Regarding the first, only die hard Obama voters need a primer on why that's idiotic--it would incentivize buying foreign oil while putting American oil workers out of work.  It's a long tradition in U.S. taxation (see "income tax" with elimination of tariffs), but not one that really ought to be continued.

The second issue is more subtle, but is even more egregious.  What goes as "green" in transportation really isn't.  Building an electric car (and providing the substitute car for long trips, and the garage to house it) requires tens of thousands of pounds of carbon dioxide emissions.   In the same way, when you account for how empty most mass transit is during operation,  transit isn't very efficient, either. 

For example, typical passenger-miles per gallon of diesel for urban buses is about 25--just a little better than what you'd get with a diesel-equipped Suburban with a single driver, really.  The energy budget for rail only looks better start counting the metal and concrete you put in place for the rail line.  You don't put $100 billion into a high speed rail project using 1960s technology without putting a lot of steel and concrete in place, after all. 

So the long and short of it is that Obama's proposal not only gets an F for economics, but the same for ecology. 

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