a self-destructing gas tax

[was saving this idea for the Obama administration, but looks like I won't be getting the call, so just gonna float it on out there in the ether, as a New Year's gift to the U.S.A. Don't say I never gave you nothin...]

Have you heard about the self-destructing gas tax? It's green -- encourages energy efficiency; it promotes open and honest government by making it clear when the government runs up debts for future generations to pay; and it requires no new bureaucracy to administer. But best of all, it is self-destructing -- the first tax that automatically makes itself go away!

Why do we need a gas tax? We already have one, but it hasn't been increased in forever, and at just 18 cents a gallon it is no longer doing its job. As many others have noted, a gas tax is the best way to wean ourselves off of foreign energy sources, become more energy independent, fight global warming, etc (see, for example, Tom Friedman's recent article in the NYTimes).

Why self-destructing? It seems the government is always creating new taxes, making the tax code more complicated, but never getting rid of obsolete rules. So this proposed tax works until its job is done, then it goes away.

So how does the self-destructing gas tax work? Simple -- by indexing the gas tax to the national debt! That way, when the government acts irresponsibly, cutting taxes while increasing spending, the gas tax automatically goes up to help make up the difference. Of course, a few precautions would be necessary to avoid damaging the economy (particularly during recessions, see below). But on the whole this proposed tax would make the economy stronger, leading to greater energy efficiency, and lesser dependence on oil from unstable areas of the world. And best of all, when the country gets back in the black, the gas tax goes away!

Assume, for example, that the gas tax were indexed at 10 cents per $1 trillion of national debt. Since the national debt recently passed the $10 trillion mark (!), that would put the gas tax at just over $1 per gallon today. This is well above our current gas tax, and thus high enough to encourage greater fuel economy (but still well below that of many European countries).

If this tax had been in force during recent decades, it would have told us a great deal about the fiscal (ir)responsibility of recent presidents. For example:

• When George W. Bush became president, the tax would have been 57 cents per gallon, but due to his irresponsible tax-cutting while spending like a drunken sailor, the tax would have gone up dramatically by 49 cents, to $1.06 per gallon, and still counting (all figures based on data from the treasury). What better sign could we ask for that W. has been saddling future generations with debt at unprecedented levels?
• By comparison, Bill Clinton was also president for eight years, but the tax would have gone up on his watch by only 15 cents, from 42 cents to 57 cents per gallon. The economy was growing like mad back then, so we could have afforded it.
• Aside from W's presidency, the largest jump in the proposed gas tax would have occurred under Ronald Reagan, going from 9 cents to 27 cents per gallon. Not sure why some remember him so fondly; I remember him as the one who tripled our national debt! Not coincidentally, this was the last time the gas tax was even close to where it should have been.
  

So how do we implement this new self-destructing gas tax during an economic downturn? Very carefully.

Raising taxes is almost the worst thing you could do during a recession (reducing govt spending is the other). I'd suggest, first of all, that the tax be phased-in over five years. In 2009, for example, it would be indexed at 20% of the national debt, so it would be about 21 cents per gallon (or 3 cents higher than now). In 2010, it would go up to about 42 cents, and by 2013 it would be fully phased-in at more than a dollar per gallon (depending on future spending and taxing levels). I'd also suggest (for the policy geeks in the audience), that it be lagged by 18 to 24 months, so as not to interfere with the ability of the government to spend its way out of a recession. The price tag for the mess we're in now could well be trillions, and it would definitely help to defer that first tax increase by a couple of years.

Some time soon I'll suggest how to help out those impacted most by an increase in the gas tax; and maybe another idea about how to spend the money (like promoting energy efficiency and reducing the debt).

But for now we just need to get this thing rolling in the right direction. Fix the gas tax now!

buy something. better yet buy solar!

Those of us lucky enough to still have a job should be thinking about what we can do for those who don't. And no, I'm not asking you to donate to your local food bank (or mine, though it's not a bad idea). You can actually help the economy by being selfish..

The best thing you can do for the economy is go out and buy stuff you may or may not need. Spend some money, have fun, whatever. Every dollar you spend on something you may or may not need goes to someone who hopefully spends it again, on something they may or may not need, and it goes to someone else, and on and on it goes. This is how the economy works, and this is what keeps people employed. (it's also why money gets so dirty, but a credit card works just as well)

The problem with this system is that when too many people decide they "may not need" instead of "may need" stuff, and they hold onto their money, the whole system starts grinding to a halt. So quit being such a tightwad! Break out the wallet and spend some of that dough while we still have an economy.

preachy alert... about to get preachy...

Even better than spending it on something frivolous, go out and get solar panels for your house. That way you can help the economy while also helping yourself. Boost employment in the short run, while you get lower energy bills in the long run..

I heard the most amazing thing the other day -- the cost of solar panels is dropping! Now it's no surprise that prices drop when the economy slumps, but solar panels, really? I would think people would be itching to get these on their houses.

So as not to be a hypocrite, I'm getting solar panels and solar thermal (water heater) installed on my house. I'm lucky to live in Austin, home of the most generous solar energy credit in the country. But chances are you can get some kind of rebate where you live, and even if you can't, there's still the 30% federal tax credit that was recently extended (perhaps the only smart thing Congress has done all year).

So my neighbors ask me how much this is costing and how much I expect to save, etc. I really hate to bore you with numbers and whatnot, but since no one reads this blog anyway, here goes:

Numbers alert... here come the numbers...

I'm getting a 3kW solar photovoltaic system, the largest system that Austin Energy will subsidize. My roof is nearly perfect for it (south orientation, 27 degree tilt, no shade). So it should produce a little over 4000 kWh per year. At average utility rates (10.6 cents / kWh), that saves about $425 per year or $36 per month. It's about 30-40% of my typical electric bill.

So what's it costing? The system is a little over $20k. The maximum Austin Energy rebate is $13,500, so now we're talking $6.5k. I'll get 30% of that back on my federal income tax, so in the end I'm only coughing up around $4500! Yep, you read that right.

If you paid cash for this system, your return on investment (ROI) would be over 9% in the first year. Assuming energy prices keep going up (in the long run, they will), the ROI will only go higher. According to my calculations, depending on what energy prices do, the system could pay for itself in 8 to 10 years.

Don't have that kind of cash lying around? Neither do I. That's why I'm getting a low-interest solar loan from a local credit union. I'll be paying interest, so my ROI won't be quite as rosy. But when the loan's paid off, it will be nothing but gravy..

Where do I sign, you say? If you're in Austin, first step is to go to Austin Energy, read up about it, click apply, and get approved for the rebate.. it might take a little while.

While you're waiting, go buy something else..

Fix the electoral college system already!

couple-ideas lesson of the day: if you sit on a good idea long enough, someone will write a piece for the NYTimes and claim the idea was his! Well, this so-called author was wrong on enough of the important points that his column is no longer what you might call a 'good idea.' This is the real deal:

Everyone knows the electoral college system is screwed-up. It was invented a long, long time ago to give U.S. citizens the impression that they were living in a democracy. The major problem with the system is, from time to time the person who most people vote for is not the one elected president. The most recent time this happened, one candidate received a half-million fewer votes than his opponent but became president anyway (we'll refer to him as W. to protect the innocent.. until proven guilty). I don't have enough space here to document how well that turned out, so I leave that to others..

Another really huge problem with the electoral college system is that most elections end up being determined in a handful of so-called swing states, places like Florida, Ohio, and Missouri. Now why should a vote in, say, Broward County, FL, count more than my vote? I believe this is a major reason for low voter turnout. Not only that, but the only times we get to actually see the candidates in the so-called 'blue' or 'red' states is during the primary when our vote still counts for something, or when they want our money. And then they take our political contributions and spend them in the swing states on TV commercials and whatnot trying to get every last couch potato to the polls.

To avoid fiascoes like this in the future, we really should have the popular vote determine the outcome of US presidential elections. But how do we bring that about? A constitutional amendment will never happen. The easy fix, as both I and the aforementioned NYTimes contributor suggest, is to have some of states change the way they allocate their electors. Below, I explain why his idea would perhaps make the problem worse, but first let me tell you about my idea:

My proposed fix is to have just a couple of states, say Texas and California, pair up and decide to allocate all their electoral votes to the winner of the national popular vote. If the two states are big enough, and if one state is red and the other blue, the effect would be to break the electoral college hold on all the states at the same time. How would this work? If the 89 electoral votes of the two states I just mentioned are no longer taken for granted, but suddenly up for grabs, then every single vote by every citizen in every state suddenly counts! Not just the votes in the two states, but all of them, because it's the national popular vote that would matter. At that point the other states could fall in line and change their laws as well, as the dam would effectively be broken.

Why one red and one blue state? Because they don't trust each other, and neither side wants to risk their 'safe' votes for nothing. Why is this proposal much better than the current system in Maine and Nebraska, the one proposed by our NYTimes friend, or the one that California voters rightly turned down? Because they allocate electoral votes based on congressional districts within states. That sort of system just devolves the problem to a substate level, so votes in safe red or blue districts would no longer count; candidates would then visit only the 'swing' districts, as recently happened in Omaha; etc.. And imagine how much more contentious and political the process of redistricting would become.

If the election were based on the national popular vote, we wouldn't care about these ridiculous stories every four years about hanging chads, lost ballots, voter registration fraud, etc (unless it involves hundrend of thousands of votes). And mine and many other votes for president might count for the first time!

Yuppies off the eastside?

Have you seen this graffiti-propaganda posted around town?

Wouldn't it be cool to create acronyms for a living? But what to do with 'Yuppies off the eastside?' Not sure I disagree completely with the message, but YOE is hard to work with. I mean, YOE grabs the attention, but then what? YOE, YOE..

Is it possible this message is talking to me? I'm certainly not Young anymore, having recently completed my 40th trip around the sun. And not really Professional. I do earn a decent wage from the university, but I wear shorts to work most days. I get my hair cut at least once a year, sometimes twice. But Urban.. oh yeah.. maybe..

I did recently buy a home on the near-east side, site of the old Robert Mueller airport, in fact. So maybe they are talking to me..

You can't really call it gentrification, though, if they are turning former runways into homes, can you? I mean, when the development dedicates 25% of housing units to those with low income, it's not quite the same as forcing longtime residents out of their homes by driving up their property values, and thus their property taxes, to levels they cannot afford. Is it? Destroying the fabric of the neighborhoods and such.. But at least they're getting paid a premium for their land, before being shoved out, and their old homes bulldozed to make way for new condos, right?

The problem is not really those people buying houses over here -- close in where they don't have to sit in traffic for hours. Isn't the real problem the system that collects most of its tax money from property owners? When you live in a state with no income tax, the funds to keep it all going have to come from somewhere, right? Everyone knows sales taxes are regressive, falling to a greater extent on the poor, but aren't property taxes more fair? I don't know, but I doubt it, not if people are being forced out of their ancestral homes..

How about this?

CRED: Citizens for Responsible Eastside Development.

Has a nice ring to it, no?