The announcement today by Obama regarding the change in mileage standards for autos in my opinion makes sense. After all I drive a Honda so I have already taken the first step. The Republicans in general seem to support a "market approach" of taxing gasoline and then giving it back in a tax payback in the withholding taxes. The problem with the Republican proposal is minion. They are:
1. Once the Government gets your money you can be certain you will never get it back. There is thus a fundamental flaw in the principle they espouse.
2. What of those not paying taxes such as the poor and the retired. They will get no rebate and in fact they will be taxed disproportionately.
3. There is a class of drivers with substantial discretionary spending who will buy their Hummers and Escalades and drive the gasoline up and out their exhaust. This group, and it is not a small group, will just dominate gas usage. They could care less and besides they will be getting their money back if we believe the Republican acolytes. Small chance.
4. People will buy what is available. Thus if one gets to buy only 35 mpg and greater vehicles then the system works. Clearly Honda, Toyota and the other imports are already on the way there so they care less. However the Detroit trio are the ones with the problems. They need the big muscle cares because their labor costs are so high. They cannot bear the small autos. How this will work is unknown but since Obama runs two of the three there is no longer any complaints.
5. A tax is always regressive. A tax just adds the the burden of taking money from the economy and from entrepreneurs who can create wealth and value. The current administration has taken the position of wealth transfer and perhaps wealth and value destruction by absorbing funds from the economy and adding to the overall deficit and debt burden. However in this case if we can stay away from a tax and only sell what makes sense then this is the better solution.
1. Once the Government gets your money you can be certain you will never get it back. There is thus a fundamental flaw in the principle they espouse.
2. What of those not paying taxes such as the poor and the retired. They will get no rebate and in fact they will be taxed disproportionately.
3. There is a class of drivers with substantial discretionary spending who will buy their Hummers and Escalades and drive the gasoline up and out their exhaust. This group, and it is not a small group, will just dominate gas usage. They could care less and besides they will be getting their money back if we believe the Republican acolytes. Small chance.
4. People will buy what is available. Thus if one gets to buy only 35 mpg and greater vehicles then the system works. Clearly Honda, Toyota and the other imports are already on the way there so they care less. However the Detroit trio are the ones with the problems. They need the big muscle cares because their labor costs are so high. They cannot bear the small autos. How this will work is unknown but since Obama runs two of the three there is no longer any complaints.
5. A tax is always regressive. A tax just adds the the burden of taking money from the economy and from entrepreneurs who can create wealth and value. The current administration has taken the position of wealth transfer and perhaps wealth and value destruction by absorbing funds from the economy and adding to the overall deficit and debt burden. However in this case if we can stay away from a tax and only sell what makes sense then this is the better solution.
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