Rating the Tax Code's Green Performance – Part 2

Our panel of Homer Simpson, Gordon Gekko (“Greed is good” from the movie Wall Street) and Henry David Thoreau perseveres in its look at the tax code's performance from a green perspective, continuing yesterday's discussion.

Henry:  Let's start today off with transportation.  We just mentioned that the tax code encourages low density housing, which makes it more difficult to use energy efficient public transportation.  Congress lets employers pay a tax free parking allowance and a public transit commutation allowance, and they finally equalized the amounts last year, better than nothing, but why not make the public transit allowance even bigger?

Gordon:  Relax, Henry, it's no biggy.  I'm not trading my limo for the bus, I don't care how big the allowance gets.

Homer:  Bart is riding his skateboard to a part-time job, can he collect? 

Henry:  Not sure about skateboards, but employers can pay bicyclists a commuting allowance of up to $20/month tax free, now if only they would let the employers combine allowances for the people like me, I take my bike to the train.

Gordon: Guys, busses, bikes who really cares.  The glitz is in the cars.  I just saw that new Porsche 918 Spyder hybrid – 500 horsepower, 189 mph top end, my name is already on the waiting list.  I know the hybrid credit is over, but didn't tax credits help get all this hybrid stuff off the ground?

Homer:  You mean that Porsche 918 Spyder actually flies?

Gordon:  No Homer, it's idiomatic, just means tax credits helped the hybrids get started.

Homer:  Watch what you're calling me suit, or you won't live to take delivery on that Porsche.

Henry:  Relax gentlemen.  Yes, there were and still are, an array of credits for alternate energy vehicles, and they helped, but really fuel cell, lean burn, plug in, three wheeler – is this any way to run a tax code.  Why not just tax gasoline to the point where the gas price reflects the external costs of using gas, then the market would spur development of these alternate vehicles without a Chinese menu of credits.

Gordon:  Henry, I'm so proud of you – not crazy about the gas tax idea, but I love that whole “market would spur development” schtick, I'm rubbing off on you.  What did you think of the performance of the Cash for Clunkers program.

Henry:  It actually had a pretty significant impact on the average fuel economy of the cars on our roads, but I don't suppose you had any clunkers.

Gordon:  No, but I've got a few bucks tied up in agribusiness and I'm crazy about  the after-tax performance of my investments in ethanol.

Henry:  Of course you are Gordon, its subsidized up the wazoo, and it uses corn, which is a needy plant when it comes to water, fertilizer and pesticides, not to mention the fact that there are about a billion people who might like to eat that corn.  Ever hear of switchgrass, Farmer Gekko, you can get an even bigger tax credit if you move into cellulosic ethanol – get there ahead of the crowd and you can make a few bucks.  When it comes to credits, alternate fuels are another area  that emits an aura  of special interests and boondoggles.  The thing that really drives me nuts is that we are still using the tax code to subsidize the production of fossil fuels for transportation, tax subsidies that will add up to the tune of $26 Billion over the next decade.

Homer:  So this is like that thing with the alternate vehicles – if we just stopped subsidizing fossil fuels and  taxed gasoline to cover the climate change and environmental costs it generates, this alternate fuel stuff would sort itself out without a lot of complicated credits.

Henry and Gordon, in awe: Nice performance,  Homer, you were actually paying attention!

Homer: Hey, I was, wasn't I.  But now I'm very tired.  Need donuts.

Henry:  OK, we'll finish our discussion  with Part 3 , maybe we should get a little thank you gift for Professor Mann. 

Photo Credit: David Reber's Hammer Photography