Wednesday, June 21, 2006
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Wacky government incentives, continued
A quick follow-up to my post on the bizarre tax incentives for hybrid vehicles.
As fate would have it, David Leonhardt at the New York Times looks at this scheme and confirms the explanation made by many commenters in the last thread -- the goal of the tax credit is to help the domestic auto industry, not energy conservation:
The first thing to understand about the hybrid tax credit is that it was never really intended to reduce oil imports from the Middle East or slow the effects of global warming. The credit was created to prop up Detroit while giving conservation a nod.I'll close this post with an e-mail excerpt from a good friend and high-powered Chicago lawyer who shall remain nameless:
Much of the law has a kind of internal coherence. The common law, especially, is a kind of organic effort to rationally work out social ordering. Federal statutes are often broad efforts to impelement a basic policy objective -- sometimes successfully, sometimes not. Because the law "makes sense" much of the time, one can usually infer the "purpose" of a law from its provisions.posted by Dan on 06.21.06 at 01:56 PM
It occurs to me that eliminating the market distorting mortgage interest deduction would probably have more effect in reducing energy consumption. Fewer McMansions would be built, requiring less energy heating and cooling, and some people would choose to remain renters in high density housing closer to their place of work, thus tranportation energy expenditures would go down. Of course the dreaded realitor lobby and the developers would fight to keep it -- just a pipe dream of fair treatment for us renters.posted by: Mitchell Young on 06.21.06 at 01:56 PM [permalink]
Just another illustration showing why I either laugh or check my billfold anytime someone suggests "sensible energy policy" will help deal with the petroleum situation.posted by: TJIT on 06.21.06 at 01:56 PM [permalink]
Your Chicago lawyer friend's statement is simply self-obvious to anybody with the slightest understanding of the tax code and the use of it for multiple purposes other than simply raising revenue. It is, of course, the nexus of Congressional power, and the lever by which Members can play interest groups against each other for partisan purposes, policy purposes, and the Members' own benefits.
It is the single largest driver of a corrupt culture and a structural defect that ensures that corruption will never be banished.
The sad part is that some naive, deluded do-gooders think that they are benefiting society by inserting provisions of tax credits for buyers of hybrid vehicles. No matter how the credits might have been structured, the effort would inevitably led to misalloction of resources while at the same time furthering a corrupt political structure. A very dubious home run...posted by: Seppo on 06.21.06 at 01:56 PM [permalink]
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