According to the WSJ, electric cars are closer than we think.
Is this good or bad?
According to The Tax Foundation, the three major domestic oil companies (Exxon, Conoco, Chevron), paid a total of $47,858,000,000 in taxes in the First Quarter of 2008. (Their net profit during the Quarter was $28B less than their tax bill. How cool is that?) (The majority, but not all, of these taxes were paid to the US; the taxes paid to the US by BP and Shell, non-US companies, are not listed, so this may be a wash.)
Over a full year Exxon, Conoco and Chevron pay US taxes of $191,432,000,000.
American annual tax revenues from the consumption of oil and gasoline are $256,432,000,000.
Imagine what will happen when the major car companies finally put before the American consumer an affordable electric car, something GM now promises in 2010.
The stampede to buy one (or more) of these will be staggering. Of course Congress will find a way to distort the market with all kinds of crazy tax schemes to get everyone to buy an electric car because, “The earth has a fever.” (Is this “Sesame Street”?)
Make no mistake – I’ll buy one of these things when I can afford it. Running it will not fund existential enemies of Civilization (other than through the oil we will buy to make all that extra electricity since we are’t allowed to drill our own oil or use (heaven forbid) nuclear power).
One wonders whether Congress, in its infinite wisdom, will hit Ford, GM and Chrysler with windfall profits taxes as the margins of gotta-have (through penalties, incentives or the cool factor) electric cars stay high for years on-end.
I’ve written elsewhere about the possibility (probability) of Congress finding some way to finance your electric car through the same sense of entitlement that causes Congress now to be financing through your tax dollars the Constitutional necessity of your digital television home receiver.
There is just no way Congress will be able to abstain from helping the “working class” voter (whoever that is) buy an electric car, having legislated out of existence working class transportation.
But that aside, what about the drop in tax receipts? Where will the money come from to pay for Boomer Baby Democrat spending or Republican earmarks? Exactly what will replace oil taxes?
The annual tax revenues that will need to be replaced over a very short period of time (five years? ten? twenty is inconceivable given the green pressure to go electric) will exceed $256 billion dollars.
By 2050 in order to recover the lost oil & gasoline tax revenues, another $10.24 Trillion will need to be replaced – on top of that $2.8T.
‘A trillion here and a trillion there and pretty soon you’re talking about real money’?
Skip all the other nonsensical tax and spend schemes of the Boomer Baby politicians of both parties. Here you are looking at a perceived increase in annual taxes of well over $256B in a very few years just to stay even. (And who ever heard of our Boomer Baby Congress willing to stay even, to willingly not spend any more money year-on-year?)
But wait – we pay that now, right, so it won’t be a problem, right?
I don’t know about you, but gas pump and oil company taxes are fairly transparent to me. Several dollars in pump taxes every time I fill up my Scion. Oil company taxes are totally invisible to me.
But take a few trillion out of my wallet for things now un–taxed, or taxed at far lower rates and I’ll probably notice.
Add these taxes to the price of electricity? Perhaps Congress will slap this tax on these new electric cars? Then I’ll buy one because….?
Or instead of $5/gallon will we be paying $5/KW? And that makes sense because…?
Perspective: In 2005, 131M Americans filed a tax return, so that’s an increase per taxpayer of about $1,957.
The average American income in 2005 was $36,000. An American with an income of $36,000 paid federal income taxes of $4,881. Adding $1,957 to that tax bill will be perceived as a 39% tax increase. Who’s going to sell a 39% tax increase to people making $36,000?
No one. The Middle Class will get to suck up this tax along with what they doubtless will pay for coupons to buy the “Working Class” electric cars.
Since this tax needs to be replaced, and since we pay it currently as a consumption tax every day, why not just transfer it to the new fuel?
Because an increase in my annual electric bill of $2,000 might be noticed. If the “Working Class” somehow is given a pass on this tax, then the Middle Class will perceive a sudden increase of well over $4,000. Every month.
And Congress will need to track how many cars you have to bill you properly. We want Congress to do this?
Mass Transit, you say? Cool. So we all dump our cars and take the train.
Then where will these tax revenues come from?
This is analogous to Federal and State withholding. We never see the money now, but if withholding were to be ended and we each were sent a monthly tax bill for 40% of what we make, you think compliance might go down? Which is why we have withholding.
And if one still drives a gasoline car and gets this electricity tax bill? How, exactly will that work? Pay $1,957 at the pump and another $1,957 in extra electricity taxes?
Someone had better be thinking about the disappearance of these tax revenues over the next 5-10 years. Significant tax sources will need to be found to replace the revenues from oil and gas. To say nothing of the other schemes the Boomer Baby politicians dream up as electric cars arrive.
Or voters will get sensible about what Congress spends our tax money on – and start voting Boomer Baby politicians off the island.
When will Gen X and Y and Z realize that all this Boomer Baby Congressional spending on ourselves and our ignorant ideas is just taxation without representation?
Didn’t we fight a war about that once?