Thursday, December 13, 2007

Americans for Tax Reform

The interest group Americans for Tax Reform took out a full page ad in the Statesman, and no doubt in many other places, to stir up resistance to the energy bill recently passed by the House. ATR is calling the energy bill the “Massive Tax Hike of 2007.” ATR alleges the bill has $21 Billion in new taxes, will lead to higher utility bills, and will cost drivers more than $6.71 Bil.

What a crock.

The bill does increases taxes for oil companies, but it’s in the form of taking away subsidies and special tax breaks. Given the record, and windfall, profits oil companies are enjoying, this is reasonable. They don’t need tax breaks in these highly profitable times. Higher utility bill will result only if the oil companies raise their prices even further to make up for the lost tax breaks.

I suppose that if car manufacturers incur costs to raise fuel economy, and they pass along those costs, then drivers might have to pay more. However, in the current highly competitive environment it’s not clear that manufacturers can pass along such costs. Also, c’mon, it’s obvious that better fuel economy will save drivers money.

From NHTSA's website, "Report to Congress: Study of Feasibility and Effects of Reducing Use of Fuel for Automobiles"
NHTSA’s decision to raise light truck standards for 7 consecutive model years (2005-2011) will contribute greatly to reducing fuel consumption. In addition to the 14.3 billion gallons of fuel saved over the lifetime of the vehicles affected by the standards, NHTSA also completed and institutionalized a size-based CAFE reform structure that will save more fuel than the unreformed CAFE structure without negatively affecting safety and jobs.

I figure that 14.3 billion gallons of fuel saved, times $3.00 per gallon, means a savings of $43 billion. And there is the real problem for ATR; that’s $43B that won’t be going to oil companies.

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