“Actually, as of today (Thursday March 13) the loonie is worth more than the American dollar (1.015 or something like… similar to our gas prices.)”
Yup, it’s 1.018 as of a few minutes ago.
The only affect of this for those who do not want to pay the initial tax is the buyers will transition to the used market.
Joseph, your assertion that everyone can simply decide to work closer to where they live, live closer to where they work, or buy cheaper transportation is, with all due respect, absurd.
Housing is a long term investment, a place to raise one’s children, a location to be able to send them to good schools and raise them in a safe neighborhood. In many areas the distance one has to buy from where he/she works is driven by the housing prices and their ability to qualify. I’d love to buy a house right by where I work. But simply cannot. The prices are simply beyond my reach.
The choice of where to work is also a long term decision dependent upon many factors including what is available and where. When I built my house in Litchfield it was about 5 miles from where I worked. When that company closed, when the market sagged, I had to accept a position in Haverhill, Mass, a definite commute. Had I moved to be close to work, my mortgage would have tripled and my kids’ quality of neighborhood environment and quality of schools gone down considerable.
My current vehicle is a 30 mpg highway vehicle that I had to get for comfort because the 38 mpg vehicle I bought was crippling me…degenerative disc disease.
My situation, with variations, is the norma rather than the exception.
I’m happy for you that your situation is working for you. Mine is too.
I would not dream of imposing some huge financial cost on you in order to force you to change your situation to what I’d like to see in order to artificially control some market that realistically is beyond our control. I’d appreciate the same respect.
Mitt Romney had a solution to Massachusetts residents that did not have health insurance. He got a law passed that required them to buy health insurance. Perhaps those who want to artificially control oil consumption could use his logic and simply pass a law requiring everybody to drive Smart cars. Of course, GM and Ford might be less than pleased. And the families of their unemployed workers…well, maybe we could increase welfare payments!
Mr. Sanders, I believe you owe us some input here.
I think Craig is trying to alert us to the fact that the US is on a collision course with international economic realities.
Imagine yourself in the White House next February, and the secretaries of Defense, Energy, Commerce, Environment and Treasury are briefing you:
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Your country is running an unsustainable trade deficit and no amount of services (TV programs, engineering, movies, etc) can offset it. Of the $830 billion deficit, $350 billion is oil imports.
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Your country is importing 55% of crude oil for processing and another 13% of refined fuels are imported from Europe and other countries.
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The value of the US dollar is under fire because of the trade and budget defict; a large amount of government borrowing is underwritten by the Chinese and Saudis. It’s like owing the mob for your drug and gambling habits.
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The secretary of defense want even more money for the Iraq war; money you really don’t have.
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World oil demand is oustripping new reserve additions; the market is truly global and no one country can control the supply. It looks like for oil prices the only way is up.
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While other developed countries are successsfully reigning in fuel consumption through selective, revenue-neutral taxation of cars and fuel, your country is one of the last developed countries to leave the automobile totally unfettered, except for state road taxes which are very low by world standards. Even oil-rich Canada has a stiff gas guzzler tax and higher fuel taxes.
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Fuel prices in the US are typically less than half of those in other OECD countries. Selective car and engine size taxes are too low to be effective.
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US car mnufacturers are making little effort to produce high quality small cars and do not support fuel and other taxes.
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The new CAFE standards are the only bright lights in an otherwise gloomy scenario.
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The environmental pressure is mounting to reduce total carbon emissions from all power sources.
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Fourteen states, led by California,have already enacted fuel economy and emission standards stiffer than the recently passed new CAFE standards. Your government is not providing leadership.
You as leader have to make relatively quick decisions on a plan of action. Although there is little chance that foreign suppliers will cut off US oil supply, there will likely be a repeat of the 70 oil crisis, but with much worse consequences. Gas rationing, WWII style, may be necessary.
A sensible leader will try to be proactive and start forcing down oil consumption gradually, but starting with new car and truck sales, and fuel tax increases.
I’ll let each one of you decide how patriotic it is to do nothing (Laissez-faire Frontier America) and let the crisis develop, or become proactive and ease the pain in the transition to a new reality.
“Joseph, your assertion that everyone can simply decide to work closer to where they live, live closer to where they work, or buy cheaper transportation is, with all due respect, absurd.”
I’m not sure that “long term decision” model is true any longer for most people. My parents lived in the same area for their entire lives and my dad worked in the same family business (5 miles from home) for his whole career; but I have lived in 5 different states (so far) and now I never work within 1000 miles of my home. I have no clue where I will be living or working in 5 or 10 years, I may well be living in another part of the world by then. I would be amazed if my kids ended up anyplace near my current home, or even in this country. None of my neighbors are from this area and they frequently move away for better opportunities. For better or worse, homes, jobs, and transportation are all very temporary for most people I know. Anyone who is unable (or unwilling) to pack up and follow the next opportunity is at a significant disadvantage in today’s world. Frankly, I don’t understand the logic of staying put when there are things to do elsewhere.
Looking back, my grandparents all came from other parts of the world and moved to the U.S. because that’s where the opportunities were at the moment (early 20th century). Many of my parents generation seemed to have the luxury of staying in one place, but that seems to be an anomaly. The next generation will certainly be more mobile than the current one, and will adopt more easily to whatever comes along. Someone said, the only constant is change (and that’s probably a good thing).
“I think Craig is trying to alert us to the fact that the US is on a collision course with international economic realities…”
That’s what I would have said if I was smart enough. (-;
That scenario is very scary and not unrealistic, the only question is how quickly we get there and how bad it will get before we do something. Personally, I’m considering moving to europe and pretending to be canadian before it all hits the fan (just kidding… maybe).
The idea behind revenue-neutral taxes is precisely that taxes raised in one area are used to provide services in other areas. Higher education, health care are some of these services.
The other advantage of this mechanism is that lower income people can get more tax credits so that the higher tax burden for fuel falls on the higher income types and those that drive gas guzzlers. So your fears of unjustly taxing the poor is groundless. We just want to prevent poor people from making the mistake of buying a cheap gas guzzler and then being stuck with high gas bills.
Just for the record, The US spend the highest percentage of Gross Domesctic Product (National Income)on health care of all countries. Japan, with state medicine, spends 1/3 as much per capita, and somehow they live longer. Quite a bit of the Japanese program is financed by fuel taxes.
In my area of the country it is still true.
The economy is a factor too. In a robust economy people become more mobile, but in a down economy mobility suffers. Age is, I think, also a factor. When I was a young properous and upwardly-mobile fella moving was easier. And more palatable.
I’ll be reitred in 5 years.
I’n your area, people will probably be more mobil within another generation. It’s just the way the current economy works, that will make it easier for people to accept other changes.
I’m not that young either. Hopefully, I’ll never be retired.
If you don’t like a $6000 gas guzzler tax on a Chevy Tahoe, the alternative is not just a used car, but you could trade “down” to a cheaper and more economical new car as well. People who are used to buying new cars only go to used ones when their financial condition is desperate, such as with job loss, major illnes, etc. If you really need a powerful machine such as towing a large trailer, you could buy a used gas guzzler without incurring the new car surtax. One poster owns a diesel truck to pull his horse trailer. He just bought a new Prius, and will only use his diesel 3000 miles a year. That’s intelligent planning !
Going from an overpowered expensive car or SUV to something more sensible does not entail physical or financial suffering. It might mean some loss of ego.
During WW II no new cars were built for the public from mid 1942 till late 1945! Everyone made the old cars last, and gas was rationed a good part of the time as well. Americans coped extremely well and probably lived healthier lives doing so.
An interesting fact is that people who live in “mobile homes” move less often than people who live in houses! The reason is probably socio-economic; those people tend to not have the portable technical skills that make mobility possible.
Fifty years ago, no one could get elected president of the US without carrying New York State. Now he/she needs California and Texas and Florida (by hook or by crook)and can probably lose New York and still make it. There has been a monumental shift in population and that’s a good thing, as Martha Stewart would say. These large shifts do not occur overnight, and it is ususally the young people who move. I have moved 7 times for career reasons, mostly West.
The tax system works both ways; Sweden has a “negative income tax” for people who are in low income brackets, in other words, a wage top-up. Canada has various forms of assistance too, I understand.
After hurricane Katrina, gas prices went through the roof; several states inaugurated temporary subsidies for gas over $8/million BTUs.
Isn’t that more or less what the U.S. “earned income tax credit” does?
I drive 30 miles one way and I drive an Accord.
It doesn’t tax you to death. You drive an xC don’t you? Take a look at the cars on the gas guzzler list (see attachment). They include the Audi S4, BMW Z4M, 5.4L Mustang, Cadillac XLR, Honda S2000. Anything that gets less than 21.5 combined MPG is on the list. Sure, these are upscale cars, but none is all that large.
Free market economics is fine. I like it. Except that in this case, it will cause big problems. Did you like the stagflation of the late 1970s and 1980s? That’s what we are starting again and it could get much worse. The trade deficit has many causes; a big one is buying foreign oil. Our largest export seems to be dollars. That’s OK for a while, but eventually no one wants more dollars. They then have to be enticed by providing ever more dollars for the same old goods. I see stemming this as the government’s job. Another large component of the trade deficit is federal debt financing. Lowering the federal debt and making large vehicles less attractive interests me. We could shut down Health and Human Services, NASA, the Department of Commerce, and Department of Energy, but we would still likely run a national debt. Our federal tax income is almost always less than federal expenditures. It doesn’t seem that we will cut the biggies (social security, agriculture subsidies and defense) and the smaller agencies just don’t have enough money to come close the the shortfall. How do you propose we deal with it?
“It is IMO unfair to suddenly hit someone with a big change of this type. But certainly extending the gas guzzler to vehicles that are primarily used the same as cars, is fair and may benefit the car buyer be encouraging them to make a more economical choice.”
Big change? I guess that’s up for debate. I don’t think that a one-time fee for gas hogs is too expensive. It would likely be 10% or less for most trucks once in the life of the vehicle. I see this as an equity issue. When the gas guzzler tax was passed in 1976 there were very few personal trucks on the road and almost no SUVs. If there had been, they would have been part of the package. Certainly encouraging lower fuel consumption could be done through fuel taxes. It could also be done through market forces alone, but the effects tend to be severe. Remember that the market has no heart - until it tears yours out. I’m a free market guy, but it can’t be truly free without dramatic impacts. The credit crunch we’re in right now is pure free market fiasco. We can’t blame the government for this one. Unless you want to say they didn’t interfere enough.
“What about the poor, who can only afford to live in rural areas, and drive older, less efficient cars because they haven’t the money to pay for higher urban housing, a newer car, higher insurance premiums, etc.”
If it’s a one time fee when a vehicle is first purchased it won’t effect these folks at all. They would be effected only by increased gasoline taxes. Expanding the existing guzzler tax would actually reduce their expenses if the feds taxed both gas guzzlers and fuel instead of just fuel.
It doesn’t penalize everyone equally, it penalizes people for the decisions they make. If they buy a car that gets better mileage, they won’t pay as much in annual taxes.
I have a neighbor who uses their SUV to drive the kids to the end of the driveway (300’) and idles it to keep them warm while waiting for the school bus.
I answered some questions above. Is that enough for now, MB? I’m happy to talk with you. But I do have to drive that 30 miles home from work every day before I can talk to you.
I had proposed this annual fee based on fuel consumption here once on the old board, I didn’t go into as much detail this time, but it would replace the annual value tax for new car purchases and would only apply for a fixed number of years, I would recommend 7 years. The EPA figures would be used, not what someone claims they are getting because of some “gas saving” gizmo they got hooked into.