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05/07/2006

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Tom Myers

Your suggestion of revenue-neutral gasoline taxes brings to mind my own feeling, dating back to about December 2001, that we could maximally encourage new technology with (1) a hefty tax on traditionally-produced oil (not just gasoline) which would be set against the payroll tax, and (2) a weekly $1M technology prize...not trying to pick a winner, which government has no record of doing well, but penalizing a known loser and dramatically encouraging a lot of potential winners among IGCC power plants and bicycles, batteries and nukes, fuel cells, solar cells, underground compressed-air storage, etc. etc...

(My concern is strategic more than environmental; replacement of oil with coal/syngas etc. is acceptable.)

I'd love to see a specific revenue-neutral tax proposal; did you (or someone) present one somewhere that I missed?

Paul N

A wide range of evidence supports the conclusion that human activity is causing global warming, and attempting to create disincentives to carbon dioxide generation is certainly could be reasonable in principle.

However, the cost-benefit analysis evidence supporting the imposition of high gas taxes is lacking. I think Posner's typical analytical rigor is somewhat relaxed for issues relating to global warming, and I believe (but am far from certain) that a careful examination of the economics of such a gas tax would convince him that he's taken an irrationally harsh position on this issue.

K G

"But better than a government-planned and -funded project would be, in my opinion, heavy gasoline taxes. They would give private industry strong incentives to discover good substitutes and also means for reducing carbon-dioxide emissions and indeed removing carbon dioxide from the atmosphere."

The root of the "problems" referenced here is not "incentive". Raising taxes will simply remove money from the marketplace that would otherwise have been allocated to some productive endeavor.

New taxes will not give scientists or engineers new ideas. They will not alter the laws of physics. They will not suddenly make silicon more plentiful for solar panels, or hydrogen more cheaply extracted from water.

The incentive to invest in various energy technologies is already there - shaving revenue and profit from the marketplace will artificially increase incentive but to what end? It won't solve the technological problems any faster.

In fact, it may result in less money to invest in developing those technologies. The government could certainly invest its tax windfall in research but I'm not so naive as to believe that the federal administrative costs would be low.

To apply "heavy" taxes strikes me as an attempt to force an invention or innovation into existence that you or I don't have the capacity to develop.

From a different prespective, the oil business has very high barriers to entry in capital, labor and regulation - that alone is incentive enough for entrepreneurs to look elsewhere to apply their talent.

The government only has one tool in its toolbox: the stick. The stick of taxes and regulation. Government can simulate the carrot by reducing the severity of the stick but it's still the stick.

I'm more a fan of reducing regulation to allow more freedom for entrepreneurs to explore because if you want to create what hasn't been created, rules don't help.

In short, if you want a viable alternative to gasoline, you're just going to have to wait. But don't worry, there are already a lot of people who get the "hint" that there's money to be made.

George Weinbaum

I suggest an excise tax on new cars to replace CAFE. It would work as follows, 150,000 miles average car life divided by estimated consumption assuming a 25 mpg average. A car getting 25 mpg pays no tax, one getting 15 mpg pays as follows: 150,000 / 15 = 10,000; 10,000 - 6,000 = 4,000 tax. A car getting 30 mpg gets a 1,000 subsidy.

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