After I boasted during my show a couple of days ago that I’m the best talk show host on the air, a listener retorted: “You have virtually no guests. You talk about the same things almost every day. You have one of two solutions to every problem….raise taxes or limit freedoms.”
It didn’t take much reflection to conclude Jeff in Columbus has a point when he decries my predictability. There’s an old saying if your only tool is a hammer then every problem looks like a nail. Based on Jeff’s criticism, you can probably guess that the goto tool in my kit is tax policy.
This is the case whether I’m contemplating what should be done about the attractiveness bonus or, less improbably, the recent surge in sales of nearly all cars except for hybrids and electric vehicles.
It’s not that I reject out-of-hand more complex cures to what ails us. It’s just that I don’t see any need to invent a new wheel since tried and true solutions like higher top marginal tax rates and a fossil fuels tax solve both little and big problems.
Salon’s Erin Coulehan attributes to professorial bias the slightly better grades that pretty women get. Interestingly, both men and women teachers give higher grades to more attractive females. While handsome men are not more likely to get As, studies do show that taller men make more money than height-challenged bros.
Whether you view either of these dynamics as a problem depends to some extent, I suppose, on how pretty or tall you are. Regardless, both militate strongly in favor of higher top marginal tax rates. Take two ridiculously successful (albeit fictitious) 35-year old Harvard grads who together rake in well over a million each year.
Her beauty helped her to a Phi Beta Kappa key which, in turning, led to a succession of ever-more prominent and highly compensated positions at Apple. The former Crimson basketball star she married now sits in a corner office at a major law firm. Sure they worked hard for what they’ve got but given the added value of her smooth skin and tawny hair and his six foot two frame, it’s pretty tough to claim the two “earned” every last one of their millions solely by dint of hard work and sacrifice.
Admittedly, the handicap under which less attractive women labor when teachers hand out grades is relatively modest. Sociologists concluded that one standard deviation above the mean is worth about .024 points. The difference between the most attractive and least attractive 3% of women is four standard deviations. This equates to less than .1 points on a 4.0 scale.
Still, it has an effect. Leveling the playing field slightly through higher taxes on the fortunate few who have won life’s genetic lottery – good looks, good brains, the right parents – seems eminently reasonable.
Perhaps more problematic than lookism in our high schools and colleges is the recent news that of the record number of cars Americans bought last year less than 1% of them are hybrids or electric vehicles (EVs). In light of the looming ecological disaster due to anthropogenic global warming, we must do everything reasonably possible to cut down on fossil fuel consumption. But falling fuel prices have led to demand for gas-guzzling vehicles not cleaner greener hybrids or electric vehicles – which are close to emission-free when run on electricity generated by the sun or wind.
With gasoline at $2 per gallon, the owner of a 50 mpg Toyota Prius C who drives 12,000 miles per year spends about $480 on gasoline annually. The car retails for about $25,000. You can get a comparable Toyota Corolla for $18,500 which averages 30 mpg. Annual gasoline costs will be in the range of $800. Assuming gas prices remain super-low, the Prius owner who spends about $320 less on gasoline annually than the Corolla purchaser probably will never recoup the $6,500 hybrid premium . No wonder individual auto buyers are almost unanimously rejecting the importunities of environmentalists to buy low-emissions vehicles.
The Washington Post’s Charles Lane points out that hybrids and EVs are only as cheap as they are because of massive government subsidies to EV manufacturers like Tesla and tax credits for buyers of hyper-efficient vehicles. Yet gas-fueled vehicles still rule the car lot. Needless to say rewarding good behavior hasn’t worked very well and is costing taxpayers billions of dollars.
What about punishing bad behavior? What if Congress enacts a massive increase in the federal excise tax per gallon from 18.4 cents to $3? What if the feds commit further to steady increases in that excise tax and to comparably high taxes on other fossil fuels in one omnibus Fossil Fuels Tax (FFT).
Now all those sober calculations that counseled against hybrids and EVs go in the other direction. Buying the Prius instead of the Corolla results in cost savings of $800 in the first year. As the gasoline tax rises, annual savings grow. The Prius owner will see a lower total cost of ownership than the Corolla owner in well under eight years.
EV owners who rarely drive beyond their cars’ electric range before recharging will save even more as the gasoline tax rises. That’s one reason it’s imperative to impose comparable taxes on natural gas and coal. Otherwise, utilities will fill the growing demand for electricity to power cars by burning relatively cheap coal and natural gas.
Indeed this exact scenario is playing out in the Netherlands where very high gasoline costs have led to the desired surge in demand for EVs. But because coal is not taxed heavily in Netherlands, three new coal-fired power plants opened in 2014-15 to satisfy the surging demand for electricity. Air pollution in Amsterdam is as bad as ever. Only when consumers must pay much more for all fossil fuels will we turn en masse clean green alternatives.
Sure, we might be able to reduce consumption with federally regulated cap and trade markets and constantly evolving tax credit schedules governing the purchases of various vehicles depending on whether they sip gasoline or guzzle it. But there’s no need to experiment and tweak and tinker until we’ve built a Rube Goldbergesque carbon-trading pollution-penalizing system that rivals the Affordable Care Act in its breath and complexity. Instead, all that’s necessary is to slap a very high and ever-rising tax on all fossil fuels.
Because higher prices at the pump would otherwise harm poor, working, and middle-class Americans, all revenues generated by the FFT should be rebated in equal shares to every citizen. Since the rich consume more energy than everybody else, the ultimate effect of the FFTs will be reduced wealth disparities. Additionally, the rebates will provide needed resources for the less affluent to transition towards a cleaner greener lifestyle.
Jeff’s right when he complains that when it comes to solutions to apparently intractable problems, I’m something of a Johnny two-note. Thing is those two notes – higher taxes on the rich and higher taxes on fossil fuels – are so elegant and would accomplish so much to reduce economic injustice and anthropogenic global warming, there isn’t much need to hunt around for other answers.