No, the Top 1% pay 28% of all federal taxes, which is a superset of all federal income taxes. Their overall share of federal versus income taxes is diluted by what they pay into Social Security and Medicare (something like 4% of those taxes). We don't want them paying more into SS, because we pay out relative to what somebody pays in, and it's supposed to be a safety net, not a retirement plan.

The Top 1% paid 39.38% of all federal income taxes in 2005 (up from 19.05% in 1980 and up from 36.18% in 1999).

Here's the stat: http://www.taxfoundation.org/news/show/250.html. The Tax Foundation is non-partisan and includes their data tables from 1980-2005, taken directly from published IRS data.

Regarding the hybrid tax credit, if the objective is to help manufacturers recoup development costs, it seems the more efficient approach would be to give them the tax credits. With consumer demand for hybrids at current level, the dealer is just as likely to adjust the price with the tax credit in mind and leave the buyer with no net benefit. That's certainly true with my local Honda dealer, so I went out-of-state to buy.

 

Well there you're getting back to the matter at hand, which isn't who pays the most in taxes but rather how do we provide people with incentives to green up.

I disagree with the give the manufacturers the tax credits... in fact the manufacturers do get a lot of R&D tax credits already. But the flaw in this is the SAME flaw that CREATED this whole problem to begin with... that being CAFE standards.

CAFE is a supply-side incentive in which manufacturers have to manage to get an average fuel economy when averaged across their entire fleet (although they separate cars & trucks). E.g. if I sell an economy car (which brings my average economy up), it gives me the right to sell a gas guzzler (which brings my average back down) so long as I can meet the CAFE standard (sort of like trading carbon credits).

The "problem" is that in our culture (prior to $4/gallon gas), everyone WANTS the gas guzzler and nobody actually WANTS the tiny little economy car. If economy cars were actually sold at a profit, nobody would buy that (at least not nearly enough). So to provide incentives to consumers, the auto-makers sell economy cars at a slight LOSS. This gets the few people who can't afford expensive cars to buy cars, drive up the fleet average, and gives the automakers the right to sell the enormously profitable cars.

So why's that a "problem"? Because now that gas IS $4/gallon, the auto-makers are completely screwed. The only thing that's profitable is the very thing that the masses no longer want. And what the masses DO want is sold at a loss. Another problem is that this system only provides enough incentive to 'meet' the CAFE standard, and no rewards for exceeding it.

This is your chicken-**** Washington politician who panders to voters by blaming everything on the manufacturers when frankly the "problem" is in Washington and the consumers who (and I don't care what anybody says) just didn't care about the environment, economy, or anything else... they just want their gas guzzlers.

If, on the other hand, the politicians had put CAFE standards on the consumer (basically what they do in Europe), people would naturally want the cars that are best for the environment. This works extremely well because one thing consumers want even more than gas guzzlers is to not get raped on their taxes. Now if I want to buy the unfriendly car, I'm gonna pay (and oh boy am I EVER gonna pay!). But the US system provides little to no incentive for anyone in the US to buy an efficient vehicle. Strange how almost nobody in Europe actually owns a gas-guzzler and yet European society hasn't actually collapsed from the inability to function without SUVs in every driveway. Hmm... who would have believed it was possible?

I could think of hundreds of ways (both positive and negative incentives -- and nothing to do with technology) to make it work.

For example... state license plate tags: imagine if, instead of charging for tags based on the value/purchase price of the car, it was based on EPA city fuel economy. It might work something like this:

Pick a stake-in-the-ground fuel economy and tag fee. Say 30 mpg city and $250/tags.

Now adjust the price upward by 15% for each 1 mpg short of the goal and compound it.

That would mean fees would look like this (30 seconds with a spreadsheet generated this):
Econ/Fee
30 $250.00
29 $287.50
28 $330.63
27 $380.22
26 $437.25
25 $502.84
24 $578.27
23 $665.00
22 $764.76
21 $879.47
20 $1,011.39
19 $1,163.10
18 $1,337.56
17 $1,538.20
16 $1,768.93
15 $2,034.27
14 $2,339.41
13 $2,690.32
12 $3,093.86
11 $3,557.94
10 $4,091.63

Hmm... a Cadillac Escalade and a Lincoln Navigator both get a fetching 12 mpg city. I wonder if that $3100 tag fee would get their attention?

You could go in the opposite direction and cut fees for each mpg over the goal too.

You could set a goal where every government fee or charge for any level of government (tags, parking, toll roads & bridges, sales tax, etc.) is completely free for any car that exceeds 40 mpg city. The vehicle could be irrelevant -- motorcycles, scooters, etc. also qualify for reduced/waived fees, taxes, & tolls.

I suspect this would have a huge impact on consumer buying decisions.

Alas, in order to pass such changes, state & local governments would have to vote it in and THAT would mean the masses with the vehicles that would fall into the penalty category (instead of those benefiting from the bonuses) would be so enormous that people would be out to hang them. So regardless of what's good for the country, the economy, or the planet, it'll never happen.... unless they sneak up on it (e.g. raise the fees by 1% per mpg in year 1, 2% in year 2, etc. and keep doing that until the new average fuel economy is reached.)

A consumer-driven system would change the buying mindset to the point where one of the first things buyers think about is fuel economy (of course $6/gallon gasoline would probably have a pretty big impact too). Manufacturers would be forced to respond... as a primary design goal of all vehicles would end up being fuel economy. If I'm brand 'A' and I can build a car that gets 5 mpg better economy than any model built by brands 'B', 'C', D', and 'E', then I'm pretty much guaranteed a very high product demand and some very nice growth in my stock value to shareholders.

Yeah I know... wall-of-text. Sorry about that. This is a passionate hot-button of mine that every credible scientist and economist agrees it's a problem and there's lots of nodding going on in Washington, and yet... no serious changes are being made to provide incentives (positive or negative) for anyone to change.

 

I dunno if you were thinking $6/gallon as priced by the market or via a gas tax, but the latter would be the ultimate way to tie consumer behavior to fuel economy. Yes, I know the first member of congress to propose it would be burned at the stake, but it would even affect driving behavior within the same vehicle class. If you can tease 20mpg out of your Lincoln Navigator, you save money. Like to thrash your hybrid and run at max A/C? You pay more at the pump. In the meanwhile, the gov't brings in some more revenue.

 

$4/gallon is already having an impact -- and I wasn't trying to suggest that my _specific_ ideas were the best way to solve the problem, but rather make (by way of proposing specific examples) the suggestion that a consumer-side incentive system will have a bigger impact that the supply-side CAFE system that's failing so miserably today.

Effectively the 'safest' thing a politician can do for their own career safety is to let the petroleum companies gouge the consumers while pretending to be really upset about it (because now the bastard that's raping your wallet is the oil company and not the government.) My point is that I rather suspect the reason they all just "talk about it" but are pretty thin on action is because a lot of action would result in the lynch mob, but inaction will let them blame someone else.

While I hate the sad truth of it... I'd be pretty disappointed at the intelligence of any Washington career politician who wasn't smart enough to think this through to their own benefit and effectively stick the blame on someone else.

 

Can the politicians really be blamed? If you believe they should be altruistic and held to a higher standard perhaps. But remember house members have to get elected every two years. Their constituencies may not be the smartest but even those with poor memories remember events less than two years out. They are merely following their incentives of being elected.

Perhaps if we cut congressional salaries to 50k/year it would weed out those people who are just in it for a posh life and hefty remuneration. Why is it that teachers/firemen/police and the military are the only public servants that aren't compensated much because as public officials we don't want to attract people to those careers who are focused solely on money?

On the $6/gallon--its coming. It may be a few years out, but I don't see massive hybrid or plugin adoption in time for $200/barrel oil. I'd rather us get there gradually rather than suddenly to at least allow some time for R&D and preparation of alternatives.

 

I dunno how much of an incentive salaries provide to get elected to US Congress. Their current salaries are ~$170K/yr, which a dual-income professional couple could bring home at quite few places with a lot less hassle. I think it's more about power and perhaps fame. Either way, your point about them focusing on being reelected certainly stands true.

As best I can tell, US cars use up about 10% of the oil the world pulls out of the ground in a given year. Even if every driving American doubled their fuel economy, we'd only free up 5% of the total. If $6/gallon is coming due to emerging market demand or instability among producers or lack of new supplies, we don't have much control (congressional grandstanding about Exxon profits notwithstanding). Part of my incentive to pick up a Civic Hybrid was to hedge against a combination of events that could push us into crazy expensive fuel prices.

 

U S A Today reported there have been some changes to the tax credit eligibility with regards to the AMT. Hopefully we will get some clarification soon as there may be buyers (subject to AMT) that would buy now if they knew the AMT feature of the tax code would not prevent them from claiming the Hybrid tax credit.

Perhaps we will hear something from H&R Block or Mcafee (Turbo Tax).

After all, (on a related note) our grandchildren have nothing better to do with their future earnings but pay off the debt the Imperial Federal Government is incurring today.