If you've paid much attention to policy in general, you won't be too surprised by what I'm about to tell you about energy policy. Many of our well-meaning public programs use tax dollars for the near-exclusive benefit of the wealthy—the group of people who need those shared funds the least.
Today I spoke at "What Will Turn Us On in 2030?", a conference about the short-term future of energy in the United States. At the conference, I met Lisa Margonelli, director of the Energy Policy Initiative at the New America Foundation. Margonelli has spent the last year researching the effects of high gasoline prices on middle class and working class families. (I'll be posting some more about that project later.) Along the way, she noticed some serious problems with the way we're currently trying to change energy systems in the U.S.—problems that actually endanger our ability to make real, long-term change.
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The green policies put in place by the Bush and Obama administrations are not only not aimed at the middle class; they’re benefitting the wealthy at precisely the moment that high gas prices have slammed the lower middle class.
Consider the flashiest green support for consumers at the moment: tax credits for the purchase of electric cars and solar panels. Buy an electric car (more than $40,000) or a solar array (more than $20,000) and get a tax credit. But most American families making the median income (about $50,000) spend more per year on their old used cars and fuel ($7,900) than they do on taxes ($6,000).
There's a great, illustrated history of America's highway system—from the Colonial period to the 1970s—that can be read for free on OpenLibrary.
I've just thumbed through it a bit so far, but it reminded me of a book I read a couple of years ago, Consuming Nature: Environmentalism in the Fox River Valley, 1850-1950. That book, by Greg Summers, a professor the University of Wisconsin - Steven's Point, is about how electric and highway infrastructures were built up in Wisconsin. It's also about the socio-cultural changes that led first to the construction of infrastructure and then, later, to fear over what infrastructure had done to the environment. Really super fascinating.
One of the things I learned in both of these books is that early road infrastructure was built and maintained by the local people who used it. In Colonial times, you owed the city or county so many hours of labor every year. And, when they called you up, you had to go out and work on a road crew. Sort of like jury duty. Only sweatier. (Of course, if you were wealthy enough -- or, in the case of colonial Virginia, owned enough slaves -- you could have other people do your labor for you.) In 19th-century Wisconsin, you could substitute labor on the roads for cash road taxes.
One of the fun outcomes of this system, at least in Wisconsin: Really craptastic roads. Turns out, a gang of random citizens, led by another random citizen, is not exactly who you want in charge of your infrastructure. Read the rest
When Joel Slemrod of the University of Michigan won his Ig Nobel Award in 2001, part of the prize criteria was that the research involved "cannot, or should not, be reproduced". Luckily for Slemrod, that's since been changed to "first make people laugh, and then make them think".
See, Slemrod and partner Wojciech Kopczuk of Columbia University are the researchers who found evidence that the very rich die in greater numbers just before estate taxes are scheduled to increase—or just after the taxes have been reduced. Since he published, Australian and Swedish researchers have replicated his results. And now, he says, it appears the United States is about set up a grand natural experiment with elderly rich people as guinea pigs.
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As of January 1 of this year, the U.S. estate tax has been abolished for the year 2010, and is scheduled to be reinstated in 2011 with rates as high as 55%. If our findings (and those of our colleagues in Australia and Sweden) are right, there some would be "moved" from the end of 2009 to the beginning of 2010, as some rich folks hold on to bequeath their assets tax-free. Of course, the really morbid stuff will happen at the end of this year, when dying in December of 2010 will incur no estate tax, but dying beginning in January 1, 2011 can trigger a tax liability equal to more than half the taxable estate. It's being called the "Throw Momma from the Train" tax provision.