More on Fuel Taxes

In an earlier post I proposed a three part tax to replace slowly diminishing fuel tax collections. The critical piece of the concept is the mileage tax. Both calculating the tax and collecting it challenge us with problems of privacy, accuracy, cost and enforceability.

Because of the privacy issue an onboard system of measuring mileage, by state, and computing the amount of tax due to each state requires combining GPS technology with an small computer. Sending the collected information to tax collecting facilities requires including a low power transmitter. Mass produced these devices will not cost a prohibitive amount – probably well under $100.

By keeping the data on the vehicle until the tax is paid, and erasing it at that time, eliminates the worry of many people that a large state or federal database of mileage and location information would be subject to many prying eyes.

At specific tax collection facilities the data gathering and computing device transmits the data so, one way or another, the tax can be collected. Stations could be specific to tax collection, or service stations, or even grocery or convenience stores. If the vehicle does not use any of the collection facilities the authority issuing the registration for the vehicle can collect the tax. If no taxes are due the taxing authority will have the information and no tax would be added to the registration fee.

Obviously, cost of the various devices needs thorough study, measuring one system against another. In addition, the concept requires research to determine the tax rates used for the various states. Other components of the three part tax structure, presented in an earlier post, also need research.

Implementation of the concept will take several years. Eventually the taxing concept will replace the current gasoline/diesel fuel tax.

Your comments are always appreciated.

Upheaval in the Auto Industry

My daughter called me this morning upset because President Obama’s administration, and the President himself, had forced Rick Waggoner to resign as Chairman of General Motors, and is forcing Chrysler to combine in some way with Fiat, as conditions of funding the bailout requests of the two companies.

It is easy to see her point – how can the federal government dare make decisions normally left to Boards of Directors. Do they even have the right?

It is also easy to see the other side of the question – the side I come down on.

Banks with loans to failing companies often refuse additional loans, or cancel existing ones, until the company shows evidence it can repay them. Often banks will tell Directors to hire a turnaround team to fix the problems. With the prospect of failure in sight, most companies do as the banks request. This seems exactly the situation with GM and Chrysler.

As I read in the papers, neither GM or Chrysler has developed a suitable business plan for fixing their troubles.

Now is the time.

Now they are saying to either make the changes or accept the consequences. The administration has ignited a fire under the managements both companies.

The Gasoline Tax Dilemma

A look into the future shows an alarming dilemma in the way our country funds its highway construction and maintenance costs.

The largest funding source for highways is the gasoline and diesel fuel tax. The essence of the future problem is that the fuel tax, over the next twenty years, will decline as vehicles use less gasoline and diesel because of better fuel efficiency and/or the switch to hybrid or electric power sources. As we green our planet, we, in fact, will run out of adequate highway funds.

Starting some six weeks ago, a plan has bubbled around in my head and finally has enough body to it to post it here. Concept only is described. Omitted are the details – I am seeking funding to fully research the concept and its many ramifications and do not want to divulge too many details. And there are many!

The tax plan has three parts:

· A tax that will encourage resource conservation

· A tax that will discourage the use of petroleum based fuels

· A tax that will discourage miles driven

Regarding the last of the three, there has been much written about measuring mileage driven using GPS technology. This rightly causes invasion of privacy concerns, because time and location data from the GPS could be inappropriately used.

In the Schaul concept (clever, creative name) is a system for measuring mileage and collecting a mileage-based tax that does not depend on GPS technology, does not invade privacy, and seems reasonably easy to collect. This may be the greatest value of the concept.

The various parts of the three tax bases adjust easily to replace the amount of fuel tax now collected, and as the fuel tax declines, can continually adjust to keep revenue at a level necessary to maintain our highways and bridges.

There are competing realities here. First, no one wants to pay taxes or add complication to the way they are calculated and collected. Second, the highway infrastructure will gradually wear out if we do not continue to improve it as population grows, and maintain it as wear and tear takes its toll. Making the taxes realistic and based on measurable factors, with easy collection systems seems a good way to proceed.

Your comments are always welcome.

Six Word Stories

Ernest Hemingway, when asked to write a six-word story, responded.

“For sale: baby shoes, never worn.”

Obviously not a Hemingway, here are a few of my six-word stories.

For business.

• Bad economy. Chest pain. Perhaps curable.

Or lighter ones:

• Beautiful pitch, perfect swing, one hero.

• Across the room, her smile spoke.

Or a sad one.

• Valentine’s Day. Where is she now?

Paradigm Shifts Coming

In an earlier post, December 28, 2008, I wrote about shifting paradigms. Now the signs are growing stronger – the recession we now experience will permanently change our lives. Paradigms will shift right before our eyes.

Petroleum prices will again rise. As the economies of the industrialized nations regain strength the demand for energy will rise and with it the price of all forms of energy. The days of electric powered vehicles are coming fast. Battery powered vehicles, or battery powered vehicles with on-board generators, will grow in number. Even gas or diesel powered vehicles will be smaller, more fuel efficient, and meeting tighter emission standards (in spite of objections by GM.)

Renewable energy is gaining. Chipping away at the market, it will add momentum as a result of the government’s stimulus spending.

Renewable energy comes many sources: biomass as fuel for burning and converting into e e thanol; geothermal sources not only hot water but water at 50° to 60° not far below ground level; the sun through solar thermal uses and photovoltaic electricity; the wind; the tides and ocean currents; untapped flowing rivers providing hydroelectric energy; and possibly others. By 2020 the share of all electricity generated from renewable sources will be slightly over 10%. (http://www.eia.doe.gov/oiaf/forecasting.html)

In time there will be more electricity generated from nuclear energy. Not in a short time though. By 2020 nuclear power generation will rise from about 2% now to almost 10%. (http://www.eia.doe.gov/oiaf/forecasting.html

We will see more and more energy neutral housing. Voluntarily initially, and later forced by building codes. Per capita energy consumption for housing will decline appreciably, over the next twenty and more years. Technologies already in use in Europe will become accepted in our country.

Banks will become banks to accept deposits and lend money, and not to be places to make investments. Investment banks will just what the words say – places to make investments. Both will be more rigorously regulated (until the next lull.)

Athletes earn as much as owners are willing to pay them. If they have a bad year, though, their compensation normally goes down. Why not apply the same rules to the executives of our corporations? If you are a stockholder of a company, will you push for realistic executive compensation, and accountability for performance? If so, inflated salaries will slowly disappear, especially after stockholders sue enough Boards of Directors for failing in their fiduciary role. Instead of bonuses, poor performance will lead to reduced compensation. Is this an unreal dream? I do not think so.

(Charlie’s note: I wrote this blog posting early Tuesday morning. As usual, it was in the editing process until this morning, Wednesday. I was surprised to read, a day after I wrote the above, that President Obama has suggested limiting salaries for executives of companies accepting bailout money.)

The paradigm for health care in the US will change, in fits and starts. Our system badly needs revising. Costs are outrageous compared to those of other countries, including those that provide even better care than do we. Drug prices are too high. Why does the government not negotiate prices with the pharmaceutical companies? That will change.

The psychological effects of the recession will last for many years. Financial caution will be the watchword. Just as is the financial caution of elders who suffered through the Great Depression. This is not limited to only those who incomes have suffered in the recession – almost all. There will be a slow market for luxury items, from yachts to houses and down the line. This caution is not limited to consumers. Businesses of all sizes will spend less freely and expand more slowly.

Air travel, in the midst of rapid change, will be even more difficult than it is now. There will be no relaxation of security; it will become even tighter. Fares will remain high. There will be fewer flights and almost all will be full.

Because of high fuel costs, people will travel less, and when they do, for shorter distances. As a result, families will tend not to scatter as far as they do today; conversely, family units will become more compact. Additionally, the young will assume more responsibility for their elders. I believe there will be a strengthening of family values.

"The only thing we have to fear...."

“This is pre-eminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great nation will endure as it has endured, will revive and will prosper.”

“So first of all let me assert my firm belief that the only thing we have to fear. . .is fear itself. . . nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

Taken from President Franklin Roosevelt’s first inaugural speech, in 1933, these words might well be spoken by Barack Obama next Tuesday, January 20^th, Inauguration Day, 2009.

President Obama will then face the worst economic conditions since those faced by President Roosevelt.

He must bring to his presidency a clear vision of what he wants done with bailout and stimulus, and then have the leadership strength to accomplish it.

For the benefit of our country, and politics aside, best of luck to him.

No Time to Waste

President-elect Obama has asked Congress for quick passage of an economic stimulus package. Some in Congress are grumbling, and some seem to want to analyze and modify the basic requests in time-consuming processes. Obama wants Congress to move faster than that, and with good reason.

Much of the proposed stimulus money aims at projects already on the books, for the most part designed and ready to go. Implementing those projects will very quickly add jobs to the economy.

With unemployment claims over 500,000 a month, and two month delay in approving the stimulus proposals will add a million people to the unemployed list. The unemployment rate, just reported at 7.2% will climb another point. Even with the stimulus funds moving toward projects, unemployment will continue to rise at least two months. That could be another million workers out of work, and the unemployment rate over 9%.

So, Congress, hear the message.

There is no time to waste.

Forget about partisan politics. Forget about your egos. Our economy is crumbling. The longer it takes to get the stimulus package approved, the more it will crumble.

Get with the program.