Thursday, July 17, 2008

Houston, we have lift off!

Welcome to the launch of the Green Energy Tax Cuts blog! You are in at the birth of an idea that could change the world -- every bit as ambitious and doable as the Apollo Missions to land men on the moon -- but what we need, here and now, is a feasible plan to jump start the Green Energy Revolution in the US and around the world. The idea is simple but powerful: given the perfect storm of crises facing our nation at this time -- skyrocketing petroleum prices, global warming, insanely expensive oil-related wars and geopolitical quagmires -- ALL green energy technology should be tax free at all levels of government. That means free of all sales, income and capital gains taxes. That one policy would do more to encourage the extremely rapid development of green energy technology in this country and abroad, and break our nation's dependence on foreign oil, while lowering energy costs overall. It would spur the creation not only of hundreds of thousands of new jobs, but of whole new industries, and insure that the US becomes the world leader in these new technologies.

Think of it: no sales tax on green energy cars, powerboats, airplanes, appliances, machinery or heating and cooling systems. No income tax on revenue from those products, or on energy produced from green energy sources: wind, solar, hydro, geothermal, etc. No capital gains tax on the stock of green energy technology companies, and pro rata capital gains tax breaks for companies that are partly devoted to green energy. Such a simple straightforward policy will lead to massive new investment in these technologies, and massive consumer demand for them.

All we need to do is unleash the free market and level the playing field. Level the field? Currently the playing field is NOT level, because petroleum leads to many HUGE unintended costs (think pollution, global warming, Katrina, foreign wars, terrorism). These costs are mostly NOT borne by the oil industry, but by the American taxpayer. Green technologies do not carry these costs, and in fact will help America escape these costs. So Green Energy deserves to be tax free because it can save the taxpayer trillions in petroleum subsidies and cleanup costs. That tax break is the most painless cost our country can pay in order to escape our addiction to foreign oil, and all the massive extra costs that addiction brings.

This simple but radical idea is not yet on the radar of any presidential campaign that we know of, which all seem to be sadly ineffective when it comes to energy and environmental policies. We do not need government spending boondoggles disguised as "investment," as Mr. Obama now proposes. We don't need piecemeal tax incentives or inventor prizes for this or that technology, as Mr. McCain proposes. Government should not be in the business of promoting one green technology over another, but should make all of them tax free, and let the market choose the best. We need one simple clear policy that will massively bootstrap green energy, in all its forms: making ALL green energy technology tax free across the board is it.

This blog will consider the energy and environmental proposals of all major candidates and think tanks, applauding the worthy and hopefully improving the rest. We will offer online petitions and other tools for activist promoting green energy and green energy tax cuts. Readers will also find a section here devoted to cool green energy innovations, products and investments. You will see a lot of changes: this is just the first post.

And we want to hear from you: can you help? Are you the person that can introduce this idea to Barack Obama or John McCain? Do you know of any think tanks promoting a similar idea, or that should take up the cause of green energy tax cuts? Do you have any thoughts for the blog -- or technical abilities to contribute to online advocacy for our cause?

Hopefully, the Green Energy Tax Cut proposal will transcend left and right, and have an appeal across party lines. The idea combines the best of both the right and the left, to create what could be called Supply-Side Environmentalism. Supply-side economics holds that, if you want more of something (either prosperity or a clean environment) just tax it less. It will be a great accomplishment if we can motivate both the tax cutters of the right and the environmentalists of the left to drop the dogma and mutual suspicion to come together to solve the greatest challenge facing out nation today.

R. R. Richardson


Nick Jainschigg said...

It sounds like a wonderful idea to me,provided, of course, that clear definitions are established as to what constitutes "green".

Government and those who seek its favor have a long history of perverting definitions to achieve their ends--"middle class", "cutting taxes", "Clear Skies Initiative", "PATRIOT Act". I could go on.

A proposed definition of "green" would have to include:
1.) Accessible from a majority of nations. Obviously, tidal energy isn't immediately available to the landlocked, but any coastal or riparian nation might access it. This would prevent a repeat of the current control of oil resources by a minority of nations.

2.)It must not contribute to greenhouse gas emissions. No methane, no CO2, etc. Its carbon footprint must be neutral or negative without outside offsets.

3.) It must not create further problems "to be solved". Nuclear power, for instance, is a wonderful pseudo-green energy source, but not one lacking in its proponents already. The big problem with nuclear is the problem of security and waste, neither of which are solvable in the short term. A "green" energy should provide a safe method of generating, transporting and using the power.

I'm sure that there are other definitional hurdles, but with enough thought it ought to be possible to propose a sensible, well-thought-out regime that will promptly be gutted by vested interests.

Unknown said...

Call me a commie bastard but this is not enough. The free market simply can't be relied on to make real progress any time soon with merely tax incentives. It. Will. Take. For. E. V. E. R. The Apollo mission didn't wait for "somebody" to come up with a three stage rocket booster. The Government wrote a check. During WWII auto plants weren't converted to make bombers overnight just to save a few bucks on some guy's tax return. Again, the Government paid up front and then sold war bonds and found(struggled with) other creative ways to pay for it. It sounds to me like this is at best a ploy to delay or at worse avoid making tangible publicly funded investments to get the job done asap...or worse yet, a ploy to open up a tax avoidance loophole you could drive a natural gas powered truck through.

Tinkuy said...

As an unrepentant "communist" (per RRR), I have to agree with Spam's comments. I would add federal funding of the interstate system during the Eisenhower administration to the list of examples. It was a massive investment which benefited society at large and stimulated economic expansion. And, of course, it ultimately contributed to our current problems.

dropkick said...

Spam, you are a commie bastard, and crazy to boot. There is no doubt the free market can move very fast when the commercial incentive is there. Just look at the rapid development of the PC, or the internet. The only real question is whether this proposal is too strong, whether it will be too effective, possibly causing a green energy investment bubble. I doubt it, tho'. It may actually prevent a bubble: green energy tech has been plagued by volatility in the oil market -- price of oil is up, folks invest, oil drops, green energy investment dies. These tax cuts could create a viable environment for continued investment in Green tech. Congress can also throttle back on this tax break when, say, green energy has 60% - 80% of the market. This is easily the most innovative energy proposal I have hear in some time.

BTW, Government sucks as an investor. However, there is no doubt that government at all levels should only buy green tech whenever possible.

Anonymous said...

It certainly would be an incentive wouldn't it? Imagine, a green start-up that has a better cash flow than most early start-ups. Yours is an interesting idea that I have never heard before. -- Xris

Unknown said...

Dropkick, you ignorant slut. The internet was designed by smart people who placed the public interest of free communication above many commercial attempts to squash that concept from the beginning. Glorious new markets were created because of this freedom, but all those healthy markets rely on an entity that is not beholdent to the current market leaders whoever they might be. If the internet was designed by folks who were driven only by the benefits of tax incentives (that might hopefully lead to higher profit margins), we would all be talking on Compuserve right now.

Anonymous said...

DROPKICK said ...
spam, wonderful teh spam: Actually, the internet was first a DARPA military project: DARPA was definitely more concerned about military communications than free communication. The free communication folk, university types mostly, were the second wave, and the entrepreneurs the third. And it was largely tax and regulation free during its early explosive growth phase. It is still protected from excessive taxes and regulation. Many internet advocates regard that tax protection as key to the internet's vitality. Low or no taxes would obviously be a huge help to any budding technology, you slope-brained hyena.

Eva said...

The only comment worthy of comment here is that of Nick Name. (The others seem merrily afloat on a party boat in a drunken brawl.)

I agree, the hurdle here is definitely definition. I squirm to think of the enormity of the document ... like Hillary's health care times ten.

But we really do need to allow the present dirty-tech infrastructure to reform itself, rebuild itself anew for the new clean age. Because they are here. They are not going away. It makes no sense to tax and send them to corporate prison when they have huge powers to revamp themselves. Even now, without the tax incentive, they are starting up green alternatives on a small scale. Con Edison's wind energy option, for instance.

At very least, the re-infrastructurization could answer the question of what in bloody hell should we do with our SUVs?

Unknown said...

Leaving behind the question of how long it might or might not take for the free market to solve our energy problems, the next question is how best to lubricate those free markets if we are going to be depending on them. Tax incentives are not the best way.

I'm reminded of the old joke about the guy who is being wooed by two women. He gave each $1000 so he could choose which one would invest the money most wisely...One of them invests in stocks, the other in bonds...Which one does he choose?...The one with the biggest tits.

The "tits" in the case of driving free markets are profits, not tax rates which are at most mere fractions of tits. Fractions of nipples, in most cases. Investors will be glad to invest just like they do with all other companies if and only if the underlying business model leading to profits is sound.

A much better lubricant would be to facilitate demand which could be achieved in many ways including providing infrastructure (ie: natural gas filling stations, etc), raising gas milage standards, mandating net metering premiums, pollution limits, etc, etc, etc.

This is a sustainable policy for the government as well, unlike the proposed taxfree scheme which would (supposedly) encourage investment but then prevent the government from getting a future piece of the action from the few successful winners. That is an exercise in masochism as far as long term public government funding goes.

I suspect that that is the goal here. The widespread appeal of green technology is being used as a trojan horse by anarchists to cripple future government budgets.

Unknown said...

Here are a few logistical problems inherent in this tax free scheme:

1. Filings take 1.5-2 years to surface much less for the government to verify and digest, so we wont know the true cost of this until it's way too late to "throttle down". The cost of demand based lubricants on the other hand can be accurately determined on the front side.

2. If it is possible for the government to "throttle down" at any point in the future, investors will take this into account now so the market won't even get the full benefit that is being advertised. If these exemptions are permanent, (to get the full advertised benefit) who is going to be responsible if this gets out of hand and the costs to society are way more than anticipated? What is a reasonable cost for this risk?

3. If foreign companies happen to have better product/market solutions than USA companies why would we want a policy that doesn't reward the best products as the primary criterion? The goal here is to encourage solutions ASAP, not to give USA companies an undeserved advantage. That might be something the government should also do, but that is a different argument. Demand based lubricants on the other hand directly reward the best solutions first and foremost.

4. Many new solutions will be unexpected, arising from industries that did not qualify for this exemption. This is a policy that discourages "thinking outside the box" when that is exactly what we should be encouraging. Demand side incentives on the other hand will reward all the good solutions regardless of whether they were prequalified by some bureaucrat.

Rod Randolph Richardson said...

Spam: You really need to start your own blog. I'll be happy to come post comments about your so-called ideas.

Here is a preview:

1) You say tax incentives are weak compared to profit incentives, but you have absolutely no suggestion to make that uses the profit incentive. On the contrary, tax incentives of the magnitude that I am suggesting greatly enhance the profitability, cash flow and attractiveness of any new investment. Of course the basic model needs to be profitable, but tax exemption supercharges that equation -- and so uses the power of the profit motive more than anything you can suggest. To extend your metaphor (should I really do that?) tax exemption is like giving the green economy a boob job.

2) By contrast, the demand-side mandates you suggest are, by your own logic, a poor idea: if there is no profitability there, you are then forcing business to make unprofitable investments, that will only create a huge backlash against green energy legislation.

TO once again extend your metaphor, you have just prescribed an economic double mastectomy for no valid medical reason, making green energy seem less attractive to most investors.

Mandates have their place, but because these can easily provoke a backlash, they are not a great national solution.

3)Demand side mandates are the ultimate example of govt. bureaucrats trying to pick winners. You try to say the opposite is true, but that just ain't so. Tax exemption for all gree energy solutions makes no attempt to pick winners, and will allow the best solutions to rise to the top. Certainly, it only encourages outside the box solutions that are truly green.

to arise

exactly an example of govt. trying to pick winners and losers.

Unknown said...

Ok, putting aside my suggestions and arguments for demand based incentives which might be fodder for a different forum, you still haven't answered my legitimate logistical problems relating to your tax free scheme.

1. What about the time it takes to add up the cost of your plan?

2. Do you propose having these tax breaks not be permanent? What about the guy who invests only because of your promises only to be shafted after the tax shelter is removed?

3. What about foreign companies that happen to have better market solutions?

4. How are you going to pre-qualify investments without knowing ahead of time what might lead to green solutions?

Aren't these sorts of questions relevant to this forum?

Unknown said...

I can't resist...

If the government mandated fuel efficiency standards, premiums for green netmetering, natural gas filling station infrastructure, etc. it would be the equivalent to a Girls Gone Wild wet T-shirt contest for companies that could meet that demand!

Rod Randolph Richardson said...

Spam, Endless, Unstoppable Spam:

I'm not sure you disagree with me as much as it might appear. I readily agree demand-based incentives (mandates) certainly have their place, but only observe that they also have a history of sparking political opposition, so you can't rely on that alone as a core policy. Tax-incentives are generally more popular, easier to legislate, and more effective to boot. For instance, being a psychic, I can sense that you personally embraced tax incentives as a consumer: I'm sensing a hybrid, and you stoked to get, what, a $3,000 tax credit; I'm feeling that the credits you got on your solar panels were a major factor in your decision to install them on your roof. I'm right? Amazing!

So basically, you have already embraced green energy tax incentives in a big way in your life, and are now just being an over-the-top, tit-metaphor spewing, spam-happy devil's advocate in this forum because, I guess, it is fun to be a gadfly. No problem, that is fine. If you don't mind, however, I will answer your remaining questions in future posts (I promise). Until then, a truce on the boob analogies, please. For the sake of my more delicate readers...

Unknown said...

PG-13 truce agreed to.

I would, however, distinguish the highly targeted (read:"social engineering") tax incentives you just referred to from the blanket industry wide boondoggle you are proposing. Please elaborate on the logistics of who qualifies, how will abuses be dealt with and how in general would it's "success" ever even be attempted to be evaluated?