Tuesday, May 02, 2006

New taxes dead, pander still on life support

Senate Republicans can act quickly when necessary -- such as when their business allies object to proposed new taxes.

Senate Republicans on Monday hurriedly abandoned a broad tax proposal opposed by the oil industry and business leaders, another sign of their struggle to come up with an acceptable political and legislative answer to high gasoline prices.

Senator Bill Frist of Tennessee, the majority leader, said he had decided to jettison the provision, which would have generated billions of dollars by changing the way businesses treat inventories for tax purposes. Instead, he said the Senate Finance Committee would hold hearings on the plan "later this year, so the pluses and minuses of the provision can become well known."

I actually think the proposal should never have been made in the first place: oil company profits are the least of my worries. But it shows once again how clueless Frist is.

Meanwhile, the $100 rebate plan has not yet had its plug pulled. But sweet merciful death can't be far away, especially because income from the tax provision is supposed to pay for the rebate.

The centerpiece of the leadership proposal, a $100 rebate check to compensate taxpayers for higher gasoline prices, continued to receive a rough reception. Members of the public have telephoned and written to ridicule the idea, and even Republican lawmakers are finding fault.

"Political anxiety in an election year is to blame for a lot of the bad bills Congress passes," said Representative Jeff Flake, Republican of Arizona, who on Monday called the rebate a "knee-jerk populist idea" that voters would see through.

The rest of the bill has some other elements:
The measure includes new protections against price gouging, incentives to expand domestic oil refinery capacity, support for new energy initiatives and tax incentives for buying hybrid vehicles.

Ditch the price-gouging protections, because I have yet to see evidence of it being a widespread problem and anyway I want gas to be more expensive. Expanding refining capacity is fine, because refining is the main bottleneck in our energy supply line. But tax incentives are less important than overcoming political and environmental opposition to their construction.

Support for new energy initiatives is fine as long as it's different sources of energy, not just drilling in ANWR and other such measures that will have no short-term effect and in the long-term will just provide an excuse to continue our oil dependence -- all while incurring lasting environmental damage.

Tax incentives for hybrids is nice, but misses the point. Target the tax incentive at fuel efficiency, not one particular type of motor. I don't care if the car is a hybrid design or not; all I care about is that it gets 50 miles to the gallon.

I'll also note, yet again, that all of these tax incentives and funding options and so on and so forth would be totally unnecessary if we do one thing: keep the price of gas high. Do that, and people will pursue the other options on their own, out of naked self-interest.

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