Posted by
Daniel Miller on Wednesday, November 01, 2006 12:26:17 PM
Should a new tax be instituted on Californians to create a
new state agency to collect $4 billion, to be distributed, at the agency's disgression, among
privately held research and development of alternative energy companies? If passed California Proposition 87 would do just that. If all Californians benefit, as proponents of the proposition claim, why are only people purchasing gasoline being taxed?
It is said and true in many cases as California goes, so goes the rest of the country. Proposition 87 is not the direction we should go. Higher taxes on consumers is not the answer. Tax
incentives to these types of entrepreneurs makes more sense to me.
The San Jose Mercury writes on this:
The first is a philosophical objection. If developing alternative
energy sources will benefit all Californians, then all taxpayers should
help shoulder the burden. Yet Proposition 87 taxes one industry, the
state's oil producers, to benefit another industry, alternative fuel
producers. And, the writers of the proposition included language aimed
at preventing oil companies from passing along the tax to California
drivers when they gas up their cars. Beyond being naive and difficult
-- if not impossible -- to enforce, it directly goes against the
laudable principle that all Californians should help sacrifice in some
way to help ensure a better future for ourselves and for our children.
The second compelling reason to vote ``no'' stems from legitimate
concerns about oversight of the agency that will be charged with
distributing the $4 billion in taxes. The proposition calls for
abundant transparency throughout the process of deciding who will
receive the money. But it does not provide Californians adequate
recourse if the agency repeatedly makes poor spending decisions.
WSJ writes:
There'd likely be no alternative energy proposition on
the California ballot if one guy, Stephen Bing, hadn't put up $50
million to place it there.
The media is kind to call Mr. Bing a "movie producer";
his fortune was inherited from his grandfather and his dabbling in the
film business has been desultory. His misadventures with starlets and
models have proved a more lasting claim to notoriety. In fact, he has
little record of sustained commitment to anything, which perhaps
explains the economic incoherence of the ballot proposal.
You would never say the same about his most visible
ally, Vinod Khosla, a highly reputable Silicon Valley venture
capitalist, a founder of Sun Microsystems, and now an avid investor in
ethanol ventures. Mr. Khosla says what grabs the public's attention is
not "facts" but "stories," and he has lustily lent his voice to telling
stories about gouging oil companies, the urgent need for energy
independence, and other media-ready tropes useful in selling the
proposition to California voters.
Under Prop. 87, as the measure is called,
California-produced oil would be taxed to fund alternative energy
projects. By making domestic energy more expensive, it would increase,
not decrease, the clout of foreign suppliers. But never mind. It also
includes an absurd and unenforceable mandate that the cost of the tax
not be reflected in the price of gasoline.
Even the reliably middle-of-the-road (?) Los Angeles Times calls the proposition economic quackery. What's really going on here?
Let's begin
by noticing that there's been no shortage of capital for alternative
energy ventures. By one count, 140 ethanol plants are in the works
around the world. Everyone from Goldman Sachs and Warren Buffett to
Monsanto and the Carlyle Group has been jumping in.
Nor is there an obvious call for government planners
to help investors sort out the winning technologies. Even amid the
ethanol frenzy, BP and DuPont are placing a contrarian bet on butanol,
another crop-derived fuel, with higher energy content and better
compatibility with the gasoline distribution system.
When he's not stumping for the California initiative,
Mr. Khosla has been in Washington proselytizing for a package of
subsidies and mandates to prop up the ethanol industry, one of which is
a "cheap oil tax" to kick in whenever the price of oil sinks below $40
a barrel. A slide show he gave so enthralled Nancy Pelosi that she had
him repeat it for her Democratic colleagues.
One "story" Mr. Khosla enjoys telling at these events
is of an oil executive supposedly confiding the industry's plan to push
down the price of oil to drive the ethanol industry under. Mr. Khosla
is an economic sophisticate. He knows oil's price will go to whatever
level is required for the commodity to sell. He also knows that the
same technological progress being applied to turn crop material into
automotive fuel is also working to turn the world's still-large
inventory of stored hydrocarbons into automotive fuel.
Polls show that Proposition 87 will lose handily. In
this case, I hope the polls are right...