Renewable tax Credit Stuck into Bailout Bill

A revised bailout package passed both chambers of congress, and stuck into the bill before voting was an extension to the renewable energy tax credit.  I blogged about this earlier, and I really believe that the renewable infrastructure boom will be Americas saving grace over the next 15 years.  Extending the tax credit could prove to be as important as the bailout package.

I hate to beat a dead horse, but….

Can it be any more obvious that the way to reduce oil consumption and greenhouse gas emissions is to raise taxes on the stuff?

Creating Photosynthesis to harness solar + tax commentary

A new development brings the idea behind photosynthesis closer to economical energy production.  The breakthrough came when the scientists decided to go back to the drawing board and utilize a catalyst that breaks down, then recreates itself.  Typical chemists try to always make a stable reaction.  By making the reaction “unstable” but functional, they invented a method that promises to be cheap.

My first thought was how amazing this sounds, but my second thought was about how wrong political policy geared toward subsidies can get it sometimes.  It is really true that you cannot predict what technologies are going to come out triumphant during a product cycle.  Throwing money at particular technologies can often be a dead end.  (like corn ethanol)  But if you instead tax things that you know are bad, you change the market for the whole sector.  So, in other words (economists have been saying this for like a million years), you tax the bad stuff to make it more expensive, then let the market pick which tecnology succeeds it.  Don’t subsidize ethanol, tax oil.  Don’t subsidize solar and wind, tax coal.

THEN, before you complain about making things more expensive for those least able to afford it, you change the tax structure to lower taxes on the poor, and create a new rich-guy tax bracket for, say, over $2,000,000 income.

The market is now adjusted, so things are priced taking into account externalities.  Poorer people that will now be paying more for basics get an income tax break.  But since the bad things are taxed, the money comes right back to the government anyway.  Oh god this would work so well.