Don't Mess With Taxes

The energy tax reversal of Rep. John D. Dingell, D-Mich., is the topic of an article in today's New York Times.

Economists and environmentalists, writes economics columnist David Leonhardt, "aren't quite sure what to make of [Dingell's] conversion. They suspect that he is really a double agent, cynically supporting an infeasible solution -- a big tax increase -- as a way to maintain the status quo. But they also wonder whether they may be able to use him even if he is trying to use them."

Leonhardt also admits his skepticism about Dingell putting the full weight of the House Energy and Commerce Committee, which he chairs, behind a carbon tax. "The details of his plan -- like using the tax revenue to shore up Social Security, rather than to cut other taxes -- do not seem aimed at building political support for it," says Leonhardt.

But he also acknowledges that "it's enormously useful for a powerful House chairman to be acting as a gadfly who points out the weaknesses of the current proposals."

"A big, broad solution that changes the incentives surrounding energy use really would be far more effective than a hodgepodge of tax credits, new gas mileage standards and other rules that apply to individual industries. If nothing else, it’s also enormously useful that Mr. Dingell is no longer suggesting, as he did just eight months ago, that the scientific consensus on global warming may be a 'great error.'"

Bigger house energy numbers: The Times' piece doesn't mention the reported elimination of the mortgage interest deduction for larger houses, the "McMansion" provision I blogged about earlier.

In that item, I questioned the targeting of a home simply based on its size. I mentioned that some of the previous houses the hubby and I owned were smaller, less energy efficient and produced pretty good sized A/C and heating bills.

That comment caught the eye of the Energy Programs Consortium (EPC), which sent me its issue letter with a collection of data showing how much energy larger homes consume vs. what it calls an average house.

The EPC's math: Homes with more than 3,000 square feet require 53 percent more energy.

On top of that, say EPC researchers, homes with more than 3,000 square feet represent the fastest growing segment of the nation’s housing stock. Between 1990 and 2001, according to the group, homes of more than 3,000 square feet increased by 159.5 percent and those between 2,000 and 2,999 square feet by 35.5 percent. Meanwhile, homes with less than 2,000 square feet decreased by 6.6 percent.

I'm sure the housing industry, which is marshaling its forces to fight Dingell's proposal, is madly crunching its own numbers.

If nothing else, the mortgage interest tax deduction, as well as Dingell's other carbon tax proposals, will definitely spark a lively debate on a worthwhile topic. As a nature lover, conscientious recycler, minimal auto driver (thanks to working from my big house) and owner of one of the targeted residences, I look forward to the discussions.

Tiny house, big price: While a small residence might save you some on your utility bills, some Lilliputian abodes will cost you a pretty penny, as noted in this previous blog item.