Posts Tagged ‘taxes’

An Exercise in Economic Thinking

Monday, 13 July 2020

Yester-day, I posted a problem to Facebook:

Assume that the market for CEOs of large corporations is very tight, with directors competing ferociously for candidates. How will the burden of a tax on compensation to CEOs be distributed between the CEOs and the stockholders? If a heavily progressive tax is placed on the incomes of CEOs, what will happen to the pre-tax income levels of these CEOs?

So far, for whatever reasons, no one has offered answers, though the answers should be obvious. What makes the exercise interesting is the inversion of the answer to the second question. A great many people who could correctly and quickly answer the question itself it would almost surely miss the inversion if not asked the question.

The Way that I Roll

Tuesday, 2 May 2017

The state of California has introduced a raft of new taxes associated with motor vehicles. These include an increase of the tax on gasoline (which increase alone is expected to cost the typical driver an additional $280 per year), a general increase in vehicle registration fees, and a new tax of $100 per annum on ULEVs. That last tax is advocated on a theory that, since they travel more miles per gallon of gasoline, ULEVs put more wear-and-tear on the roads with each gallon consumed. I very much doubt that, even on average, the difference comes to about $100; and of course drivers with ULEVs who do very little driving will be disproportionately taxed.

I drive a 2012 Honda CR-Z. It is a hybrid whose design alludes to that of the Honda Civic CR-X (aka CRX) much as the modern Volkswagen Beetle, Cooper S Mini, and Fiat 500 allude to models of the past. (Honda was well-advised not to name this successor CRY.)

The first- and second-generations of CR-X came in three basic varieties: the HF, which was designed for fuel economy; the DX, which offered a bit more performance; and the Si, which was a genuine sports car. (The CR-X originated in an effort to design a vehicle with superior fuel economy, but this naturally led to a streamlined body and limited seating, as with a sports car.) The CR-Z combines three analogous varieties into one, by having three operating modes: an Econ mode, a Normal mode, and a Sport mode. (There is also a special hill-climbing mode.)

I had no desire for the Normal or Sport mode. I'm never in the latter, and only in the former when a mechanic switches modes and I travel a few yards before realizing what has happened. (I've used the hill-climbing mode briefly just a very few times, to deal with especially steep inclines).

In the Econ mode, the CR-Z functions as a ULEV, but the model has not been classified as a ULEV, because there is no politically practical way of ensuring that CR-Z drivers are operating them in that mode. Here-to-fore, the implication for me has been that I cannot legally use car-pool lanes without having a passenger, whereäs those with recognized ULEVs can. But now, unless the state engages in hypocrisy (which is quite plausible), I will dodge that $100 tax.

I don't do a great deal of driving; I've had the car since the start of summer in 2012, but my odometer only recently passed 9000 miles (14484 km). And a significant part of what little driving I do is to visit my family in another state jurisdiction. Most of my recent driving has been primarily to ensure that the twelve-volt battery stays charged and that gaskets don't dry-out. My insurance company has repeatedly demanded to know why I drive so little. On the first few occasions, I explained that driving has become expensive; more recently I've just told them to shut-up and simply be happy that I drive far fewer miles than my policy covers.