In a capitalist society, positive outcomes or use of technology often is accompanied by less wealth or income distribution, because the system works through incentives (this is meant to be a general statement). There are winers and losers. But for those of us that can afford new cars in California, we are moving towards alternatives away from gas consumption. IMO, the is a good thing and its a discussion for another thread.

Economics 101 tells us when the demand for gas goes down, so should the prices, all things being equal. And its true on the wholesale market, where California gas prices have plummeted to all time lows. (see edit). So does that mean prices at the pump (retail level) have followed? Not so fast in the California regulatory environment. So those who are driving old gas guzzlers are now subsidizing those of us who can buy cars that use less or no gas. This is not necessarily a bad thing from the environmental or long run economic growth standpoint for the state. But it is a reverse distributive impact than what the free economy could provide.

http://reut.rs/2aBofmX

Edit: prices have hit all times low in recent years and I assume when indexed for inflation are also low.

Makes sense to me

Thanks for sharing that information

Think it will be same for automated cars?

The ridiculous thing is CA taxpayers subsidizing $85,000 Tesla's for rich people.

wifeisafurd;842711057 said:

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California gas prices have plummeted to all time lows.[/url]

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????????? Why do I remember 25cent gas?

CaliforniaGoldenBear;842711063 said:

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????????? Why do I remember 25cent gas?

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Yeah just a slight exaggeration

NVBear78;842711062 said:

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The ridiculous thing is CA taxpayers subsidizing $85,000 Tesla's for rich people.

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With mortgage interest tax deductions, aren't people also subsidizing rich people buying luxury homes?

burritos;842711087 said:

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With mortgage interest tax deductions, aren't people also subsidizing rich people buying luxury homes?

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Yes.

BluesandGold2;842711091 said:

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Yes.

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That's worse than the Teslas isn't it? Cause that's year after year.

The mortgage credit phase out at a certain point so it isn't like the mega rich are subsidized. Just the well off.

wifeisafurd;842711057 said:

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In a capitalist society, positive outcomes or use of technology often is accompanied by greater wealth or income distribution, because the system works through incentives (this is meant to be a general statement). There are winers and losers. But for those that can afford new cars in California, we are moving towards alternatives away from gas consumption. IMO, the is a good thing and its a discussion for another thread.

Economics 101 tells us when the demand for gas goes down, so should the prices, all things being equal. And its true on the wholesale market, where California gas prices have plummeted to all time lows. So does that mean prices at the pump (retail level) have followed? Not so fast in the California regulatory environment. So those who are driving old gas guzzlers are now subsidizing those of us who can buy cars that use less or no gas. This is not necessarily a bad thing from the environment or long run economic growth for the state. But it is a reverse distributive impact that what the free economy could provide.

http://reut.rs/2aBofmX

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It's very expensive to be poor - not being sarcastic. Then you get a ticket for a bad tailight. Then you miss work to get it fixed and / or pay the fine. It goes on and on.

Actually not. When I was growing up (50's and 60's) gas was as low as 19 cents during "gas wars," and regularly between 25-30 cents/gallon. My father used to routinely ask for "$2 worth" (in those days there was no self-serve).

burritos;842711087 said:

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With mortgage interest tax deductions, aren't people also subsidizing rich people buying luxury homes?

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Using capital gains taxed at 15%

dajo9;842711113 said:

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It's very expensive to be poor - not being sarcastic. Then you get a ticket for a bad tailight. Then you miss work to get it fixed and / or pay the fine. It goes on and on.

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So true

burritos;842711087 said:

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With mortgage interest tax deductions, aren't people also subsidizing rich people buying luxury homes?

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As income increases Itemized deductions are factored so high wage earners don't get full credit.

dajo9;842711113 said:

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It's very expensive to be poor - not being sarcastic. Then you get a ticket for a bad tailight. Then you miss work to get it fixed and / or pay the fine. It goes on and on.

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That's justs the start

UrsaMajor;842711118 said:

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Actually not. When I was growing up (50's and 60's) gas was as low as 19 cents during "gas wars," and regularly between 25-30 cents/gallon. My father used to routinely ask for "$2 worth" (in those days there was no self-serve).

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Taking inflation into account. What was the average income in the 50s and 60s?

NVBear78;842711062 said:

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The ridiculous thing is CA taxpayers subsidizing $85,000 Tesla's for rich people.

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The California tax deduction is eliminated if the car buyer makes over $500k. My guess is that this means most Tesla owners don't get to claim it. The federal tax credit is not indexed to income and is a far bigger waste.

calumnus;842711134 said:

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Taking inflation into account. What was the average income in the 50s and 60s?

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In constant dollars, gas today is not all that expensive. [ATTACH=CONFIG]5755[/ATTACH]

dajo9;842711113 said:

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It's very expensive to be poor - not being sarcastic. Then you get a ticket for a bad tailight. Then you miss work to get it fixed and / or pay the fine. It goes on and on.

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Someone gets it. That was the basic point, and often its government action (often well intended) that makes it expensive to be poor, as provided in this example, or the guy who can't afford a new alternative fuel car.

Lot of misinformation on TESLA credits and tax information. Currently no one is getting a credit from California, since the fund for the credit has run out of money. Many states provide TESLA buyers and other alternative fuel car owners with tax credits - some more or less than the Cali credit, if the credit was available. As does the federal government. For a TESLA bought earlier (which we did) the tax credits basically eliminated all the other taxes and government charges on the car, and little else. We loved the car, and would have bought the car without the tax credits. Most TESLA owner I talk to at supercharge stations feel the same way. I think the tax credits will be more meaningful when the Model 3 car arrives.

If you talk to practicing CPAs, they will tell you there basically there is a flat federal tax (state tax rates typically max out at a rather lower level) once your income goes above a certain level, as deductions, credits and capital gains are subject to phase-outs, other types of taxes (e.g., alternative minimum tax) and the like. Basically, we tax successful professionals at the same marginal rates as billionaires. I suppose a truly progressive tax system should look at taxing wealth rather than income, though that would not be an easy tax regimen to administrate. The tax system often is used to award certain conduct, but to the extent it becomes a flat tax, you lose those incentives. That may explain some of the malaise in federal action, and why there has been more focus on on FED action and stimulas spending lately.

CaliforniaGoldenBear;842711063 said:

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????????? Why do I remember 25cent gas?

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Yes, imprecise wording on my part -see the edit.

The EV tax credit is not to subsidize buyers, it subsidizes producers. It may not seem like it I'm all cases, but carmakers are able to charge $7500 more than they otherwise would be able to without the credit. Were it not for the credit, Tesla may not have had the staggering demand that has led it to build the gigafactory, etc.

And since we are talking about the credits, the idea in CA of limiting the state credit to lower income people (phaseout starts at 3x federal poverty level) is dangerous because EVs are still not cost effective and lower income people should not be incentivized to buy them.

Am I the only one who wouldn't recommend families earning $60k a year or less to buy brand new electric cars that start at $35k+ let alone any new car?

NVBear78;842711062 said:

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The ridiculous thing is CA taxpayers subsidizing $85,000 Tesla's for rich people.

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IIRC the price of new technology goes down as there is greater use and development. I am old enough to remember the the first hand held digital calculators and digital watches which were outrageously expensive. The price dropped dramatically as they came into greater use and technology improved.
That is the purpose of subsidies. I remember subsidies for the first solar generators and wind turbines. The owners needed the subsidies to make the projects viable (I worked on the financing back in the late 80's and 90's.)
Unfortunately as the subsidies were pulled back the technology was sold to China, Israel and Spain.
Now with technological improvements the price per unit has dropped dramatically. Unfortunately we have to buy back product from those countries. Technology made in the USA.

Unit2Sucks;842711164 said:

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The EV tax credit is not to subsidize buyers, it subsidizes producers

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Not sure what the original point was. It kind of got convoluted with the spurious connection to California's "regulatory environment", but there is some truth to the subsidization of EV drivers by gas drivers. They don't pay the gas tax used to maintain the roads. My personal view (gas user, here) is that the societal benefit of EVs (zero emission) makes them worth the subsidy, especially in the "take-off" phase of their development. Further, that equity problem is easily solved by shifting the road funding formula from a gas tax to a car tax. Probably not popular, but good public policy.

Go!Bears;842711176 said:

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Not sure what the original point was. It kind of got convoluted with the spurious connection to California's "regulatory environment", but there is some truth to the subsidization of EV drivers by gas drivers. They don't pay the gas tax used to maintain the roads. My personal view (gas user, here) is that the societal benefit of EVs (zero emission) makes them worth the subsidy, especially in the "take-off" phase of their development. Further, that equity problem is easily solved by shifting the road funding formula from a gas tax to a car tax. Probably not popular, but good public policy.

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I think the attached article explains how California manages to make it so the drop in wholesale gas prices is not passed on the consumer, and does touch upon the impact on those who are struggling financially. One of several impacts is as you mentioned the CA gas tax represents a subsidy (or income shift) from higher income EV users to lower income (on average) gas guzzler users. But its actually worse than that. Just when Congress finally approves a long-delayed transportation bill that guarantees five years of federal funding for road, bridge and transit projects, state officials announce that they'll have to slash funding over the next five years for the same infrastructure investments.

Last month, the California Transportation Commission said the state would cut transportation funding by $754 million a 38% decrease given that revenue from the state's levies on gasoline sales, which provide much of that funding, plummeted as gas prices dropped and more fuel-efficient vehicles and EV's proliferated. Those falling prices cut the state's gas excise tax revenue from 18 cents a gallon two years ago to 12 cents last year, and revenue is expected to sink to 10 cents in July. Every penny in revenue lost per gallon means a $140-million drop in transportation funding per the LA Times.


Last year, there was a special legislative session to come up with a way to pay for more transportation projects. Gov. Brown, have proposed raising fuel taxes between six and 22 cents a gallon and imposing a new highway user fee that would apply to all vehicles, including electric cars not subject to the gas tax. But Republican leaders and many Democrats (presumably out of environmental concerns or representing low income area) opposed tax increases, citing the state's budget surplus.

Its usually not good policy to use a temporary revenue surge to solve a long-term problem. Even if gas prices climb again, the trend toward fuel efficient and alternative-fuel vehicles will continue to eat away at the taxes that have traditionally paid for transportation improvements at both the federal and state levels. California is developing a pilot project to test a new model charging drivers based on how many miles they drive, rather than the gas they use. But that option could be as much as a decade away according to experts (see LA Times Op Ed 2/13/2016).

dajo9;842711113 said:

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It's very expensive to be poor - not being sarcastic. Then you get a ticket for a bad tailight. Then you miss work to get it fixed and / or pay the fine. It goes on and on.

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I couldn't agree more and think about the horrific effect on the average working person of things like Red Light Camera tickets with $500 fines. Absolutely criminal amounts charged illustrating the neverending greed and stupidity of government.

EV's create their own demand-they don't need to be subsidized. People are willing to pay a premium for a dubious return-let them. What is I think a growing problem is the amount of private vehicles now used for delivery of food and goods (door dash, amazon) or transportation (uber, etc,). Most of these are driver-operators with their own vehicles. Legions of people running around delivering things in individual cars is not an efficient transportation module and may result in increased emissions. There should be discussions about whether these are commercial vehicles and what are appropriate regulatory responses-it would make much more sense for the government to provide subsidies here since they are for the most part middle income people trying to make a buck not some venture capitalist trying to make a statement.

NVBear78;842711183 said:

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I couldn't agree more and think about the horrific effect on the average working person of things like Red Light Camera tickets with $500 fines. Absolutely criminal amounts charged illustrating the neverending greed and stupidity of government.

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Are there many other countries where it's better to be poor? Seems like people in Europe are acting all angry too. And in South America there seem to be zombie hordes running around. In China you can drink the air.

Yes, I agree with WIAF about the regressive subsidy from the gas tax which funds infrastructure, but my point was just about the purchase tax credit itself. We clearly have an infrastructure funding problem (and not just with respect to roads but public transportation as well) and as cars get more fuel efficient an already underfunded situation will only get worse if we don't change the source of funding.

Go!Bears;842711176 said:

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Not sure what the original point was. It kind of got convoluted with the spurious connection to California's "regulatory environment", but there is some truth to the subsidization of EV drivers by gas drivers. They don't pay the gas tax used to maintain the roads. My personal view (gas user, here) is that the societal benefit of EVs (zero emission) makes them worth the subsidy, especially in the "take-off" phase of their development. Further, that equity problem is easily solved by shifting the road funding formula from a gas tax to a car tax. Probably not popular, but good public policy.

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GivemTheAxe;842711170 said:

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IIRC the price of new technology goes down as there is greater use and development. I am old enough to remember the the first hand held digital calculators and digital watches which were outrageously expensive. The price dropped dramatically as they came into greater use and technology improved.
That is the purpose of subsidies. I remember subsidies for the first solar generators and wind turbines. The owners needed the subsidies to make the projects viable (I worked on the financing back in the late 80's and 90's.)
Unfortunately as the subsidies were pulled back the technology was sold to China, Israel and Spain.
Now with technological improvements the price per unit has dropped dramatically. Unfortunately we have to buy back product from those countries. Technology made in the USA.

---

As a rule, the cost of new tech goes down, but not for all. It's still survival of the most scalable ideas. I'm not sure about electric cars, especially if you include all costs.

If you start at the car and work backwards, you can think of some costs that most "analysts" don't. Development and mfr of batteries and reengin of car designs. Cost of redundant refueling stations (charging places). Loss of time in recharging on the go (I have an idea to minimize that). Here's a little-thought-about biggie - loss of efficiency in the transmission of all those electrons over the power infra, not to mention the cost of increasing transmission capacity big time. Then, there's increased cost of power gen and the increase in power gen infra - another biggie. And, chances are you'll be burning more fossil fuel, unless you power with nuclear .

PS There is little that is new in the auto business. The first true (very much like today's designs) gas/electric hybrid (with auto transfer between sources on the fly) was the 1896 Armstrong, mfrd. in Bridgeport CT. It also had the first electric starter, very much like today's. Before the Model T there were cars with power steering and brakes, disc brakes, power windows, auto transmissions, overhead valves, the whole magilla. To make cars more affordable for the masses, Henry cut that stuff out. You know the rest.

How do states that don't tax the crap out of gas pay for their roads? Otherwise, is it 100% federal subsidies or better use of funds?

oski003;842711207 said:

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How do states that don't tax the crap out of gas pay for their roads? Otherwise, is it 100% federal subsidies or better use of funds?

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I suspect the answer to this question is that other states may use greater proceeds from gas taxes to actually pay for roads. I don't believe that's the case here.

oski003;842711207 said:

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How do states that don't tax the crap out of gas pay for their roads? Otherwise, is it 100% federal subsidies or better use of funds?

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Some states tax the crap out of gas to pay for their roads, but don't fix them. Instead, the money goes into the general fund to pay for bloated costs and pet projects. Actually, for the increased costs of borrowing to pay for it - they've already run out of operating funds to cover the outlay.

wifeisafurd;842711179 said:

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I think the attached article explains how California manages to make it so the drop in wholesale gas prices is not passed on the consumer, and does touch upon the impact on those who are struggling financially. One of several impacts is as you mentioned the CA gas tax represents a subsidy (or income shift) from higher income EV users to lower income (on average) gas guzzler users. But its actually worse than that. Just when Congress finally approves a long-delayed transportation bill that guarantees five years of federal funding for road, bridge and transit projects, state officials announce that they'll have to slash funding over the next five years for the same infrastructure investments.

Last month, the California Transportation Commission said the state would cut transportation funding by $754 million a 38% decrease given that revenue from the state's levies on gasoline sales, which provide much of that funding, plummeted as gas prices dropped and more fuel-efficient vehicles and EV's proliferated. Those falling prices cut the state's gas excise tax revenue from 18 cents a gallon two years ago to 12 cents last year, and revenue is expected to sink to 10 cents in July. Every penny in revenue lost per gallon means a $140-million drop in transportation funding per the LA Times.


Last year, there was a special legislative session to come up with a way to pay for more transportation projects. Gov. Brown, have proposed raising fuel taxes between six and 22 cents a gallon and imposing a new highway user fee that would apply to all vehicles, including electric cars not subject to the gas tax. But Republican leaders and many Democrats (presumably out of environmental concerns or representing low income area) opposed tax increases, citing the state's budget surplus.

Its usually not good policy to use a temporary revenue surge to solve a long-term problem. Even if gas prices climb again, the trend toward fuel efficient and alternative-fuel vehicles will continue to eat away at the taxes that have traditionally paid for transportation improvements at both the federal and state levels. California is developing a pilot project to test a new model charging drivers based on how many miles they drive, rather than the gas they use. But that option could be as much as a decade away according to experts (see LA Times Op Ed 2/13/2016).

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No argument. But gas prices have nothing to do with the merits of an EV subsidy. California needs to figure out a new model to pay for its roads, whether it subsidizes EVs, or not.

But then there is the price of gas. High prices are a way of encouraging a shift to other modes of transportation. Because I like those modes (and their consequences) better than gas-powered private vehicles, I think higher prices are not such a bad thing. The environmental regulations that keep California gas prices high are worth it to me. If you want to worry about the poor, the problem is with the disposition of the funds paid for gas. I would rather see the monies go back into transit programs that help low income Californians (cheap mass transit) than go to oil companies, but even so, anything that makes a person hesitate before using a fossil fuel is small but important progress.

Unit2Sucks;842711201 said:

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Yes, I agree with WIAF about the regressive subsidy from the gas tax which funds infrastructure, but my point was just about the purchase tax credit itself. We clearly have an infrastructure funding problem (and not just with respect to roads but public transportation as well) and as cars get more fuel efficient an already underfunded situation will only get worse if we don't change the source of funding.

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We will have to agree to agree.