Taxes

CA: Do Not Ask for Whom the Road Tolls…

By Robert Farago
September 2, 2008 - 1,090 views

The Newspaper reports that the California state legislature has blessed AB3021, a measure that will expand toll roads throughout the Golden State. The CA trip A ain't too pleased with the provisions contained therein. "We support the use of tolls as one option to pay for new infrastructure; however, because the very broad toll authority proposed in this bill is not limited to new construction and because revenue from the tolls could be used for a wide array of transportation and related efforts (well beyond the roads, streets, and highways used by toll payers), we must oppose the bill. Those goals should not inappropriately be placed on the shoulders of motorists by allowing the widespread tolling of facilities already paid for by existing taxes without clear and direct benefits for the toll payers." In other words, the cash cows will graze freely while providing precious little milk for the motorists paying through the nose for the farmers' livelihoods. Or something like that. 

The Newspaper »

Posted in News Blog | Taxes | 21 comments

Volt Birth Watch 78: The First Of Many Tax Breaks

By Edward Niedermeyer
August 27, 2008 - 710 views

As Detroit gears up for the beggar-bowl bailout-fest, the Volt is taking center stage as, well, the only reason to invest in Detroit's future. We already know that GM is pushing hard for consumer tax breaks to bring high-flying MSRP estimates down to earth, but it seems production incentives will be the first Volt-related handouts out of the gate. MLive.com reports that Flint's city council has approved three tax incentives worth tens of millions of dollars to bring Volt engine production to the rustiest town in the rust belt. GM's Volt engine plant is expected to cost the company $359m before incentives, and will "preserve" some 300 jobs. The exact cost to Flint taxpayers is as yet unknown, but the city is clearly bending over backwards to reinvent itself as the home of Detroit's energy-efficient renaissance. Flint has agreed to cutting 50 percent of the Volt factory's real property taxes, saving GM $6m, but also bringing in $6m in new property taxes… so far, so tax-neutral. But the city council has also agreed to abate 100 percent of the new factory's personal property taxes, meaning all factory equipment would be tax-free until 2033. Savings to GM from this measure are as yet unknown, but are expected to eclipse the $6m in real property tax savings. The city also agreed to designate the site of the factory a brownfield redevelopment site, making it eligible for state incentives which GM is still pursuing. Flint also approved a fourth undefined tax break to extend the renaissance zone through 2023 for the existing Flint Tool and Die plant. Complaints from a former local NAACP leader that such incentive mean that the Volt engine will be "built on the backs of the working poor" went ignored, as the eco-friendly backslapping from industry and government carried the day. This, ladies and gentlemen, is what we call a preview of coming attractions.

MLive.com »

Posted in News Blog | Politics | Taxes | Volt Birth Watch | 2 comments

Bailout Watch 10: TTAC Called It– Wall Street Journal Reveals Motown’s $25b Bailout Plan

By Robert Farago
August 22, 2008 - 2,740 views

And so it begins. The Wall Street Journal' s lead editorial makes it perfectly clear that Motown's plans to tap your taxes is well advanced. And guess what? It's a god damn conspiracy! "Earlier this month… the top dogs at Ford, GM and Chrysler had a meeting of the minds and decided that the way out of their current losing streak would be to ask the feds for a lifeline. They figure they'll need $40 billion or so to ride out their current troubles until they reach the promised land of hybrids, the Chevy Volt, and, who knows, maybe even profits. We've since heard that lobbyists for the car makers are taking their pitch for direct federal loans around Washington, with a goal of unveiling the plan after Labor Day — conveniently in the frenzy of the fall election campaign. They've briefed Congressman John Dingell, the dean of Michigan Democrats, as well as officials in the Bush White House… The plan is for the government to lend some $25 billion to auto makers in the first year at an interest rate of 4.5%, or about one-third what they're currently paying to borrow. What's more, the government would have the option of deferring any payment at all for up to five years." TTAC will have an editorial on this shortly. 

The Wall Street Journal »

Posted in Bailout Watch | Chapter 11 | High Finance | News Blog | Taxes | 92 comments

Nissan Loses Mississippi Pissing Contest

By Frank Williams
August 21, 2008 - 1,872 views

Nissan's taking a hit where it didn't expect, thanks to their failing full-size truck sales. According to the Madison County Journal, when Nissan built their plant in Canton, Mississippi, the automaker struck a deal with the county for accelerated depreciation on machinery. The company claimed it would depreciate faster, as it would be "used more frequently across multiple work shifts." Obviously, the local politicians would have said yes to a back massage write-off clause to get the plant. So they agreed. But things aren't working out quite like they planned. The county pays $1.67m per year on debts related to incentives they bestowed upon Nissan. Last year the plant only brought in $1.64m in taxes. And now that the plant isn't generating the estimated tax revenue due to production cuts, the county wants to tax the machinery using a standard depreciation scale. Of course, Nissan protested, saying "the assessment should not be based on a bond payment, it should be based on true value… nothing has changed to take away from the spirit of [the original] agreement." The county says that that may have been the case originally, but running two shifts instead of three changes the equation and doesn't wear out the machinery as fast. The county board of supervisors passed the new tax assessment unanimously. Anyone want to place any bets on whether Nissan will invest any more on expanding their operations in the Magnolia State?

Madison County Journal »

Posted in Industry | News Blog | Taxes | 16 comments

Bailout Watch 9: DetN Buries McCain Op Ed– $5k Fed tax Credit for Alt. Fuel Vehicles

By Robert Farago
August 18, 2008 - 759 views

I'm flabbergasted. Presidential hopeful John McCain (or someone on his staff) pens an opinion piece for The Detroit News and the paper doesn't make ANY mention of the Arizona senator's bespoke opus on their on-line home page OR the Autos section. In fact, I would have missed McCain's rant entirely if not for an article in… The Detroit Free Press. WTF is that all about? Anyway, John is holding fast to his "no federal bail out for losers" position. Per se. "With a transition to alternative-fuel vehicles, we can rejuvenate the auto industry, drive cheaply and cleanly and be more secure. I will bring customers to the showroom with up to $5,000 in tax credits to encourage the purchase of these cleaner cars." Did he say American cars? No? Shit! Chill Motown; McCain's left himself some mighty fine wiggle room. "I will continue to meet with the leaders and workers of the Big 3 automakers. If the industry should need federal assistance, I will consider any reasonable proposal they develop that moves the industry to a more stable and prosperous future." So I guess that means McCain still considers it unreasonable to suggest that a federal bailout is reasonable. Or the other way around. 

Detroit News »

Posted in Bailout Watch | Chapter 11 | Media | News Blog | Taxes | 14 comments

CBS Picks Pickens’ Plan to Pieces

By Robert Farago
August 7, 2008 - 1,842 views

The ironically named Kevin Drum takes on once and former oil man T. Boone Pickens' plan for American energy independence. After CBS' Drum has his wicked way with Pickens' not-so-well publicized personal financial interests in the matter, there's hardly a shred of credibility left upon which the Texan can wipe his ass. So to speak. "So T. Boone Pickens has an energy plan he wants to sell us. The basic idea is simple: Build a bunch of windmills in Texas to generate electricity, and then use the electricity to power electric cars. Voila! Energy independence! No, wait. That's not it at all. What Pickens actually wants to do is use the windmills to replace the electricity from existing power plants that run on natural gas. Then we can use the natural gas to run our cars." Hmmm. "Along with being the country's biggest wind power developer, Pickens owns Clean Energy Fuels Corp., a natural gas fueling station company that is the sole backer of the stealthy Proposition 10 on California's November ballot…. But a closer read finds a laundry list of cash grabs — from $200 million for a liquefied natural gas terminal to $2.5 billion for rebates of up to $50,000 for each natural gas vehicle. Much of the measure's billions could benefit Pickens' company to the exclusion of almost all other clean-vehicle fuels and technology." Is that why GM was talking up CNG cars recently? Hang on; one conspiracy at a time, please. 

CBS »

Posted in Alternative Energy | High Finance | News Blog | People | Taxes | 44 comments

Obama To Spend $4b of Your Tax Money for 1m Hybrids by 2015

By Robert Farago
August 5, 2008 - 988 views

The Detroit News reports that Senator Barack Obama wants to help Michigan et al. help him become president of the United States (surprise!). To that end, Barack will gladly use your tax money to encourage Detroit to, as my 14-year-old puts it, party like a Barack star. Speaking at the Lansing Center, "Obama proposed $4 billion in federal loans and loan guarantees to help the automakers meet his goal [of 1m hybrids by 2015]– a figure he first mentioned last month in a letter to United Auto Workers leaders — and a $7,000 tax credit to drivers who buy plug-in hybrids." That is, it has to be said, small beer. So Detroit's lackeys said it. "U.S. Rep. John Dingell, D-Dearborn, one of the auto industry's staunchest supporters in Washington, said the domestic companies could require $30 billion or more to meet the goal for their initiatives." Of course, if the real goal was more hybrids, why not let Toyota in on the action? Or the feds could just let the free market do its thing. Anyway… Obama also "modified" his position on domestic drilling (hey, sure, why not?), and proposed selling some oil from the U.S. strategic reserve [just before the election]. In case you were wondering… 

Posted in Chapter 11 | Hybrid | News Blog | Taxes | 40 comments

TTAC to DC: Let’s Kill CAFE!

By Robert Farago
August 5, 2008 - 987 views

When it comes to public policy, I don't often agree with the automotive industry in general and Motown in specific. That's because the car biz is ready, willing and lobbying to suck on the federal tit whenever and wherever they can. But when it comes to federal Corporate Fuel Economy (CAFE) regulations, I agree: the system is absurd. As the otherwise deeply misguided GM Car Czar Bob Lutz said, it's like trying to get people to lose weight by forcing manufacturers to sell smaller shirts. Anyway, none of the automakers or their camp followers have the balls to simply call for CAFE's abolition. Instead, they continually work to game, undermine and otherwise manipulate the system to appear to support it. You know; in principle. And now The Wall Street Journal reports that even that's in jeopardy. At a National Highway Traffic Safety Administration (NHTSA) hearing on a new CAFE draft statement, "The auto industry said federal regulators are pushing too far, too fast in their effort to raise fuel-mileage rules [to 35mpg by 2020]. The complaints from the industry, which had previously voiced support for tougher standards, underscore how economic hardship is affecting a major policy debate.they reversing their former support by claiming hardship." It gets worse. According to Automotive News [sub], "The Alliance of Automobile Manufacturers questioned whether the statement was necessary, calling on NHTSA to reserve its right to not draft a statement at all." In other words, can we please torpedo this thing in private, like always? So, anyway, I sent an email to NHTSA.

Wall Street Journal »

Posted in Crime & Punishment | Fuel Economy | News Blog | Taxes | 28 comments

Bailout Watch 8: Senate Dems Back Bailout

By Edward Niedermeyer
July 31, 2008 - 760 views

When the new energy bill mandating higher CAFE ratings came out last December, it didn't offer automakers any kind of financial assistance to meet those goals. Since then, we've been treated to a parade of industry types wailing that with times so bleak, CAFE will kill Detroit unless the government bribes assists the domestics with following the law developing more efficient cars. Perhaps sensing John McCain's weakness with the industry, Senate Democrats are rushing to position their party to take advantage of the now free-floating "bailout vote." The Detroit News reports that Democrat leadership has agreed to support $6b in loan guarantees to domestic automakers, and is considering a further industry stimulus for plant retooling. All told, the package will total some $25b in loan guarantees that would cost taxpayers $3.75b. Tellingly, $300m of the initial $6b is earmarked for advanced battery development. If that sounds familiar, that's because it's a pretty handy preemption of John McCain's "Project Lexington." And since McCain seems happy to stick to his Nancy Reagan (just say no!) on bailouts, Obama and the Dems are going to go after the weird industry-worker alliance that wants bailout. It's populist, it's patriotic, and (post-Bear, Fannie and Freddie) it's principled. Best of all, it only costs the taxpayers a few billion. Game on!

Posted in Bailout Watch | High Finance | Industry | News Blog | Politics | Taxes | 15 comments

Feds Face Falling Gas Tax Revenue with Road Pricing, New Toll Roads

By Robert Farago
July 31, 2008 - 269 views

Oil prices go up. Gas prices go up. American consumers switch en masse to the kind of vehicles promoted by CAFE (Corporate Average Fuel Economy) regs since 1975. They also help reduce American oil imports (and pollution) by driving 3.7 percent less over the first five months of '08. The reduced demand lowers the price of gas (OK, in theory). Everyone happy? Of course not. The same feds who want us to reduce our dependence on foreign oil are hit with a drop in federal gas tax revenue (currently 18 cents a gallon). And so the "acting head" of the Federal Highways Agency declares [via The Detroit News] that "without a doubt, our federal approach to transportation is broken." No, REALLY. "No amount of tweaking, adjusting or adding new layers on top will make things better." And he drops the other shoe. "Ray [that's MR. May sonny] said the Bush administration was in favor of a 'more progressive direct user fee' similar to a system that is currently being tested in Oregon. Under that pilot program, cars were equipped with on-board mileage counting equipment that was read by pumps equipped with mileage reader devices." Can you drop a third shoe? Sure! May also wants to "encourage" private companies to lease federal highways and maintain them through tolls. With ideas like that, what's the bet that the acting head is shuffled off-stage, and soon?

The Detroit News »

Posted in Fuel Economy | News Blog | Politics | Taxes | 24 comments