ENERGY TAXES

Is the Great American Tax Revolution about to croak?

It never lived. It was based on the depressing, though correct, premise that most people would rather parrot than use their heads. The latter painful process will reveal that Great Tax Revolutions can be quite revolting, but never very great:

1) Tax revenue comes practically only from the middle classes: the poor don't have the money, and there is not enough of the very rich to make much difference. Soaking the rich is eyewash.

2) Corporations do not pay taxes, they only collect them: you reimburse them for every cent of taxes when you buy their products. Raising corporate taxes is a publicity stunt.

3) The minimum lost votes per added tax dollar result from the large items supported by few voters: depreciation allowances, investment credits, intangible drilling costs, etc. Their repeal would hurt the economy, but not short-term political support.

Ronald Reagan knows it well and often made the first two points before running for president; the (temporary?) humiliation handed him by Congress and his own party is therefore not undeserved.

Intangible drilling costs are costs of material and equipment used (just about) once, such as drilling "mud," the liquid that circulates down the rods and up along the casing to lubricate and cool the drill bit, and to reveal the composition of the layer through which the drill is working. For taxes, it is the equivalent of Ralph Nader's typewriter ribbons, except that Nader's corporate empire does not pay taxes on anything.

It also seems that the federal tax credits for soft-headed energy will be allowed to expire, though some state taxes and special cheap credit will continue to distort the market, and the racket of windmill tax-shelters will continue. However, in essence only the genuine applications of solar energy (which do exist!) will survive the coming shakeout. Lovin's false or manipulated data (promoted by the Wall Street J. without printing a comparable reply) have not succeeded in saving the subsidies paid by the poor to the affluent. His own $500,000 solar house, built in time to get the tax credits, has a regular power line from the local utility, which will supply coal-fired, oil-fired, hydroelectric, and soon also nuclear power for his electronically typed articles on the low cost, reliability and complete self-sufficiency of "renewable" energy sources.