Thus, [Ian M.D.] Little began the 1960s believing in planning and import substitution and ended the decade supporting trade liberalization and import decontrol. “I am widely regarded as having shifted from uncritical belief in dirigiste planning to excessive trust in the price mechanism,” Little observed. “Apart from the adjectives, this is broadly true.” He characterized his change in views as being “driven by experience and research.” He attributed his early beliefs to having “too much faith in government” and being excessively critical about the faults of the price mechanism, both of which led to the desire to interfere with markets. Speaking for his generation, he confessed: “We were slow to realize that the most prevalent reason for market failure was government itself. Governments were driven by false economic ideology—heavy industry, protection, import substitution—and also became increasingly self-serving and corrupt.”
Beyond the price tag that burdens taxpayers, the credit is unfair to the vast majority, who — being less well off than EV purchasers — drive relatively affordable gasoline-powered vehicles and do not reap any financial benefit from the credit. Studies repeatedly show that most of these credits go to higher-income individuals, making the credit a tax cut for the rich. For instance, the Congressional Research Service study noted: “For vehicles purchased in 2021, taxpayers with adjusted gross income (AGI) greater than $100,000 represented 22% of all filers and received 84% of the credit benefits.”
Vero also has some sound ideas to improve the U.S. tax code. A slice:
You can say what you want about Elon Musk, but he is able to pinpoint in a single tweet some of the most dysfunctional aspects of our federal government. For instance, he recently noted that “Simplifying the tax code will increase productivity, instead of incentivizing bizarre tax-avoidance behavior.”
He’s correct. If President-elect Donald Trump wants to have a lasting impact, he should not simply extend the provisions of the 2017 tax reform; he should use the opportunity for further serious reform.
The U.S. tax system could be used to teach a masterclass on inefficiency, complexity, and distorted incentives. The high cost of complying with our tax code encourages wasteful tax avoidance strategies and creates what we economists call significant deadweight losses by distorting work and investment decisions.
This complexity doesn’t just hurt taxpayers, business owners, and innovators. By reducing economic growth, it hurts us all.
Wall Street Journal columnist Joseph Sternberg understandably cheers for the demise of “net zero.” Two slices:
Whisper it, but 2025 may be the year net zero dies. Such a development isn’t inevitable, but what was once described as “the climate crisis” is morphing into the climate-crisis crisis as voters lose patience with the project and grow less shy about saying so.
The evidence is all around us. Recently, Britain’s Labour Party government quietly started to backtrack on its green-electricity pledges, now saying the goal is 95% renewable power in the grid, compared with the 100% it promised as recently as last summer. Prime Minister Keir Starmer’s administration also appears to be getting cold feet about electric-vehicle mandates as job losses mount in the auto industry. Officials will review the mandate policy in 2025, with the potential of scaling it back.
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As for the quality of life, high prices on electricity, natural gas and motor fuel are only the start. The French government recently suggested that meeting its net-zero targets would require households to tolerate lower temperatures inside their homes in winter, smaller and lower-resolution screens on televisions and smartphones, and less vacation travel—and that’s before you even get to ideas such as reducing meat consumption.
These two strands of thought converge in the electric-vehicle fiasco, in which the push to force households to buy cars they don’t want is causing a highly visible and politically emotive industry to collapse. If there’s one reason more than any other to suspect 2025 may be the year net zero finally dies, it’s that the dire consequences of aggressive carbon policies are having a visible and negative effect on both drivers and makers of cars.
None of this means the death of net zero will be easy, and nor is it a foregone conclusion. European voters truly believe what they’ve been told to date about a “climate emergency.” Many may not yet realize the household and industrial costs they hate are features of the climate agenda and not merely a sign that the transition has been mismanaged to date. Meanwhile an extensive and noisy activist and media class has built up around climate issues and won’t go gently into that good political night.
The climate policy retreat is accelerating as Citigroup, Bank of America and Morgan Stanley this week joined an exodus from the Net-Zero Banking Alliance. Energy reality can bite.
The NZBA alliance is part of the United Nations “Glasgow Financial Alliance for Net Zero” effort to conscript private capital to drive the left’s climate goals. It was spearheaded by former Bank of England Governor Mark Carney in 2021. That was the year of peak climate arm-twisting.
The alliance’s some 140 bank members have committed to align their lending and investment to a goal of zeroing out greenhouse gas emissions by 2050. But the net-zero transition keeps getting set back.
Who’d a-thunk it?: “Americans continue to vote with their feet for lower-tax states.” A slice:
Of the five leading growth states in the U-Haul report, three have no individual income tax (Texas, Florida, and Tennessee) and one has a flat tax (North Carolina at 4.25 percent).
Of the five worst-performing states, four have income-tax rates that top out at 9 percent or higher: Massachusetts (9 percent), New Jersey (10.75 percent), and New York (10.9 percent), and California (13.3 percent).
