The R Street Institute, a free-market think tank in Washington, D.C., released a policy study last year on replacing fuel-economy rules with CTCs. The paper proposed setting a single vehicle-efficiency target and using it as a baseline for rewarding automakers with tax cuts. Companies would get breaks on corporate income taxes, capital gains taxes, estate taxes and earned interest taxes paid by shareholders and bondholders.
In the News Should we just get rid of auto efficiency regulations altogether?
Researchers say CTCs would solve many of the problems with current federal standards. For one, a sliding scale for tax breaks would motivate companies to exceed emissions targets, rather than stopping when a minimum target is met. Automakers also have little incentive to meet Corporate Average Fuel Economy (CAFE) standards, because the penalties for non-compliance are relatively low.“It’s very common, historically, for companies to not meet the targets and just pay the fines,” said Josiah Neeley, a senior fellow for the R Street Institute. “There’s not a huge incentive for car manufacturers to increase mileage beyond what they were naturally going to do.”[…]
“Any time you’re trying to get three approvals rather than one, it can be pretty bad. Imagine having three supervisors at work,” said Neeley.
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Now that CAFE standards are on the EPA’s chopping block, R Street is likely to release new reports and proposals on the benefits of CTCs, says Neeley.
“Whenever there’s a change that’s already happening, that creates potential for bigger changes — to reexamine the whole system,” said Neeley. “I do think we’re in an opportunity now where people are talking about CAFE…and they’re thinking about what the limitations are and how it could be done better.”
