Roger, when you wrote:
> Eugene Coyle wrote:
>
> > When I made the query about a progressive tax I had in mind that the
> > fundamental idea behind it is that after its imposition, the dollar
> > income disparity between low and high income taxees would be reduced.
> >
> > Take two persons, one paid $10,000 and one paid $100,000. A
> > $90,000 spread. Even a flat tax now imposed would reduce the dollar
> > spread. Say a 10% tax -- now the spread shrinks to $81,000. A
> > progressive tax would shrink the gap even more. Say a 5% tax rate for
> > the low income, a 10% for the higher. Now the taxes would be $500 and
> > $10,000, so the gap would be $80,500.
> >
> > That is what shaped my thinking when I made my query.
>
> You are mistaken, Gene, and I though most of the posts made that clear.
You have mistaken my basis for posing my query with the conclusion (if any)
I reached after reading the responses. As I said earlier, the responses
were very helpful.
You seem very sure of your conclusion about what is or isn't
"progressive taxation." I thought there were a variety of positions in the
responses -- so maybe your conclusion isn't what all economists hold.
Roger, you then go on:
> > Rod Hay asks about the experience with deregulation -- is it giving
> > the benefits promised? No, it isn't. It isn't even delivering the
> > benefits on the energy piece of the total, and rates for the
> > transmission and distribution are going up, quite sharply, and
> > swamping the downward push on the energy side.
>
> Where do you see this? Transmission and distribution costs are small
> compared to generation.
You are factually wrong on that. T&D costs are not small compared to
generation.
> Plus they are still regulated on a cost basis,
> and consist mainly of sunk capital costs (depreciation of plant and
> equipment).
Wrong again. There is a lot of labor and a lot of General and
administrative expense.
> How could they be going up sharply as you suggest to swamp
> any reduction in generation costs? Did the state commission in Calif.
> deny some of the existing plant costs (e.g., for nukes) and thus lower
> rates a bit with deregulation (rates for those who don't switch
> suppliers)? Do you have evidence of sharply rising transmission or
> distribution costs and rates in Calif?
Yes, there is clear evidence of sharply rising T & D rates in California.
PG&E, serving northern California is asking for an increase of non-energy
rates (T & D) of around $650 million on electric. (They are also asking
for a gas T&D increase which, added to the electric, brought their request
to around a billion dollars. In that case the ALJ (Administrative Law
Judge) proposed that the electric increase be "only" $268 million. One of
the commissioners, Carl Wood, an ex-labor guy and an appointee of the
Democratic gov, Grey Davis, has proposed an alternate decision which would
give PG&E an electric increase on T&D of $361 million, plus an "attrition"
adjustment (for both gas and electric) of another $110 million. The
California PUC will issue a final decision in the near future.
Southern California Edison will file for a T&D rate increase later this
year. They have already said that they want residential rates to have a
charge of $17 per month simply for being connected to the system. Would
you call THAT regressive?
Roger, on your next point I think we are agreeing, rather than
disagreeing. I think you missed my point. You wrote:
>
>
> > Plus, in a few short years the energy side will start up as the
> > players work out "cooperation" as has happened with the airlines.
>
> This isn't going to be that much like airlines, Gene. Utilities will
> fight to avoid competition and control prices on two major fronts.
> Generation, by merging existing capacity and creating generation and
> marketing affilites in an attempt to control the introduction of new
> capacity under deregulation. And transmission, where they will fight
> the creation of genuinely independent operators of the grid, by e.g.,
> creating for-profit companies (in which they own a share) to run things
> and allow themselves some measure of control over power flows.
>
> RO
The airlines have fought to avoid competition -- that's what I said. They
cooperate, post fare increases through a cental computer that they
collectively own. And the power generators must, fairly soon, come to some
sort of "cooperation" or collusion to keep capacity additions down and thus
avoid "cutthroat competition." If I read you correctly, you are saying the
same thing.
Gene Coyle
