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Taxing dilettantes

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THE LATEST POLITICAL CRUSADE from multimillionaires Steven Bing and Vinod Khosla -- a proposed ballot initiative that would tax oil companies to pay for research into alternative fuels -- has some to like and much to hate. If nothing else, it shows that California could really use a moratorium on wealthy and/or famous dilettantes trying to push their pet projects into the state Constitution.

Movie producer Bing and venture capitalist Khosla were key backers of the 2004 stem cell research initiative, and now they’re putting their considerable financial clout behind a measure that could generate as much as $380 million a year to help wean the nation off fossil fuels. It has a very strong chance of appearing on the November ballot, not only because of its rich sponsors but because it targets oil companies, whose record-breaking profits over the last year have fueled consumer outrage.

The proposal isn’t all bad; after all, who could argue with more money being spent on alternative fuel development? Further, while a windfall profit tax or price controls on oil companies are stupendously bad ideas, the so-called Clean Alternative Energy Act involves neither. Instead, it would merely impose an extraction tax on companies that drill in California. Though it’s the third-biggest crude oil producer in the country, California, surprisingly, doesn’t collect an extraction tax, as do other oil states such as Texas, Alaska and Louisiana.

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But just because you can doesn’t mean you should. The new levy would be a “dedicated” tax -- meaning its revenues don’t go into the general fund but have to be spent on a particular project. Such taxes are rarely a good idea because they reduce flexibility in the budget-making process. More worrisome is the project that the funds are dedicated to: alternative energy research. The stem cell effort demonstrates how hard it is to distribute taxpayer money for something as intangible as research. Until the new stem cell board works out dilemmas over transparency and conflicts of interest, voters should think twice about approving a similar new bureaucracy.

The high price of gas is already creating a market incentive for more private research on alternative fuels. And President Bush has signaled that he plans to focus more federal resources in that area. So all this extra government funding may not even be necessary. If the money were instead spent on improving public transit, it would accomplish the same goals of reducing fuel consumption and cleaning the air, with the added benefit of reducing traffic in a state with too much of it.

California is lousy with wealthy people who enjoy buying their way onto the ballot, from actor/director Rob Reiner to financier Robert Klein and even Arnold Schwarzenegger (before he became governor). Sometimes they have good ideas; more often, we wish they’d find another hobby.

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