The legislation we're discussing is the opposite of a tax. It is a tax credit.
I don't look at it that way. A tax *credit* to one person is a *tax* on the rest of us. So it is a tax. And those with more than ~ $50,000 AGI pay almost all of that tax.
So here's a more appropriate example:
Gov't gives homeowner a $1,000 tax credit to purchase a tankless heater. User installs it, and the payback period is 15 years. House burns down after 10 years, and the owner dies in the fire.
Was it cost effective? No. Did it save energy? Yes. Did it stimulate the economy? Yes. Was it worth $1,000 of taxpayer money? Probably. In any case, the money was not wasted.
I don't see how you can say it was worth $1,000 of the peoples money to save some small amount of energy? It must be a small savings if the payback is 15 years. What is your formula for $ in versus energy saved for you to say it was "worth it".
I'd look at it this way - Did that $1,000 save so much energy that it reduced demand so much that the cost of energy was pushed down by $1,000? That would be "worth it" economically. Now, you could factor environmental costs in there also, but that is exactly why I would favor a tax on carbon fuels - then the "true cost" (or at least a "truer" cost") would be built into the price of fuel, and these decisions could be made on economics alone. Simple.
Another view - if the consumer does not think it is worth it to spend/invest the $1,000 to save energy, then why should the govt (YOU and ME!) do it in his name? Makes no sense to me. If it did make sense, we would all go around giving our neighbors $1,000 to install energy saving stuff in their own homes. Why not?
BTW, my tankless water heater cost $1,700 installed, and with propane over $2.50/gallon, it has already paid for itself in the few years I've had it.
And this is why everyone should make these decisions for themselves, rather than the govt using a one-size-fits-all approach. In your case, you pay about 3X more per Therm for heating fuel than I do - the payback would be 3X faster. And I suspect that you are not using more hot water just because you can, but that is not true of all people. Another way to look at that, if we just want to save energy is, you had plenty of incentive to go tankless - so why should I give you a tax credit on top of it? We should (if we are giving tax credits) save them for the people who need the incentive to save energy.
I'l go back to the earlier post on the 95% furnace that gets a credit versus the 94.1% that does not. Nothing in there tells us who is saving more energy. Turning the thermostat down 1 degree would have a bigger difference than those eff numbers, it would cost nothing. But we don't provide an incentive for that. That is what a fuel tax would do.
It all comes back to my same argument with mpg and CAFE ratings on cars. Nothing about that tells me if the person is car-pooling, driving conservatively, reducing miles driven, etc. It just does not get to the heart of the problem. And yes, some people will drive more knowing that their car uses less gas, will leave the CFL on when they leave the room, will take longer showers with their tankless, will turn the heat up with their new eff furnace. So the savings is very, very questionable.
Hit 'em in the pocketbook, and it all becomes much clearer.
BTW, I appreciate all the challenges on this, I ended up looking again at water heater choices and found the Sears "shortie" for $10 less! It is the same eff as the standard height one of that model, same specs, but I wanted to get it up off the floor in case of any future basement flooding anyhow. It should be easier to get down there and install also. And I double checked the more eff models - I would have to spend $170 more to use 16 fewer Therms per year. Therms are ~ $1 for me, so over 10 year payback on simple terms. Longer if you consider opp cost of the $170, and the fact that all that heat is not wasted - it goes to heat my house 8 months of the year.
-ERD50
