Saturday, September 5, 2009

Engineering and the Beatles

Engineering likes the Taxman (and the Beatles). We need to help governments find new ways of raising and supporting taxes. Engineers need to review the lyrics of the Beatles' Taxman:

If you drive a car, I'll tax the street
If you try to sit, I'll tax your seat
If you get to cold, I"ll tax your heat
If you take a walk, I'll tax your feet

Civil engineering is intimately linked to the viability of the Highway Trust Fund. The fund was founded by the 1956 Highway Revenue Act. The Highway Trust Fund is unique in that it is funded by the users, namely those who travel on the highways. It is modeled on the Social Security Trust Fund, where money goes to the general treasury but is credited to the fund. In September 2008 the fund was depleted of funds and required a transfer of $8 billion from general revenue funds, by act of Congress. Currently the fund in projected to run out in 2009. As addressed by the GAO, "The highway Trust Fund balance is gradually being depleted because estimated outlays of the Highway Account exceed estimated revenues . . ." The Trust Fund faces forces and disruptive technologies on both sides of the revenue and expense equation. Our aging highway infrastructure assets and new mobility requirements place upward pressures on the expense side. Conservation and a severe global recession has placed downward pressure on the revenue side.

Potentially more disruptive to the current highway funding tax mechanism is changing technology. You have very smart people, like ex-Intel Andrew Grove, arguing that oil and cars are heading for a divorce. Grove regards electricity as the most promising replacement fuel, and thinks battery technology has the potential to produce an Intel-like company as the industry develops. Disruptive technologies that impact the Trust Fund will need engineers that can develop and support new strategies for the Taxman.

Our recent bust in tax revenues has impacted large groups of engineers. In particular is the real estate bubble - both Britain and the United States raise a higher proportion of their revenues from taxes on property than other countries. We are also facing a global economy in which it is easier to tax the static versus the mobile. Economist have noted that "revenue windfalls during asset-price boom periods are often misread as durable improvements in the underlying budget position." We have been highly dependent on the financial industry for tax revenue. In the good years, bumper bank profits inflated both corporation tax receipts and the income tax take from bonuses. The credit crunch has slashed the revenue from both. An unhappy Taxman makes for unhappy engineers.

Justice Oliver Wendell Holmes made the comment, "I like paying taxes. With them I buy civilization." And what civilization buys - we design and build. The road and highways. The public library. The tank and jet fighter. The new public high school. We like the Taxman - he needs our input, support, and wisdom.

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