Well there you're getting back to the matter at hand, which isn't who pays the most in taxes but rather how do we provide people with incentives to green up.

I disagree with the give the manufacturers the tax credits... in fact the manufacturers do get a lot of R&D tax credits already. But the flaw in this is the SAME flaw that CREATED this whole problem to begin with... that being CAFE standards.

CAFE is a supply-side incentive in which manufacturers have to manage to get an average fuel economy when averaged across their entire fleet (although they separate cars & trucks). E.g. if I sell an economy car (which brings my average economy up), it gives me the right to sell a gas guzzler (which brings my average back down) so long as I can meet the CAFE standard (sort of like trading carbon credits).

The "problem" is that in our culture (prior to $4/gallon gas), everyone WANTS the gas guzzler and nobody actually WANTS the tiny little economy car. If economy cars were actually sold at a profit, nobody would buy that (at least not nearly enough). So to provide incentives to consumers, the auto-makers sell economy cars at a slight LOSS. This gets the few people who can't afford expensive cars to buy cars, drive up the fleet average, and gives the automakers the right to sell the enormously profitable cars.

So why's that a "problem"? Because now that gas IS $4/gallon, the auto-makers are completely screwed. The only thing that's profitable is the very thing that the masses no longer want. And what the masses DO want is sold at a loss. Another problem is that this system only provides enough incentive to 'meet' the CAFE standard, and no rewards for exceeding it.

This is your chicken-**** Washington politician who panders to voters by blaming everything on the manufacturers when frankly the "problem" is in Washington and the consumers who (and I don't care what anybody says) just didn't care about the environment, economy, or anything else... they just want their gas guzzlers.

If, on the other hand, the politicians had put CAFE standards on the consumer (basically what they do in Europe), people would naturally want the cars that are best for the environment. This works extremely well because one thing consumers want even more than gas guzzlers is to not get raped on their taxes. Now if I want to buy the unfriendly car, I'm gonna pay (and oh boy am I EVER gonna pay!). But the US system provides little to no incentive for anyone in the US to buy an efficient vehicle. Strange how almost nobody in Europe actually owns a gas-guzzler and yet European society hasn't actually collapsed from the inability to function without SUVs in every driveway. Hmm... who would have believed it was possible?

I could think of hundreds of ways (both positive and negative incentives -- and nothing to do with technology) to make it work.

For example... state license plate tags: imagine if, instead of charging for tags based on the value/purchase price of the car, it was based on EPA city fuel economy. It might work something like this:

Pick a stake-in-the-ground fuel economy and tag fee. Say 30 mpg city and $250/tags.

Now adjust the price upward by 15% for each 1 mpg short of the goal and compound it.

That would mean fees would look like this (30 seconds with a spreadsheet generated this):
Econ/Fee
30 $250.00
29 $287.50
28 $330.63
27 $380.22
26 $437.25
25 $502.84
24 $578.27
23 $665.00
22 $764.76
21 $879.47
20 $1,011.39
19 $1,163.10
18 $1,337.56
17 $1,538.20
16 $1,768.93
15 $2,034.27
14 $2,339.41
13 $2,690.32
12 $3,093.86
11 $3,557.94
10 $4,091.63

Hmm... a Cadillac Escalade and a Lincoln Navigator both get a fetching 12 mpg city. I wonder if that $3100 tag fee would get their attention?

You could go in the opposite direction and cut fees for each mpg over the goal too.

You could set a goal where every government fee or charge for any level of government (tags, parking, toll roads & bridges, sales tax, etc.) is completely free for any car that exceeds 40 mpg city. The vehicle could be irrelevant -- motorcycles, scooters, etc. also qualify for reduced/waived fees, taxes, & tolls.

I suspect this would have a huge impact on consumer buying decisions.

Alas, in order to pass such changes, state & local governments would have to vote it in and THAT would mean the masses with the vehicles that would fall into the penalty category (instead of those benefiting from the bonuses) would be so enormous that people would be out to hang them. So regardless of what's good for the country, the economy, or the planet, it'll never happen.... unless they sneak up on it (e.g. raise the fees by 1% per mpg in year 1, 2% in year 2, etc. and keep doing that until the new average fuel economy is reached.)

A consumer-driven system would change the buying mindset to the point where one of the first things buyers think about is fuel economy (of course $6/gallon gasoline would probably have a pretty big impact too). Manufacturers would be forced to respond... as a primary design goal of all vehicles would end up being fuel economy. If I'm brand 'A' and I can build a car that gets 5 mpg better economy than any model built by brands 'B', 'C', D', and 'E', then I'm pretty much guaranteed a very high product demand and some very nice growth in my stock value to shareholders.

Yeah I know... wall-of-text. Sorry about that. This is a passionate hot-button of mine that every credible scientist and economist agrees it's a problem and there's lots of nodding going on in Washington, and yet... no serious changes are being made to provide incentives (positive or negative) for anyone to change.