IRS Increases Standard Mileage Rate - Good Tax Policy?

The IRS released Announcement 2011-40 to let people know that starting July 1, 2011, the standard mileage rate for claiming such an expense will increase as follows:

• Business - 55.5 cents/mile (up from 51 cents)
• Medical and moving - 23.5 cents/mile (up from 19 cents)
• Charitable - remains at 14 cents/mile because provided for in the tax statute so IRS can't change it

Obviously, this is good in that gasoline prices are higher than at the start of the year when the rates were last adjusted. And, in measuring income, a business should be able to deduct its expenses of generating that income. ...

But, I just raise the point, of whether there should be any discussion about the goals our tax system is to support. There are economic and social goals - not have provisions that operate against business formation and expansion, and support people being able to have enough money to live (so not taxing all income). Should Congress and President Obama articulate any environmental goals, such as reducing carbon emissions? The US doesn't have a target for greenhouse gas emission reductions, although several states (such as California) do. Should the mileage rate be kept below cost to encourage reduced consumption? Of course, that would also mean that those who use actual costs rather than the mileage rate would also need to reduce their deduction.

Does the US have any environmental policy relevant here? President Obama wants to reduce some of the special deductions available to oil companies (Greenbook FY 2012, page 38, 39, 65, et seq). We have a variety of tax incentives for renewable energy. In 2008, legislation was passed requiring a carbon audit of the Internal Revenue Code (see my 11/26/08 post).

The principles of neutrality and simplicity would suggest no special deductions or modified deductions. That would need to be weighed against ensuring that economic, social and environmental goals are supported by government rules and actions. That is, not having policies that encourage renewable energy and ones that promote use of driving and buying gasoline.

Will such topics make their way into tax reform discussions?

And ... what about that carbon audit of the Internal Revenue Code? Apparently, the study was delayed because no funds were appropriated to do the study in the original enacting legislation. That was addressed in 2009 - see Grist article of 12/11/09. In September 2010, a $1.5 million contract was awarded to the National Academies of Science for the study. We'll wait and see - what a delay from 2008!