7 ms·

Why would taxes be needed to internalize the increased risk to others? It seems to me that liability insurance is the appropriate place to factor those risks in

Why would taxes be needed to internalize the increased risk to others? It seems to me that liability insurance is the appropriate place to factor those risks in.

lotsofpulp 4y ago
Drastically higher minimums for liability insurance would be better, but politically unpopular for the same reason that higher taxes would be unpopular.
- throwaway0a5e 4y ago
  Higher liability minimums would be very regressive making support tepid among the demographics who usually want really high taxes.
  - letsgo39 4y ago
  - lliamander 4y ago
    The higher liabilitie minimums would be specifically for those who have larger vehicles. How is that regressive?
- harha 4y ago
  That’s the cool thing about insurance, it doesn’t have to be popular - you have a risk you’d like to cover, here’s what it costs you
  - maxerickson 4y ago
    How does liability insurance cover the risk of an uninsured under-insured driver hitting me? (I live in Michigan and continue to carry unlimited PIP FWIW)
    - lotsofpulp 4y ago
      I do not buy any PIP because I have health insurance with an out of pocket maximum. Although, I think states should require quite a bit of PIP as well so that non drivers are not subsidizing drivers.
      - maxerickson 4y ago
        Michigan's unlimited PIP is lifetime (so no out of pocket maximum to cover in year 2 of your catastrophe). There's rules about what is covered of course, but the financial side of it is a bit simpler. My premium for the year is less than 1 month of health insurance, it's pretty cheap.
  - fnordpiglet 4y ago
    Except they operate in a competitive and fairly transparent market, so it’s actually not like that at all. Insurance rates are very tuned for a variety of risk profiles to capture the specific risk segments the insurer wants to take on and they compete for price in that space. If you don’t like what it costs from A you might be able to find it cheaper with B, and B has incentive to do that.
  - tshaddox 4y ago
    But if it costs a lot, people would rather just take the risk and then be on the hook for way more money than they can pay. Which is why paying for insurance is legally mandated in some cases.
  - bombcar 4y ago
    The problem is we have that - and even the cost of obliterating however many pedestrians and cyclists divided over all drivers is mere pennies.
- stjohnswarts 4y ago
  Insurance rates should be set with actuarial data and not with political agendas. It's not insurance companies duties to set our action for societal purposes. You really do not want to give them any more power than they already have in our lives. See healthcare in the USA. That's why we have governments.
  - lotsofpulp 4y ago
    The government requiring people to purchase higher liability coverage does not mean the government is setting the prices for the liability insurance. Actuaries would still be doing the same job.
woodruffw 4y ago
Increased liability insurance, if mandatory, is effectively just a tax collected by an independent entity. At least on first blush, it makes sense (to me) to just cut out that middleman and levy it directly.
- briandear 4y ago
  It’s not a tax. It’s literally insurance for liability.
  - anonporridge 4y ago
    Sometimes, a tax can effectively be insurance for liability. Sin taxes, e.g. alcohol or tobacco tax, in part help pay for the social cost of those activities.
    - thrill 4y ago
      No, that's just how they're sold.
    - zibby8 4y ago
      As the name implies, sin taxes are taxes to discourage use. Tobacco smoking, for instance, likely saves tax payers money because: 1) Smokers pay more in taxes through tobacco purchases. 2) Smokers die way earlier, so there are less social security payments and fewer medical expenses.
  - woodruffw 4y ago
    We're talking about an incentive structure. Whether that's liability insurance or a direct tax, the goal is the same: to disincentivize unnecessarily dangerous road vehicles.
    - fnordpiglet 4y ago
      In a competitive market for insurance the goal is to optimize the actuarial outcomes such that you make a margin after losses are paid out on average. Making the tables optimal and margins small bring you volume of business. Taxes have no such incentive structure at all.
resoluteteeth 4y ago
Drivers are often not found liable for hitting pedestrians in the US even when it is clear that an error on the part of the driver caused the accident, so liability insurance is not actually capturing those externalities. However, laws automatically holding drivers liable by default for accidents with pedestrians unless there were clear extenuating circumstances, as some other countries, might be another way to change this situation so that this risk could be better captured by liability insurance.
- carlivar 4y ago
  I remember there was a talk at Defcon that hypothesized: if you want to murder someone and get away with it, hit them with your car.
- throwawaylinux 4y ago
  > Drivers are often not found liable for hitting pedestrians in the US even when it is clear that an error on the part of the driver caused the accident, so liability insurance is not actually capturing those externalities. Do you have a source for this? > However, laws automatically holding drivers liable by default for accidents with pedestrians unless there were clear extenuating circumstances, as some other countries, might be another way to change this situation so that this risk could be better captured by liability insurance. What countries have those laws, and how have they worked out? Why not just do something sane like treating it like any other civil case where people who cause damage to others are liable for it?
  - adgjlsfhk1 4y ago
    the problem with this is the same as the problem when police shoot people. when there's only one side left, justice tends not to occur.
    - bolt7469 4y ago
      justice tends not to occur I think you're being a little disingenuous. Most police are shooting people in self-defense (https://www.statista.com/statistics/585140/people-shot-to-death-by-us-police-by-weapon-carried-2016/ https://www.statista.com/statistics/585140/people-shot-to-de...). A minority of victims are actually innocent, and justice still does tend to occur in those specific situations. For instance, George Floyd's killer received a (presumably) just punishment.
makeitdouble 4y ago
Perhaps because this is just one of the external costs, and these costs are absorbed through taxes (for instance, road wear is higher for heavier vehicles, so lighter car effectively pay for the SUVs and trucks) There's many instances of direct subsidy going through SUV [0]. I don't remember the exact framing, but basically tariffs and other rules carve out a SUV shaped bubble for US makers to operate with extra low competition, and subsidies will often go there too when they don't want to make it explicit it's only for US makers. The recent EV plan would be one exception to this, where it's worded straight as a middle finger towards foreign makers. [0] https://abcnews.go.com/Technology/Hybrid/story?id=97505&page=1 https://abcnews.go.com/Technology/Hybrid/story?id=97505&page...
- deleted 4y ago
  [deleted]
- rootusrootus 4y ago
  > instance, road wear is higher for heavier vehicles, so lighter car effectively pay for the SUVs and trucks The correct answer in that case is to quit wasting time & effort creating taxes for personal vehicles, and just make commercial truckers pay it all. It spreads the cost of the roads around to everyone who benefits (even if you don't have a car, you benefit from the roads existing). And since the damage to roads scales to the fourth power of the axle weight, the difference between a car and SUV isn't too dramatic, compared to the difference between an SUV and a big rig.
  - tdehnel 4y ago
    Good reasoning. But take it one step further…who pays when shipping costs go up?
  - makeitdouble 4y ago
    > even if you don't have a car, you benefit from the roads existing That's the most interesting part to me. Trucks using the road is really important to our society, and if everyone benefits from it I'm not sure it makes much sense either to make commercial entities pay in full for it. The same way railroads where heavily subsidized and water ways are also usually state/government projects, road maintenance could be (and probably is up to a point?) handled at the same level. My ideal would be to get rid of SUV preferential policies so there is no need to counterbalance their use on other aspects. In a balanced setting, SUVs are rarely a rational choice (cf. the cars that get chosen everywhere else in the world).
bioemerl 4y ago
We legislate safety standards that require cars to get heavier to meet them. The best course of action would be to correct our standards to make lightness and damage to other vehicles part of the safety requirements as well.
- freedomben 4y ago
  Yep, classic fallacy of judging actions on intentions rather than results (i.e. ignoring unintended consequences). A. Cars get bigger because of safety standards. B. Bigger cars cause safety issues. C. Rather than unrolling A to adjust the original incentives, we stick a punishment (taxes) to offset some of the incentive we are placing in other areas

Why would taxes be needed to internalize the increased risk to others? It seems to me that liability insurance is the appropriate place to factor those risks in.

lotsofpulp 4y ago

Drastically higher minimums for liability insurance would be better, but politically unpopular for the same reason that higher taxes would be unpopular.

throwaway0a5e 4y ago
Higher liability minimums would be very regressive making support tepid among the demographics who usually want really high taxes.
- letsgo39 4y ago
- lliamander 4y ago
  The higher liabilitie minimums would be specifically for those who have larger vehicles. How is that regressive?
harha 4y ago
That’s the cool thing about insurance, it doesn’t have to be popular - you have a risk you’d like to cover, here’s what it costs you
- maxerickson 4y ago
  How does liability insurance cover the risk of an uninsured under-insured driver hitting me? (I live in Michigan and continue to carry unlimited PIP FWIW)
  - lotsofpulp 4y ago
    I do not buy any PIP because I have health insurance with an out of pocket maximum. Although, I think states should require quite a bit of PIP as well so that non drivers are not subsidizing drivers.
    - maxerickson 4y ago
      Michigan's unlimited PIP is lifetime (so no out of pocket maximum to cover in year 2 of your catastrophe). There's rules about what is covered of course, but the financial side of it is a bit simpler. My premium for the year is less than 1 month of health insurance, it's pretty cheap.
- fnordpiglet 4y ago
  Except they operate in a competitive and fairly transparent market, so it’s actually not like that at all. Insurance rates are very tuned for a variety of risk profiles to capture the specific risk segments the insurer wants to take on and they compete for price in that space. If you don’t like what it costs from A you might be able to find it cheaper with B, and B has incentive to do that.
- tshaddox 4y ago
  But if it costs a lot, people would rather just take the risk and then be on the hook for way more money than they can pay. Which is why paying for insurance is legally mandated in some cases.
- bombcar 4y ago
  The problem is we have that - and even the cost of obliterating however many pedestrians and cyclists divided over all drivers is mere pennies.
stjohnswarts 4y ago
Insurance rates should be set with actuarial data and not with political agendas. It's not insurance companies duties to set our action for societal purposes. You really do not want to give them any more power than they already have in our lives. See healthcare in the USA. That's why we have governments.
- lotsofpulp 4y ago
  The government requiring people to purchase higher liability coverage does not mean the government is setting the prices for the liability insurance. Actuaries would still be doing the same job.

woodruffw 4y ago

Increased liability insurance, if mandatory, is effectively just a tax collected by an independent entity. At least on first blush, it makes sense (to me) to just cut out that middleman and levy it directly.

briandear 4y ago
It’s not a tax. It’s literally insurance for liability.
- anonporridge 4y ago
  Sometimes, a tax can effectively be insurance for liability. Sin taxes, e.g. alcohol or tobacco tax, in part help pay for the social cost of those activities.
  - thrill 4y ago
    No, that's just how they're sold.
  - zibby8 4y ago
    As the name implies, sin taxes are taxes to discourage use. Tobacco smoking, for instance, likely saves tax payers money because: 1) Smokers pay more in taxes through tobacco purchases. 2) Smokers die way earlier, so there are less social security payments and fewer medical expenses.
- woodruffw 4y ago
  We're talking about an incentive structure. Whether that's liability insurance or a direct tax, the goal is the same: to disincentivize unnecessarily dangerous road vehicles.
  - fnordpiglet 4y ago
    In a competitive market for insurance the goal is to optimize the actuarial outcomes such that you make a margin after losses are paid out on average. Making the tables optimal and margins small bring you volume of business. Taxes have no such incentive structure at all.

resoluteteeth 4y ago

Drivers are often not found liable for hitting pedestrians in the US even when it is clear that an error on the part of the driver caused the accident, so liability insurance is not actually capturing those externalities. However, laws automatically holding drivers liable by default for accidents with pedestrians unless there were clear extenuating circumstances, as some other countries, might be another way to change this situation so that this risk could be better captured by liability insurance.

carlivar 4y ago
I remember there was a talk at Defcon that hypothesized: if you want to murder someone and get away with it, hit them with your car.
throwawaylinux 4y ago
> Drivers are often not found liable for hitting pedestrians in the US even when it is clear that an error on the part of the driver caused the accident, so liability insurance is not actually capturing those externalities. Do you have a source for this? > However, laws automatically holding drivers liable by default for accidents with pedestrians unless there were clear extenuating circumstances, as some other countries, might be another way to change this situation so that this risk could be better captured by liability insurance. What countries have those laws, and how have they worked out? Why not just do something sane like treating it like any other civil case where people who cause damage to others are liable for it?
- adgjlsfhk1 4y ago
  the problem with this is the same as the problem when police shoot people. when there's only one side left, justice tends not to occur.
  - bolt7469 4y ago
    justice tends not to occur I think you're being a little disingenuous. Most police are shooting people in self-defense (https://www.statista.com/statistics/585140/people-shot-to-death-by-us-police-by-weapon-carried-2016/ https://www.statista.com/statistics/585140/people-shot-to-de...). A minority of victims are actually innocent, and justice still does tend to occur in those specific situations. For instance, George Floyd's killer received a (presumably) just punishment.

makeitdouble 4y ago

Perhaps because this is just one of the external costs, and these costs are absorbed through taxes (for instance, road wear is higher for heavier vehicles, so lighter car effectively pay for the SUVs and trucks) There's many instances of direct subsidy going through SUV [0]. I don't remember the exact framing, but basically tariffs and other rules carve out a SUV shaped bubble for US makers to operate with extra low competition, and subsidies will often go there too when they don't want to make it explicit it's only for US makers. The recent EV plan would be one exception to this, where it's worded straight as a middle finger towards foreign makers. [0] https://abcnews.go.com/Technology/Hybrid/story?id=97505&page=1 https://abcnews.go.com/Technology/Hybrid/story?id=97505&page...

deleted 4y ago
[deleted]
rootusrootus 4y ago
> instance, road wear is higher for heavier vehicles, so lighter car effectively pay for the SUVs and trucks The correct answer in that case is to quit wasting time & effort creating taxes for personal vehicles, and just make commercial truckers pay it all. It spreads the cost of the roads around to everyone who benefits (even if you don't have a car, you benefit from the roads existing). And since the damage to roads scales to the fourth power of the axle weight, the difference between a car and SUV isn't too dramatic, compared to the difference between an SUV and a big rig.
- tdehnel 4y ago
  Good reasoning. But take it one step further…who pays when shipping costs go up?
- makeitdouble 4y ago
  > even if you don't have a car, you benefit from the roads existing That's the most interesting part to me. Trucks using the road is really important to our society, and if everyone benefits from it I'm not sure it makes much sense either to make commercial entities pay in full for it. The same way railroads where heavily subsidized and water ways are also usually state/government projects, road maintenance could be (and probably is up to a point?) handled at the same level. My ideal would be to get rid of SUV preferential policies so there is no need to counterbalance their use on other aspects. In a balanced setting, SUVs are rarely a rational choice (cf. the cars that get chosen everywhere else in the world).

bioemerl 4y ago

We legislate safety standards that require cars to get heavier to meet them. The best course of action would be to correct our standards to make lightness and damage to other vehicles part of the safety requirements as well.

freedomben 4y ago
Yep, classic fallacy of judging actions on intentions rather than results (i.e. ignoring unintended consequences). A. Cars get bigger because of safety standards. B. Bigger cars cause safety issues. C. Rather than unrolling A to adjust the original incentives, we stick a punishment (taxes) to offset some of the incentive we are placing in other areas