Raise the Gas Tax

[w¡n9Nµ7 §£@¥€r 123]

We should raise the tax on gasoline. Not quickly, but substantially. I would like to see Congress increase the gas tax by $1 per gallon, phased in gradually by 10 cents per year over the next decade. Campaign consultants aren't fond of this kind of proposal, but policy wonks keep pushing for it. Here's why:

The environment. The burning of gasoline emits several pollutants. These include carbon dioxide, a cause of global warming. Higher gasoline taxes, perhaps as part of a broader carbon tax, would be the most direct and least invasive policy to address environmental concerns.

Road congestion. Every time I am stuck in traffic, I wish my fellow motorists would drive less, perhaps by living closer to where they work or by taking public transport. A higher gas tax would give all of us the incentive to do just that, reducing congestion on streets and highways.

Regulatory relief. Congress has tried to reduce energy dependence with corporate average fuel economy standards. These CAFE rules are heavy-handed government regulations replete with unintended consequences: They are partly responsible for the growth of SUVs, because light trucks have laxer standards than cars. In addition, by making the car fleet more fuel-efficient, the regulations encourage people to drive more, offsetting some of the conservation benefits and exacerbating road congestion. A higher gas tax would accomplish everything CAFE standards do, but without the adverse side effects.

The budget. Everyone who has studied the numbers knows that the federal budget is on an unsustainable path. When baby-boomers retire and become eligible for Social Security and Medicare, either benefits for the elderly will have to be cut or taxes raised. The most likely political compromise will include some of each. A $1 per gallon hike in gas tax would bring in $100 billion a year in government revenue and make a dent in the looming fiscal gap.

Tax incidence. A basic principle of tax analysis--taught in most freshman economics courses--is that the burden of a tax is shared by consumer and producer. In this case, as a higher gas tax discouraged oil consumption, the price of oil would fall in world markets. As a result, the price of gas to consumers would rise by less than the increase in the tax. Some of the tax would in effect be paid by Saudi Arabia and Venezuela.

Economic growth. Public finance experts have long preached that consumption taxes are better than income taxes for long-run economic growth, because income taxes discourage saving and investment. Gas is a component of consumption. An increased reliance on gas taxes over income taxes would make the tax code more favorable to growth. It would also encourage firms to devote more R&D spending to the search for gasoline substitutes.

National security. Alan Greenspan called for higher gas taxes recently. "It's a national security issue," he said. It is hard to judge how much high oil consumption drives U.S. involvement in Middle Eastern politics. But Mr. Greenspan may well be right that the gas tax is an economic policy with positive spillovers to foreign affairs.

Is it conceivable that the policy wonks will ever win the battle with the campaign consultants? I think it is. Even after a $1 hike, the U.S. gas tax would still be less than half the level in, say, Great Britain, which last I checked is still a democracy. But don't expect those vying for office to come around until the American people recognize that while higher gas taxes are unattractive, the alternatives are even worse.

http://www.aei.org/publications/filter.all.../pub_detail.asp

[mawilson 2,133]

I don't mind. I'll drive even if the price of gas hits $10 / gallon.

[Hilarious Clinton 452]

I don't mind. I'll drive even if the price of gas hits $10 / gallon.

I agree.

[Trumplestiltskin 5,791]

I'd just be happy if they would actually use the money they do collect on gas and road tax went towards fixing the dreadful condition of the roads. Had to replace a headlight a few weeks back because the roads in NJ are so uneven and pot-holed that the vibration broke the filament.

[rebeccajo 14]

What?

The revenue from 'penalty' taxes never gets spent where its promised.

[boboroad 0]

I'd just be happy if they would actually use the money they do collect on gas and road tax went towards fixing the dreadful condition of the roads. Had to replace a headlight a few weeks back because the roads in NJ are so uneven and pot-holed that the vibration broke the filament.

I agree, Detroit has the worst roads I have ever been on. There is no accountability on these taxes.

[Trumplestiltskin 5,791]

What?

The revenue from 'penalty' taxes never gets spent where its promised.

Clearly. And what's worse is I went on the NJ turnpike the other day and after paying the toll fee had to steer a wide berth around a huge pothole. That's just insulting.

[Peikko 1,575]

Hasn't this idea been muted already?

The difficulty with all these things is that they affect people proportionate to their income, so, the rich drive and the poor do what?

It's also debateable if the extra revenue would indeed be used to do anything more than line the pockets of the oil producers.

Just to increase my hippy image amongst you lot, I cycle most of the time, although I do have a car. It's a great way to get around, even in the urban wasteland I live in

[peejay 327]

I'll weigh in on this.

The sooner America gets its head out of the sand and breaks its addiction to millions of barrels of oil a day...the better off we will be in the long run.

Peak oil has been reached both domestically and from foreign supplies. We import more than half of our oil already. Continuing to build massive sprawling suburbs and plans to double immigration to push our country to 400+ million in another 40 years for Wall Street is national suicide. The era of cheap and plentiful oil is drawing to a close. Nobody wants to admit it though. America keeps on the same track as if it will never change.

There is no viable substitute for oil on the horizon and continuing to build our sprawling cities as if cheap plentiful oil will last forever is insanity. There also isn't a realistic long term energy strategy from the leadership in this country. They all hope they are out of office when the sh!t hits the fan.

Anyone that has lived through the oil shocks of the 1970's knows how precarious our country is. It ain't pretty and you ain't seen nothing yet. It's not if...but when it will happen.

If it takes a tax to wake up the masses...so be it.

[Trumplestiltskin 5,791]

I cycle most of the time, although I do have a car. It's a great way to get around, even in the urban wasteland I live in

So would I, but I find NJ drivers to be infinitely scarier to those in CA. Undertaking (on single lane roads), tailing, speeding (specifically in built-up areas) and double-parking seems to be commonplace and apparently completely acceptable. Noone seems to obey road-signs either - the number of times I've had to wait while some idiot in front of me wants to turn left in front of a sign that explictly prohibits it....

Edited October 26, 2006 by erekose

[rebeccajo 14]

We have our home for sale and our specific intent when we buy another is to move into town where mass transit is available.

It only took 2 weeks in the UK to convince me that I don't HAVE to be a slave to my automobile if I just arrange my life differently.

Frankly, it's something I'm very much looking forward to.

[w¡n9Nµ7 §£@¥€r 123]

Noone seems to obey road-signs either - the number of times I've had to wait while some idiot in front of me wants to turn left in front of a sign that explictly prohibits it....

No worries, you'll get used to it

[Trumplestiltskin 5,791]

Noone seems to obey road-signs either - the number of times I've had to wait while some idiot in front of me wants to turn left in front of a sign that explictly prohibits it....

No worries, you'll get used to it

Doesn't make me want to ride a bike as much as go the other way... a tank.

[Peikko 1,575]

It's about time we had some dedicated bike routes on the European model. Cars and bikes don't mix

[dalegg 143]

Road congestion. Every time I am stuck in traffic, I wish my fellow motorists would drive less, perhaps by living closer to where they work or by taking public transport. A higher gas tax would give all of us the incentive to do just that, reducing congestion on streets and highways.

I think we just proved that isn't the case. Gas was $1 more per gallon just 3 months ago and it was more crowded than ever on the highways.

A gas tax for the economy's sake would be a good way to get more tax from illegals I guess, but it would mean low income and middle class people would be splitting a more even share of the tax burdon with upper income earners, so I don't see this one passing. If you could somehow make the wealthiest Americans pay the extra tax on the gas that the lower income earners use, then you might have a plan.