Taking on the Gas Tax
The Gazette newspaper chain in Maryland published an op-ed I wrote today advocating an increase in the state's gas tax: http://www.gazette.net/stories/092807/policol43706_32364.shtml.
The gas tax represents an interesting middle class issue, especially for progressives. On one hand, critics of this type of "Pigovian" tax emphasize its regressive nature and prefer forms of taxation that put more of a burden on the wealthy. On the other, middle class families -- and everyone else -- would benefit from a policy that forces consumers to incorporate all costs of a product's use into their purchasing decisions. And certainly gasoline has lots of costs when it comes to our environment and national security.
What do you think? Can we just offset the regressive nature of the tax through other tax policy, or is that too problematic in today's political climate?













Comments (5)
First, today's political climate -- or any day's political climate -- is not a fact of nature. It's created by political action and discussion. Speculation about political viability should play no part in discussion of policy proposals. If the policy promises social benefits it will change the political climate -- not the other way around.
So as to the tax itself: I think the principle is sound, but what the Gazette is pushing has two problems. First, it is statewide when it should be national. Otherwise you get issues with crossing state borders to buy gas and political pressure based on comparisons with other states' rates. Second, the tax they advocate is way too low to have much effect on either consumption or income.
An effective gas tax plan would show a lot more gumption. It would bring US gas taxes closer to the European level and enable significant new revenues for non-fossil energy research and subsidies.
Here's a bolder idea: a one dollar/gallon tax nationwide. The revenue is used for two purposes: a rebate for every adult American, plus funding for alternative energy, public transportation, and related moves toward energy independence and environmental sustainability.
For example, where I live, a dollar tax would bring the cost of a gallon of gas to about $4. A vehicle that uses 20 gallons/month would now pay about $80/month. A vehicle that uses 50 gal/month would now pay $200. And so forth. Those who have no vehicle would pay nothing directly, as usual.
Out of the tax revenue, each individual would receive a tax rebate or check (at their option) of $30/month. Now the 20 gal/month person is paying $50/month, or about $2.50/gallon. If two people are using the vehicle and use their rebates for fuel they end up paying $20/month. The 50 gallon/month vehicle pays $170/month for gas, or about $3.40/gallon, or less if there are more people contributing their rebates. Those who use public transportation or other means come out ahead, except for price increases of public transit, cabs, etc, which are more than covered by the rebate.
Unlike some timid 10-cent tax increase, a dollar/gallon tax would actually move us toward the goals we claim to desperately want to reach: incentives to drive less in more efficient vehicles; incentives for car companies to cater to a much more fuel-cost-conscious consumer; dedicated funding sources for research and development on technologies that promise energy independence and all the global economic/political improvement that goes with it.
Global climate change and peak oil are realities. We will either deal with them through mildly painful measures like the gas tax/rebate or we will wait until catastrophe strikes and brings far more radical change that threatens the very existence of our societies, especially in the "developed" countries. Right now the threat is also an opportunity to initiate changes that offer long-term economic and social progress. The choice is refreshingly simple: relentless pain or peace and progress. We don't have much more time to decide which we want to work for.
September 28, 2007 12:27 PM | Reply | Permalink
My own preferrence would be one that really does put the onus on purchasing decisions-- future decisions that is. Rather than a gas tax, why not a gas guzzler tax (steeply graduated) on any vehicle that does not meet some target of high gas mileage? And a subsidy for vehicles which exceed the target. That would help people buy fuel efficient vheicles and discourage the purchase of SUVs and other wasteful cars and trucks.
September 28, 2007 2:31 PM | Reply | Permalink
I've been wondering for years now, why it's always the smokers that must pay for things the State of Federal government want. Why not the drinkers of America. They are sinners too.
They call a tax like this a Sin tax.
Gas prices have already more than doubled since Bush took office in 2000 - raising the price even more is going the extreme.
Read my article on How High Will Gas Taxes Go here: Coonsey's View: http://www.freewebs.com/coonsey/
Coonsey's View
HTTP://WWW.FREEWEBS.COM/COONSEY/
September 29, 2007 6:40 AM | Reply | Permalink
I think it'd be far better to withdraw our military forces from the Middle East and let the Saudi, Kuwaiti and Qatari "royals" fend for themselves. Let them finance their own military defenses and their own internal security forces to maintain their tenuous grip on power, and let the market price of oil reflect the true cost of that.
September 29, 2007 12:27 PM | Reply | Permalink
I predict that people will pretty much quit driving when gas hits 575 dollars a quart...
they'll be too busy shooting each other long
before that....
September 29, 2007 11:50 PM | Reply | Permalink