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Time for a gas tax

By DelbertPGH ·
A lot of people would say that the era of $4 gas is a stupid time to put a big new tax on fuel, but there are good reasons to do so. Very good reasons. About four times a year I find myself agreeing with something Charles Krauthammer (the editorialist) says; usually, he's just a conservative nutbag and a Republican shill. However, today he has an a column of huge good sense.

The U.S. currently sends about $400 billion a year to people like Khaddafi and Ahmadinejad and Chavez, money we don't actually have. The best way to choke down the money pipeline to these bandits is to keep the price of fuel high. We'll conserve, and we'll find alternative fuels that make economic sense, without government help or regulation. All it takes is a big, painful tax.

A huge tax on fuel would allow cuts on other taxes. It doesn't need to be kept; it can be injected back into the economy quickly.

Here's the editorial, from the Washington Post.

==============================
At $4, Everybody Gets Rational

By Charles Krauthammer
Friday, June 6, 2008; Page A19

So now we know: The price point is $4.

At $3 a gallon, Americans just grin and bear it, suck it up and, while complaining profusely, keep driving like crazy. At $4, it is a world transformed. Americans become rational creatures. Mass transit ridership is at a 50-year high. Driving is down 4 percent. (Any U.S. decline is something close to a miracle.) Hybrids and compacts are flying off the lots. SUV sales are in free fall.

The wholesale flight from gas guzzlers is stunning in its swiftness, but utterly predictable. Everything has a price point. Remember that "love affair" with SUVs? Love, it seems, has its price too.

America's sudden change in car-buying habits makes suitable mockery of that absurd debate Congress put on last December on fuel efficiency standards. At stake was precisely what miles-per-gallon average would every car company's fleet have to meet by precisely what date.

It was one out-of-a-hat number (35 mpg) compounded by another (by 2020). It involved, as always, dozens of regulations, loopholes and throws at a dartboard. And we already knew from past history what the fleet average number does. When oil is cheap and everybody wants a gas guzzler, fuel efficiency standards force manufacturers to make cars that nobody wants to buy. When gas prices go through the roof, this agent of inefficiency becomes an utter redundancy.


At $4 a gallon, the fleet composition is changing spontaneously and overnight, not over the 13 years mandated by Congress. (Even Stalin had the modesty to restrict himself to five-year plans.) Just Tuesday, GM announced that it would shutter four SUV and truck plants, add a third shift to its compact and midsize sedan plants in Ohio and Michigan, and green-light for 2010 the Chevy Volt, an electric hybrid.

Some things, like renal physiology, are difficult. Some things, like Arab-Israeli peace, are impossible. And some things are preternaturally simple. You want more fuel-efficient cars? Don't regulate. Don't mandate. Don't scold. Don't appeal to the better angels of our nature. Do one thing: Hike the cost of gas until you find the price point.

Unfortunately, instead of hiking the price ourselves by means of a gasoline tax that could be instantly refunded to the American people in the form of lower payroll taxes, we let the Saudis, Venezuelans, Russians and Iranians do the taxing for us -- and pocket the money that the tax would have recycled back to the American worker.

This is insanity. For 25 years and with utter futility (starting with "The Oil-Bust Panic," the New Republic, February 1983), I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home. On this page in May 2004 (and again in November 2005), I called for "the government -- through a tax -- to establish a new floor for gasoline," by fully taxing any drop in price below a certain benchmark. The point was to suppress demand and to keep the savings (from any subsequent world price drop) at home in the U.S. Treasury rather than going abroad. At the time, oil was $41 a barrel. It is now $123.

But instead of doing the obvious -- tax the damn thing -- we go through spasms of destructive alternatives, such as efficiency standards, ethanol mandates and now a crazy carbon cap-and-trade system the Senate is debating this week. These are infinitely complex mandates for inefficiency and invitations to corruption. But they have a singular virtue: They hide the cost to the American consumer.

Want to wean us off oil? Be open and honest. The British are paying $8 a gallon for petrol. Goldman Sachs is predicting we will be paying $6 by next year. Why have the extra $2 (above the current $4) go abroad? Have it go to the U.S. Treasury as a gasoline tax and be recycled back into lower payroll taxes.

Announce a schedule of gas tax hikes of 50 cents every six months for the next two years. And put a tax floor under $4 gasoline, so that as high gas prices transform the U.S. auto fleet, change driving habits and thus hugely reduce U.S. demand -- and bring down world crude oil prices -- the American consumer and the American economy reap all of the benefit.

Herewith concludes my annual exercise in futility. By the time I write next year's edition, you'll be paying for gas in bullion.

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Do you really believe

by w2ktechman In reply to Time for a gas tax

that if Gas was taxed to reduce taxes elsewhere, that those taxes WOULD be reduced???

Once a new tax is in place (even temporary ones), they seem to stay forever.

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Tollways (may as well call them Taxes on the Go)

by NotSoChiGuy In reply to Do you really believe

The Tollways in Illinois were supposed to be a temporary way to pay off some construction costs.

We now have the state leasing out management of some of the tollways for $1 billion+.

The people who use the tollways are more temporary than the tollways themselves will ever be!

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tollways are good

by Dr Dij In reply to Tollways (may as well cal ...

they reduce the amount of driving and get the people who actually use the road to pay for it.

As for the 'paid for construction costs', upkeep is never free, neither is policing and highway patrol. And states and cities almost never keep up infrastructure, instead they stave off critical maintenance (witness bridge breaking in Minnesota, and the nations water supply framework which was designed to last 50 years and now averages 60+)

Tollways help prevent the universal subsidy of roads, which screws up the market system in this country for transporation, and is the reason that passenger trains in the US are at a very low level.

It is also much more efficient and less costly to transport containers by rail than by truck. Roads have reduced this and increased our costs of goods and distribution.

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I don't necessarily disagree...

by NotSoChiGuy In reply to tollways are good

....just don't sell it as a temporary solution in order to pander votes for it.

That, and actually maintain the roads (I can understand winter potholes existing for a couple of weeks after the season...but it is cracking 90, and there are still some holes the size of basketballs on the tollways...while the 'crews' are sitting along the road, laughing it up).

I wish I could lose all semblance of dignity, integrity and honesty...these political scams seem like they would be fun to get in on from time to time.

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Isnt that

by wayoutinva In reply to tollways are good

what the federal & state gas tax is for..so being double & triple taxed for the same thing bothers you not huh

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Toll roads and pay toilets: despise them both

by DelbertPGH In reply to Tollways (may as well cal ...

I can't see any redeeming features.

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Depends...

by JamesRL In reply to Do you really believe

Since we balanced our federal budget and kept it balanced, some taxes have been reduced. GST (Goods and services Tax - federal) went from 7% to 6 and now its 5%. Federal Income taxes and some provincial were lowered as well. Propery taxes at least for me, have not dropped at all.


But until you balance the budget, I agree, you won't have significant tax cuts.

James

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We balanced the federal budget???

by CharlieSpencer In reply to Depends...

"Since we balanced our federal budget and kept it balanced,"

When did we do that? The entire Iraq war is funded through special legislation and is not included in the budget. We're spending billions daily outside the budget on other things too. Any claims the budget is balanced ignores all the debt-generating spending that goes on outside the budget.

Besides, even if the budget is balanced, there's still a couple of decades of national debt to pay off, to the tune of a few trillion dollars.

To get back on topic, jack up the gas tax permanently and require it be spent only on transportation infrastructure - roads, bridges, rail, mass transit, etc.

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You are forgetting

by jdclyde In reply to We balanced the federal b ...

he is a Canuk, so isn't talking about the US budget.

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Well, I look like an idiot.

by CharlieSpencer In reply to You are forgetting

Never mind.

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