Views on raising gasoline taxes

So Thomas Friedman, like most on the left, wants higher taxes on gasoline (1/2, Opinion, “Obama must take gas-tax plunge”). Even though he doesn’t believe President-elect Obama will do it, he advocates higher fuel taxes to drive the “benefits” of a system that “permanently changes consumer demand, which would permanently change what Detroit makes,” and on and on.

However, this stance is the basis of socialism, and this is not a socialist state (not yet, anyway). The United States is a capitalistic society based on laws and one in which the consumer drives demand, not the government.

It should be the reverse: The CAFE standards should be removed so Detroit can make the cars and trucks that people want to drive. Then they could sell the hybrids to Europe or South America.

We pay enough in taxes. Recession or not, higher fuel taxes will hurt our economy.

Dyrk Dugan
Overland Park

Recent Opinion articles have stated that gasoline and diesel should be taxed more because we need more income for road repair and people have been going back to pickups and SUVs since the price of gas went down. One article said a gas tax would force the use of small cars.

Be careful what you wish for. It may come true. Higher gas prices really hit the economy badly. We are in a major recession, and people who want to raise taxes don’t understand the situation.

Lastly, higher gas prices cause ripple effects such as higher food prices and higher airline tickets.

Al Lilly
Lenexa

First Bill Klinkenberg (12/30, Letters) and now The Star’s own Yael T. Abouhalkah (1/1, Opinion, “Blog bit”) advocate raising gasoline taxes. Excellent idea.

As a wise man once said, “Tax the poor. It gives them incentive.”

Rex Hargis
Shawnee

Comments

[Sammy]

"Think: buffalo during the Wild Wild West. Even if you KNOW it'll run out, you can't get that factored into present price, if for no other reason than uncertainty. Think: rhino horn."

Actually the buffalo and rhino horn are good examples of the tradgedy of the commons. Pricing in those markets work better when the commons are owned.

[Sammy]

"We've already seen the death of the notion that the market solves every problem if left alone."

Really? How so? Seems like the market is solving that problem, if we let it.

[Casady]

That's essentially what I was saying NMMNG when I referred to our demand reduction in gas being a mere drop in the bucket when compared to global demand for oil. It's still a step in the right direction though.

[Pub 17]

HERE'S the crux of the problem.

Old enough to have teenagers or older kids? Should sound familiar then: give them two hundred bucks a month to help out when they get their first apartment, and within thirty days they've put that into their regular mental budget and now don't recognize it as a bonus anymore. They need more money to help them get ahead. Economic term is "discounting."
That's the problem with taxes. Like all humans legislators immediately fully discount an increase in taxes across the system. That doesn't mean they mark anything off; it just means the new money becomes part of the "regular" system almost immediately, and now we need more. Nothing evil, nothing worse than turning up loud music because after a few minutes it sounds normal and you want it to sound loud.

IF AND ONLY IF you can write the enabling legislation so that it's pegged to--something--and doesn't get fully discounted into the system, raising gas tax is a good idea. Because the Obama administration may actually do the right thing instead of adhering to ideology, this is a window of opportunity that'll close quickly enough. I live in hope.

[NoMoreMrNiceGuy]

One more thing to consider. Gasoline is not the only product that is consumed. Why consumers fail to relaize many other products we consume are petro based.
An increase in taxes will show no change in the situation, simply more government spending.

[Casady]

But you also bring up another good point Pub. Oil is at $50 bbl right now and for as much as I am against an additional tax on oil, the market could probably absorb it. But what happens in the next year or two when the global economy will likely pick up speed and we see oil once again hovering around $100 bbl and pump prices around $4? Let's face it, reductions in global economic growth were more of a driving force in reducing oil prices than our measely 800K bbl/day reduction in demand. And make no mistake. We will see global economic growth pick up in the next year or two and oil prices will go up right along with it. The only differece is we will then have an excessive consumption tax on top of our $4 gas which will only serve to hinder our own growth.

[Casady]

Well, that is not entirely true Pub. The dollar strengthen a little bit as well. Actually, the Euro weakened so look at it any way you want but that was a factor as well. But I do agree that price elasticity that we have seen with oil in the last 12 months is unprecendented.

[Pub 17]

Casady-
Whatever the reduction in demand was, it more than halved price at the pump. I'll take it! I'll take it!

[Pub 17]

Marctnts-
Don't need to specify conditions. Those are fully general remarks. The market is the best thing on the planet for allocating short-run, but, like weather prediction, gets pretty fuzzy about allocating future costs to the present price. Think: buffalo during the Wild Wild West. Even if you KNOW it'll run out, you can't get that factored into present price, if for no other reason than uncertainty. Think: rhino horn.

So you do it simply by raising taxes, not to fully allocate future costs, which you can't do without perfect foreknowledge, but against the price elasticity of demand. Cut demand by raising prices, bring forth 50mpg cars without expensive subsidy programs, AND BE READY TO CHANGE THE TAX IF CONDITIONS CHANGE. Like if you find that emissions are more damaging than previously thought, or if CO2 actually turns out to be a benefit.

Keep it simple. We've already seen the death of the notion that the market solves every problem if left alone.

[Casady]

I'll side with Marc on this but perhaps for a different reason. Reviewing demand levels over the last year, a pretty hefty consumption tax would have to be levied before it would have any sort of impact on demand. $140 (i.e. $4) oil reduced demand by approximately 3% - 5%. While I find any reduction in demand to be encouraging, we would need to decrease demand much more than 3% to 5% to have a long term impact on oil reserves. The likelyhood of passing any bill that would levy the sort of tax necessary to reduce demand by acceptable levels would be slim to none.

[Marctnts]

Pub,

Nice try, but you appear to have purposely ignored my post. I never questioned whether or not there were market conditions that might require government intervention (although I'd bet you have a bigger list of acceptable times than I), what I question is the use of taxation to accomplish these goals. AGAIN, if you read my post, the question is the acceptable purposes of taxation.

You could accomplish the same conservation goals by legislative limits on consumption, mandatory rationing, etc. Of course, the government coffers wouldn't be fattened by such means, and maybe that's what a lot of this is about after all.

[Gary]

The Hammer recently suggested a revenue neutral gas tax. It is revenue neutral because it is offset by a drop in the payroll tax. Here's a link:

http://weeklystandard.com/Content/Public/Articles/000/000/015/949rsrgi.asp

[mianotkia]

Drill here, drill now, and forget the tax of the fuel of freedom!

Solar and wind are years away, let's take advantage of our own resources and stop importing the majority of our oil.

[Pub 17]

Could somebody please tell Dyrk Dugan that a) socialism involves governmental ownership of the means of production and b) is not an all-purpose word that means "anything I disagree with"?

Marctnts, for the eleventh time, the market does not and can not fully discount future costs into present market price. Fossil fuels are a dead end, either because we run out or because burning them forks up the planet, and, as one of the resident loons points out correctly, they have significant alternative uses besides fuel and should be conserved. The ONLY way you can do that is raise the price via taxation. The ONLY thing wrong with this is that we might find that there are both unlimited quantities of fossil fuels hidden from view at present AND that burning them doesn't have any effect on the global environment, so that we've distorted the market in the wrong directin. Not bloody likely.

[solomon]

Rex Hargis,
Anybody who thinks Chest Notgerman is wise is an idiot.

[Marctnts]

Casady,

I thought the same thing. Must be a "it's either me of them" kind of guy.

The argument, in my mind, is the proper purpose of taxation. On one side, taxation is the necessary support for government to provide the services required by society (police, fire, infrastructure, governance, etc.). On the other side, taxation becomes a tool for social behavioral modification where direct legislation towards that goal is illegal or unnacceptable.

Your opinion of a fuel "sin tax" is most likely shaped by your opinion of this basic issue.

[Casady]

"So Thomas Friedman, like most on the left...." Huh? Sounds like someone doesn't read a whole lot of Thomas Friedman. I suppose Mr. Dugan considers David Brooks and Charles Krauthammer left wing journalists as well and pseudo wannabes like Sean Hannity are Centrists.

[Sherry]

I think it would be a huge slap in the face of the American consumer to penalize them for conserving which is what a higher gas tax now would equate to. This past year the high cost of fuel has seriously damaged our economy and society. What we really need to do is get off oil and utilize other available sources of energy. It would cost the equivalent of 60 cents a gallon to charge and drive an electric car. The electricity to charge the car could come from solar or wind generated electricity. If all gasoline cars, trucks, and SUV'S instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. Why don't we use some of the billions in bail out money to bail us out of our dependence on foreign oil? This past year the high cost of fuel so seriously damaged our economy and society that the ripple effects will be felt for years to come. Why not invest in setting up some alternative energy projects on a national basis, create clean cheap electricity, create millions of badly needed new green collar jobs, and get out from under our dependence on foreign oil. What a win -win situation that would be. There is a great new book out I just read called The Manhattan Project of 2009 Energy Independence NOW by Jeff Wilson. I highly recommend this book for anyone interested in alternative energy. www.themanhattanprojectof2009.com Oil is finite, it will run out one day in the not too distant future. We need to be preparing for that day now.

[stone]

would you trade a gas tax for a federal income tax reduction to offset it? Then it basically becomes a consumption tax

[Michael]

I agree that raising the gas tax would be a very bad idea, especially after we were paying $4 a gallon or more just this past summer.

I wouldn't be surprised though if those knuckleheads in Washington who don't even pump their own gas do pass a new gas tax. Most of them have their pulse so far from the people of America that its hurting our country.