Tuesday, May 06, 2008

What We Really Need Is A Bigger Gasoline Tax

Our presidential candidates have hit new lows calling for a federal gas tax holiday. What a real leader, a good old-fashioned statesman (statesperson today I guess) would call for would be increases in the gasoline tax. Here's why:

1. The federal budget deficit (and subsequent national debt) is rapidly getting out of control. Check out the counters on this page for details. We certainly do not need further tax cuts at this juncture.

2. The current fossil fuel based system may be destroying the environment and is certainly a strategic risk to U.S. security. We therefore need to cut down on fossil fuel use, not encourage it.

3. Investment in alternative fuels is relatively low (and hence slow) because of the uncertainty of future oil/gas prices.

The government could solve, or at least mitigate, all three problems by imposing an escalating gasoline tax and committing to it. A quarter a quarter would probably be sufficient to spur investors to back hydrogen and battery service stations, breaking the chicken-egg problem. (I want a car that runs on X but there are no places to buy X because nobody owns cars than run on X.) And a buck a year would probably not shock the economy too much. Reasonable people would realize that in a decade gasoline would be well north of $10/gallon and make their next vehicle purchase accordingly.

In the meantime, the feds would collect large sums that they could use to pay down
the national debt. We paid off our first national debt thanks to a similar combination of statesmanship and a powerful source of revenue (customs). But let's not learn from the past, let's just talk about people's pastors and flag pins.


DaveL said...

I stumbled on your web site. I am not sure that I agree with a higher gas tax. Politicians, being politicians would divert the funds to current consumption (i.e. "buying votes"). I do favor a concerted effort to address the national debt by diverting wastefull government spending. One of my suggestions: repeal Davis-Bacon.

Robert E. Wright said...

On Davis-Bacon, see LePatner, Jacobson, and Wright, Broken Buildings, Busted Budgets.

If politicians can and will steal tax increases then we are all screwed no matter what. We might as well give up right now.