Tag Archives: gas tax

The Net-Zero Gas Tax

I have been pushing it for years, and I am glad a bipartisan consensus is now emerging around it: we need a net-zero gas tax.

Charles Krauthammer writes:

What to do? Something radically new. A net-zero gas tax. Not a freestanding gas tax but a swap that couples the tax with an equal payroll tax reduction. A two-part solution that yields the government no net increase in revenue and, more importantly–that is
why this proposal is different from others–immediately renders the average gasoline consumer financially whole.

Here is how it works. The simultaneous enactment of two measures: A $1 increase in the federal gasoline tax–together with an immediate $14 a week reduction of the FICA tax. Indeed, that reduction in payroll tax should go into effect the preceding week, so that the upside of the swap (the cash from the payroll tax rebate) is in hand even before the downside (the tax) kicks in.

The math is simple. The average American buys roughly 14 gallons of gasoline a week. The $1 gas tax takes $14 out of his pocket. The reduction in payroll tax puts it right back. The average driver comes out even, and the government makes nothing on the transaction. (There are, of course, more drivers than workers–203 million vs. 163 million. The 10 million unemployed would receive the extra $14 in their unemployment insurance checks. And the elderly who drive–there are 30 million licensed drivers over 65–would receive it with their Social Security payments.)

My proposal, by contrast, was a $3.00/gal gas tax, equiavelnt to a rebate of $42 every period. The specific mechanics of the net-zero gas, whether rebated through the payroll tax or as monthly checks, do not matter much. What matters is that it helps our friends and hurts our enemies:

We underestimate our power. Of course, the slump in China and other rapidly growing economies has contributed to the current extreme price collapse. But China consumes only 9 percent of the world’s oil. The United States consumes 24 percent. On the other hand, Saudi Arabia produces 13 percent of the world’s oil. We don’t generally see ourselves as the Saudi Arabia of oil consumers, but we are. The Saudis have the most effect on the world price because they are the swing producer. We are, in effect, the swing consumer. And since oil peaked earlier this year, we are consuming less. October was yet another month of record year-on-year decline of gasoline consumption in the United States. And that’s just the immediate effect, before the long-term impact of changes in our automobile fleet can take hold. And that long-term change will only occur if we keep the domestic price high.

Let’s hope Barack Obama introduces this geogreen net-zero gas tax, along with a geogreen economic stimulus!

No More Saudi Arabia of Oil Consumption?

America is the United States of oil consumption. Just as oil revenues my legitimate governments in much of the gap of the global economy end up supporting terrorism, oil expenditures by the United States has the effect of powering the Taliban, fueling Putin’s armies, and financing Chavez’s destabilizing schemes in Venezuela.

One way to create a better future is a gas tax.

Hybrid Cars: Gas tax gaining momentum, or at least air
A gas tax is an idea that has been floated around this blog many times over the last few years. My gas tax – really an oil tax – was always a way to help fund credits for more fuel efficient vehicles. Likewise, the tax helps drive investment in non-oil fuels and technologies, while also changing consumer behavior.

Lately, the drumbeat behind a new gas tax has been increasing. MotorTrend, the LATimes, and the New York Times, for instance, have each covered the idea in the last few days.

There are other ways of weakening oil producers and the wars, terrorists, and schemes they fund. We can plusing-up the Strategic Petroleum Reserve by simultaneously buying oil and moving to a flex-fuel fleet. We can create tax-breaks for hybrid cars and looking at biojetfuel.

President Bush should be praised for the advances in alternate fuel technologies that took place on his watch. Let’s hope Barack Obama will be even better for breaking the power of oil!

Obama’s tax and spend energy policy… is not that bad

Amateur Economist calls it “ignorance, arrogance, and socialism.” Crush Liberalism is profane. The heritage foundation is simply sarcastic. But is Obama’s plan to tax oil companies to provide a second round of “rebate” checks reasonable?

Think back to April 2005: oil was approximately $50/barrel, and I suggested a tax to raise the average price of gas to $5/gallon. Along with this I wanted to rebate the proceeds to the population on a per capita basis, so those that used less gas would actually profit from the gas tax.

The world ignored me, gas prices shot up to more than $4/gallon anyway. This has similar “demand destruction” consequences as my plan, but instead of Americans receiving monthly rebate checks, people who happen to have oil to sell (including the oil companies, but mainly including thugs such as Vladimir Putin, Hugo Chavez, King Abdullah, and so on).

Obama’s plan works like an attemp to half-implement my plan, doing nothing to prevent the massive transfer of wealth from the Core to natural resource providers, while rolling back the relatively negligible transfer of wealth from consumers to oil companies. Obama’s plan does not address the real issues. But that does not mean it is terrible.

The record oil company profits exist because the government failed to implement my plan earlier. Consumers feel squeeze because the government failed to implement my plan. Both Obama and McCain invision making things a little better, but ultimately Obama’s tax-and-spend approach is marginally superior to McCain’s gas-tax-holiday, merely because Obama’s plan continues to keep the price at the pump high and rewards Americans for not using gasoline.

Barack Obama Wrong on the Gas Tax… but in what way?

I’ve already criticized John McCain’s gas tax proposal. But I no longer understand why Barack Obama disagress with McCain.

I overheard Obama on the radio yesterday saying that the increase in fuel prices came “too fast,” and caused a lot of pain. This is a sensible position. I support gas at $5 per gallon — and I hope Barack Obama does too — though the pain of a sudden increase in cost without good warning puts a lot of people in a bad position.

But then why doesn’t Barack Obama support a gas tax holiday, to ease America into higher gas prices? Team Obama seems to be putting out the meme that 100% of the gas tax is absorbed by the gas companies. But if this is true, many (including Barack Obama supporters and myself) were wrong to criticize McCain’s gas tax holiday as sending the wrong signals, because gas taxes don’t raise the the cost of gas! Alternatively, perhaps Team Obama is wrong and some fraction of the gas tax is passed onto consumers, which case (accordingg to Obama’s logic) there should still be a gas tax holiday, but some other tax the gas companies pay should be raised to make sure the benefits go to consumers.

  • Is Barack Obama wrong that the rise in prices came to fast?
  • Or, is Barack Obama wrong to oppose a gas tax holiday?
  • Or, are Barack Obama’s supporters wrong to criticize McCain’s gas tax holiday as sending the wrong message to consumers?

Which is it? In which way is Team Obama wrong on the gas tax?

John McCain Wrong on the Gas Tax

John McCain is my guy, in spite of his imperfections. I’ve described his weaknesses in science and health care before. Here’s another one: John McCain wants to lower the gas tax (hat-tip to TPMCafe).

McCain urged Congress to institute a “gas-tax holiday” by suspending the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day. He also renewed his call for the United States to stop adding to the Strategic Petroleum Reserve and thus lessen to some extent the worldwide demand for oil.

At the very point when the market is sending signals to consumers to buy more fuel efficient vehicles and the United States Treasury is increasing its borrowing to fund McCain’s War surge, McCain want to make gas cheaper so people will keep buying SUV’s and cut income to the Treasury so we will have to borrow more from the Chinese government. Back in February during a Republican Debate, McCain said he was going to cut wasteful spending so much that we would no longer have to borrow from the Chinese. He’s a magician!

Instead, we should raise the gas tax. As I mentioned in one of my first post, $5/gallon is a reasonable place to start the discussion.

Disagreeing with South Dakota Politics

I like South Dakota Politics, a lot, but after checking the blog on my reader I find two posts to especially disagree with.

  1. SDP criticizes liberals for backing higher gas prices

    But as I wrote:

    It makes no sense to import vast amounts of oil from unstable petrokleptocracies. Oil revenues allow corrupt elites to avoid real reform and buy-off (often dangerous) special interests. It diverts capital from New Core growth economies to these backwords pits. It helps funds Islamic terrorism. It exposes us to another oil shock.

    and also…

  2. SDP says that Congress is less popular than the President

    But as I wrote:

    The reason: the American people are opposed to Congress as an institution, but are not so opposed to the President. Political science research (see, for instance, Congress as Public Enemy or Stealth Democracy) shows that Americans are opposed to the idea of a body that is dedicated to political compromise making decisions for us. We would rather our government be in the hands of experts, or people who are able to ignore politics and get things done.

Increase gas prices. Ignore Congress’s job approval.

Bush’s Anti-Geogreen Gas Tax

“Dumb as We Wanna Be,” by Thomas Friedman, New York Times, 20 September 2006, A27.

I’ve written before on the need for a geogreen gas tax. Raising the effective cost of petroleum to something like five-dollars-per-galloon. A geogreen gas tax supports freedom and frees us from propping up Middle East tyrants.

Stupidly, very stupidly, America taxes foreign sugar-ethanol. This hurts our New Core allies, props up Saudi terror-financiers, and takes in exactly the wrong direction.

Tom Friedman writes:

Thanks to pressure from Midwest farmers and agribusinesses, who want to protect the U.S. corn ethanol industry from competition from Brazilian sugar ethanol, we have imposed a stiff tariff to keep it out. We do this even though Brazilian sugar ethanol provides eight times the energy of the fossil fuel used to make it, while American corn ethanol provides only 1.3 times the energy of the fossil fuel used to make it. We do this even though sugar ethanol reduces greenhouse gases more than corn ethanol. And we do this even though sugar cane ethanol can easily be grown in poor tropical countries in Africa or the Caribbean, and could actually help alleviate their poverty.

Yes, you read all this right. We tax imported sugar ethanol, which could finance our poor friends, but we don’t tax imported crude oil, which definitely finances our rich enemies. We’d rather power anti-Americans with our energy purchases than promote anti-poverty.

Hopefully Bush will flip-flop on this soon. Otherwise, his second term will be as wasteful as the Republican House is harmful.

A Modest Geogreen Gas Tax Proposal ($5/gal gas)

We need a $3/gallon federal tax on gasoline. We can do it and make the tax a popular idea.

How? Give every citizen an equal check from the gas tax fund.

The average motorist uses 520 gallons of fuel per year. If we assume that in the first year the tax does not decrease the amount of fuel used (because people still have their old cars, etc), in the first year a $3/gallon tax collects $1560/motorist. Assume that there are 200 million motorists in America. This tax raises $312 billion in the first year. This money would then be redistributed to all Americans equally. Assuming 300 million Americans, this gives a rebate check of $1040/American.

This is a fair tax. The most serious criticism of a gas tax is that it is regressive. It hits those least able to pay — the poor — most. But a redistributed gas tax solves this problem. Further, most gas taxes hurt families because kids need to be driven places. In a redistributed gas tax, the larger the family the greater the rebate. A family of five, for instance, would have a gas tax rebate of $5,200/year.

The first years rebate checks could be given as the gas tax effect, so citizens feel the benefits of the tax immediately. It is a patriotic plan to prevent oil dictatorships from driving our policies, to save developing societies from the corruption of oil, and of course the air will be cleaner.

$3/gal gas tax now. The people will support it.

Why We Need a Consumption Tax

News of the Day,” Macroblog, 31 March 2005, http://macroblog.typepad.com/macroblog/2005/03/news_o_the_day.html (from The Glittering Eye).

Because this personal fiscal insanity has to stop

Personal spending rose 0.5 percent in February while incomes rose a less-than-expected 0.3 percent, the Commerce Department said today in Washington. The Labor Department said today the number of Americans seeking first-time jobless benefits jumped in the last weekly tally before tomorrow’s monthly jobs report.

Again spending rose faster than savings. This is great for Keynesians, but in the real world this retards growth and weakens are international position. Americans are literally selling out the future at steep discounts. A consumption tax would punish spendin, not earnings and not savings, and give us a sustainable economy.

Likewise, isn’t it great being a hostage to the Middle East?

Crude oil rose and gasoline and heating-oil surged to records on signs that U.S. refineries lack capacity to make enough fuel and Goldman Sachs Group Inc. analysts predicted that oil could touch $105 a barrel.

….

It’s equally likely that oil will touch $105 or $15 a barrel,” said Jason Schenker, an analyst with Wachovia Corp. in Charlotte. “It’s not going to $105 without a major cataclysmic terrorist attack on significant oil infrastructure. It’s not a rational expectation.”

A geogreen strategy would take pain today, in the form of consumption taxes on oil, to avoid this randomness tomorrow. Oil revenue makes bad regimes horrible and fair regimes crooked. The oil system is lose-lose.

So we have two bits of bad news. Why not combine them?

Record prices have failed to curtail surging fuel consumption, the Goldman Sachs analysts said in a research note. The firm’s upper limit was $80 previously. U.S. supplies of gasoline and distillate fuels, such as diesel and heating oil, fell last week, according to an Energy Department report yesterday.

Great. We need a step enough oil tax to divert the excess revenue out of sheik’s pockets. If it would go to the treasury, fine. If it would go to a special fund, fine. But we cannot keep this us.

Conservatives for the Gas Tax (Goldberg Now Geo-Green)

A New Era for Oil,” by Jonah Goldberg, The Corner, 30 March 2005, http://www.nationalreview.com/thecorner/05_03_27_corner-archive.asp#059495.

Jonah Goldberg joins the geogreen movement

Maybe it’s the nitrogen bubbles in my brain or the afterglow of reading Bob Samuelson’s column today, but I finally feel willing to float a trial balloon in the Corner which, I admit, has been launched more times than the Goodyear blimp: Increase gas/oil taxes.

Admittedly, current high oil prices have caused pain for some and are probably a drag on the economy in significant respects (the airline industry, for example), but the negative effects certainly don’t track with the predictions of doom and gloom which typically accompany fuel tax proposals. Clinton’s 4.3 cent a gallon tax elicited howls that the economy would go off the rails, for example. Well, now gas prices are much higher than they were in 1996, though still lower — adjusted for inflation — than they were in the early 80s. And, more to the point, the economy seems to have absorbed high gas prices better than most would have predicted.

Anyway, since it’s impossible to deny that our dependence on Middle East oil — or our dependence on foreigh oil, a lot of which comes from the Middle East — skews our foreign policy in undesirable ways (and enriches folks we’d rather see make their money from ordinary development), it seems worth considering a tax system which weans us of oil as much as possible. Demand from China and India will be putting upward pressure on oil prices for decades to come. And since I’m increasingly sympathetic to consumption taxes in general, it seems to me a fuel tax is a good place to start.

Goldberg mostly repeats geo-green talking points, but I am glad to see Jonah give President Clinton the credit he deserves. America’s economy is weaning itself off of foreign oil (as a percentage of GDP), but a higher gas tax would help that process along.