Ever since John McCain proposed the idea of a holiday from gasoline taxes this summer, I have been a little worried that people may actually buy into this idiotic idea. Unfortunately, my fears have become reality: this week President Bush and many prominent members of Congress stated that they would consider the gasoline tax as a possible solution to rising gas prices. Barrack Obama stands alone as the only presidential candidate (except probably Nader) who has the courage to point out the fact that this is an extremely stupid idea. The tax itself is less than 20 cents--about 5% of current gas prices--and would save Americans no more than $30 over the course of the summer. In all likelyhood though, it wouldn't save consumers anything: lower prices would drive demand for gasoline up, and because there is no way to increase supply, prices would continue to creep up. In part, as a result of the gas tax 'holiday'!!!
It also really worries me that these candidates are so quick to abandon their commitment to the environment. Rather than offer long-term, substantive solutions to rising energy costs, McCain has chosen to appeal to voters by making them think that he cares. The presidential candidates could have used this opportunity to encourage Americans to bike, or use alternative modes of transportation, including public transit. They could have used this opportunity to encourage more development of renewable electricity sources and more research into cars with better gas mileage. Instead, we got a stupid 'holiday'. The proposed tax break will not bring America out of its economic decline, it will not lower the cost of gasoline, it will divert tax money from vital transportation projects, which are currently funded by the gas tax, and it will not help solve global warming. I should have expected something this ludicrous and shallow from McCain, but I want to commend Obama for his determination to keep our focus on long-term solutions.
For more about this, click on the link above, or: http://www.huffingtonpost.com/2008/04/29/gas-tax-holiday-splits-cl_n_99296.html
Tuesday, April 29, 2008
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2 comments:
Damn! You totally beat me to blogging about this issue. Ahhh man. I'll find another outrageous policy scheme that our leaders are brewing up.
But in the meantime, the Center for American Progress Action Fund's daily "Progress Report" (which I'd encourage you all to sign up for. It's just about the best, most concise daily round of up political, progressive news, both inside and outside the beltway) focused on the gas tax today, too:
http://www.americanprogressaction.org/progressreport
Your economics reasoning isn't good. Whatever tiny increase in demand results from repealing the tax, it won't be enough to make the price higher than what it would have been with the tax. In practice, increasing the gas tax increases the final price and lowering it lowers the final price. Not by exactly the amount of the tax, but by something close to it.
Americans tend to buy about the same amount of gasoline after small changes in price. It's a very 'inelastic' good. The amount of gasoline consumed would barely change. It would put a fiscal stimulus into the picture. It would decrease tax revenue. It's easy to try and dismiss numbers like $30 as 'insignificant' but if you multiply that by the number of people who buy gas it adds up.
The thing to keep in mind is that the gas tax is effectively a regressive tax. The poorest people often have long commutes, and wealthier people don't drive more as they get wealthier. So, any gas tax cut/increase will disproportionately help/hurt the working poor and middle class.
It is not accurate to say that the tax holiday will divert money from transportation projects. The amount of money spent on those is fixed in the annual budget. The loss of tax revenue would just change the deficit. It's not possible to single out government programs to say which one suffers. Whichever government expenditure congress is most likely to cut in the future because of the deficit, is the one that loses funding because of the gas tax holiday.
Overall, I'm still undecided about the gas tax holiday. If it did happen, I wouldn't go completely militant apeshit about it as you appear to be inclined to do.
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