12/29/2008

Krauthammer on Gas Taxes

Read this article by Charles Krauthammer. It's why he gets paid for his opinions and I don't (yet). The single smartest security policy (national , economic, environmental, budgetary and energy) we could possibly enact in this country is a graduated Net-Zero Gas Tax. Anything else is justifying someone's status quo benefit.

Gas prices will one day be higher than they are today if we don't reduce the amount we use. The U.S. is the marginal customer so reducing our demand has a huge downward impact on the price curve. Less U.S. demand reduces the cashflows of regimes openly hostile to us. It provides steady funds for public infrastructure and motivates fuel-efficient behavior without one single solitary malinformed requirement from the economically juvenile U.S. Congress.

Driving is among, if not the, most subsidized activities in America (roads, parking, pollution costs, erosion, tax incentives for automotive manufacturers). Make its price reflect its cost and we become a far more secure and financially independent nation.

1 comment:

Rational said...

I read this and it ties in with something I saw on C-SPAN this week. While I agree that higher taxes are probably the most efficient way to change behaviors and accomplish some of the goals related to energy usage and independence, the ripples throughout the economy would be huge. Even using Krauthammer's Net Zero methodology, there would still be a significant economic effect. For those of us that purchase less than 14 gallons of gasoline a week, it is unlikely that this tax will have much if any effect on our overall driving habits. Krauthammer breezes over this point a little too easily by claiming that we are incented by the fact that we are now getting money from the government and so the less we drive the more we keep. I don't buy it. Assume I only purchase 7 gallons of gasoline a week (about the right number for me). Under this plan, I make absolutely no changes in my daily life and I am now $7 to the better each week. I have zero incentive to change my ways. I mean, is it really worth a dollar a day to me to start walking to the train station whenever I can? What about the wear and tear that will cause to my shoes? What about rainy days or really harsh winter days or really hot humid days during the summer? Will it be worth it then? Probably not.

The other problem with this plan and any big gas tax plan is that it effects far too many other industries. Just getting back to my daily commute, yes, I am $7 to the better but guess what...that train I and thousands of others take in each day? It just go more expensive. As will my food. And most of the goods in my house that have been transported to the midwest from the coasts where they were likely brought in by ship. This gets back to the C-SPAN program, on which Greg Simon from the Obama transition team was giving a lecture on this point. This is where liberals start to get tied up in knots. Too big an effect on food? fine, we'll subsidize food trucking or farm equipment fuel purchases or city bus fuel costs or...well, you get the point. It will be like TARP in that you will soon have every group that can muster a large enough population petitioning for protected status. Once we start granting this status, the effect of the tax suddenly begins to lose its power because those that drive the most will be yelling the loudest to be saved from the harmful effects of such a tax.