He'll get your money, "whetha ya like it or not!"
Yesterday Jason posted about raising the tax on gas by $1.00/gallon. His reason was that the increased tax would be invested by the government in developing alternative fuels and offering incentives for consumers to go green. That is one option. I propose a different option.
Obama keeps talking about cutting taxes for the poor and raising taxes for the rich. I say, leave income tax alone and tax gasoline. Here’s a breakdown:
America consumes 375 million - 400 million gallons of gasoline each day.
(Let’s say 388 million.)
388 x 365 days = 141.6 billion per year. Let’s assume an imposed tax would cut consumption by 15% in the first year. 141.6 x 0.85 = 120.4 billion.
The government could potentially bring in an extra $120 billion in the first year with a $1.00 tax increase on gasoline (not diesel). Sure, that only makes up 4% of the 2007 US Federal Spending Budget, but it’s a start.
I like the idea of paying taxes at the pump instead of with my income, because I can control what I spend at the pump a lot easier than my income. I want to make money. Raising taxes on the rich gives me less incentive to make that money. Raising my taxes on gas is fine. The government will take my money either way, so I’d rather do it on something like gasoline.
A few reasons a Gas Tax increase could help our country:
- Higher motivation for consumers to switch to alternative fuels
- More demand, which helps the free market develop alternative fuels
- Lower dependency on foreign oil (many benefits come from that. Less money for people who want us dead?)
- (Hopefully) Reduction of carbon footprint
Besides, taxing the rich? C’mon. Don’t you think their high-salaried accountants already know of ways to get around that? The government will get less from them than it thinks.
Last 3 posts by Mark
- I lost and won my first election - March 23rd, 2010
- Seriously?! - February 17th, 2010
- Current Government Flowchart - January 29th, 2010
Here’s an idea. Stop spending money. Why does the govt need more money? So they can pay off the mortgages of irresponsible homebuyers? Lower income Americans will suffer the most with a new gas tax.
Next, why can’t we use our own blasted oil? Check out this article: http://www.usnews.com/articles/science/environment/2008/10/22/how-oil-drilling-could-power-the-future.html
Our natural resources are a big reason we became an economic power in the first place. Lets use them to reestablish ourselves.
Artificially raising prices creates artificial demand. Make the alternatives compete on a level playing field. Why must we settle for higher prices across the board for energy? If artificial demand is used to develop alternatives, than artificial demand will be required to keep it viable. Let me buy my gasoline and when alternatives are cheap, I will buy them.
I would much rather put money in the hands of the oil companies than in the hands of the government. Besides, consider how many Americans own stock in the oil companies. It’s the only industry thriving, why try to hinder it?
Finally, I could care less about the carbon footprint. Carbon is a good thing for plants. “Global warming” plays absolutely no part, none, in my financial decisions.
You bring up many valid points. It would be great for the government to stop spending so much money. I checked out the Federal Spending Budget from 2007 and it is ridiculous. If the US Government was a public traded company, the board of directors would have been kicked out years ago. Unfortunately, it’s much harder to do that with elected officials…and apparently even harder to vote better ones in there.
As for domestic oil: I really have no idea why we aren’t doing this. It completely boggles my mind that we would pay for imported oil, that potentially funds our enemies of war, when we have so much oil in our own country. Sure it’s nice to have an animal refuge in Alaska, but at what cost? Loss of American lives and billions of dollars? Let’s not pretend that most of our recent wars weren’t fought over oil. I don’t think a mother should have to hear that her son died in war saving the life of moose.
I haven’t heard about the potential of oil shale before. That is intriguing. I don’t like the idea that we depend so much on non-renewable energy; however, it still is the cheapest thing we have right now. You are right about that. My main purpose of this post was to provide a different outlook on how a gas tax could be used. I don’t think we need it, but if it happened, I would rather see it used like that than only supporting alternative fuels.
I also find it very irritating that environmentalists hold rallies to fight to block domestic drilling and then drive home in their gasoline-fueled cars. We need our own oil so we can get off of foreign oil.
And another thing…I heard a report on NPR that the oil-producing countries in the middle east are suffering now that the price of oil has dropped. I couldn’t care less. You want to talk about artificial demand. Those guys invented it! They screw us over for so long, I don’t care if they are going to hurt economically when the screwage finally comes to an end.
You guys aren’t thinking. You’re acting like dogmatic republicans. Think like a conservative. There is a cost to pollution. Global warming aside, you can’t deny the smog over LA and how about the inversion in Utah. That has a cost to everyone. Let’s transfer that cost the the users of the product that creates the problem. If I drive less than you or have a more fuel efficient car, I am creating less pollution. If you create more pollution than I do, but we both suffer the same air health risks, how is that fair? Since pollution is a cost born by everyone in the public, it is not properly captured by the users who create the pollution. This is called a negative externality. See http://economics.fundamentalfinance.com/negative-externality.php We’ve got to properly assign the cost of the pollution to the creaters of the pollution. Maybe if we did that, the alternative sources of energy would actually be cheaper than coal or gasoline.
How much of the cost of gas is tax? We already pay much higher taxes on gas than on alternatives. Does that not internalize the externality? CARBON IS NOT POLLUTION. Pollution is bad and we can make oil and coal cleaner, but environmentalists hate clean-coal. They want it banned.
Also, smog isn’t a problem where I live. Don’t like the smog, don’t live in LA. Externalities are not equal across the geography. A local tax would be more efficient to cover that than a federal tax.
I don’t know if carbon is a pollutant or not, but I do know that whatever comes out of my exhaust is a pollutant. Cars aren’t completely to blame for air pollution, but as a whole they are a large contributor. So I see your points. (Jason, thanks for the definition of negative externalities…reminds me of Kearl. I actually used that term in a paper two days ago. Ha.)
The cost of pollution should be born by those who create it. We pay for trash pickup from our house, we pay for disposal of automotive oil, why shouldn’t we pay for our exhaust pollution? We already pay gas tax, which helps cover that cost already…but is it enough? I don’t know.
You can’t localize a tax like that, though. Because cars, whether they’re driven in California or North Carolina, pollute. (Actually, with current state emissions laws, cars probably pollute less in California.) It doesn’t matter that more people live in LA, my car contributes the same pollution there as it does when I drive it to another state. So if I fill up my gas in one state that doesn’t have a gas tax and drive to another, I’m not covering the cost of my pollutants. Existing externalities are irrelevant. What matters is what do from here on out: will we add to the problem? Then we should pay for it.
Again, I can control my consumption of gas, so a gas tax wouldn’t seem irrational.
You make a good point on localizing the tax, but geography (mountains, etc) can keep pollution from dissipating which increases harm done by the same amount of pollution. In small quantities, air quality isn’t a big deal, but when you get smog like in LA, it poses more of a health issue. In other words, a lot of pollution in a small area creates more harm than the same amount of pollution in a larger area. It is the “harm” that you want to internalize and the harm varies depending on the concentrations of pollutions in each geographic location.
Emission standards impose costs on the car producers and the car drivers. So we internalize some of the cost by having to pay more for our cars in the first place and more to keep them from polluting. The cost of buying and driving a car would be far lower w/o emission standards. California has higher emission standards because pollution does more harm there.
Keep in mind that internalizing an externality does not mean that there will be no pollution. It just means that there will be an “efficient” amount of pollution. As technology improves, the efficient amount of pollution will decrease. Right now, it is simply too expensive (alternatives are too expensive) for there to be no pollution at all.