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#1 of 874 A Higher Gasoline Tax: Good Or Bad For America?
Jan 25, 2009 (5:49 am)
A tax increase has been a political third rail in the U.S. Therefore, the idea of increasing the gasoline tax, as a way to reduce our nation's dependence on foreign oil, has gained little traction thus far. This results in a conundrum. Why? Low fuel prices encourage the sales of vehicles with low fuel economy, while undermining the effort to introduce fuel efficient vehicles and alter wasteful habits.
I dislike higher taxes as much as you do, but I believe that increasing the gasoline tax is a necessary component of achieving the Obama Administration's goal of becoming less dependent on foreign oil and, at least in some cases, governments that don't like us. Incidentally, you don't have to be an Obama supporter to be in favor of becoming more energy independent, since this goal enjoys a lot of Republican support too. I happen to be an independent who, at various times, has voted for candidates of both major parties.
I believe that CAFE has generally been a failure, and that most other proposals for reducing fuel consumption, such as the Clunker Plan, have serious inherent flaws. Although a gradual increase in the gasoline tax is not politically popular, it would be the most efficient and effective way to alter consumer behavior, in my opinion.
Michael Jackson - not the singer, but the CEO of Autonation, the largest of the megadealers - strongly favors a gasoline tax increase, and recently suggested raising the tax by 10 cents per gallon for the next 10 years. I don't know if 10 cents is the right number, but I buy into the idea of applying the increases gradually, to give people a chance to factor higher fuel costs into their driving habits and car purchasing decisions.
The argument that higher taxes are bad, or that raising taxes during a recession is bad policy, could be dealt with by making the gasoline tax revunue neutral. This could be achieved by reducing other taxes by a similar amount.
#2 of 874 Re: A Higher Gasoline Tax: Good Or Bad For America? [hpmctorque]
Jan 25, 2009 (8:04 am)
Though I know you have good intentions with this gas tax idea as written; and it would be the best way to implement it, I think you just have to review other forums which have pointed out all the problems with this idea.
The Main problem with your idea is that people will not react necessarily the way you want to this tax increase. What do I mean? I think you assume the only result is that people gradually move to more efficient cars, or to electric cars and such?
But the actual results of a gradual tax increase results in these varied results (and I'm sure I won't get them all).
1) It is the wealthier people in society who buy the largest, most powerful, and least fuel-efficient vehicles in many cases. The gas taxes you propose would have no effect on these sales.
2) After people cut a little of their consumption, they reach the point where they can not cut more driving, and then they cut other stuff instead, which hurts the economy.
3) If you propose cutting foreign energy, then I say the proposer needs to propose where an equivalent amount of domestic energy will come from.
4) The population of this country is growing and we need more energy every day. That makes it doubly hard to cut foreign energy sources.
5) No other fuel or energy source has proven as convenient (available, time to refuel) and offers the range of gasoline. A fuel also has to be available even when natural disasters shutdown an area's power-grid.
6) I just started doing my taxes, and thank god for Turbo Tax for importing stock gains from my broker. Taxes are already too complicated, without making further deductions and exemptions. The tax code should be 10 pages long, and a maximum of 2 pages to fill out. Sorry for all those people who make billions of $ selling software, and doing peoples' taxes.
7) The gas tax is supposed to be used for roads and bridges only, If it becomes so much larger, what would be done with the money? Given to banks so they can buy $1,400 garbage cans and (2) chairs for $87,000 - Merrill Lynch CEO (2008)?
Anyway you get the idea. I'm for everyone keeping their money and not giving it to DC to build a bureaucracy around, and waste the $.
I'd rather have a freer society that makes individual blunders, then have a government that we feed, to herd and protect us like sheep. The U.S. government was NOT created in the 18th century to alter (coerce) consumer choices.
#3 of 874 Re: A Higher Gasoline Tax: Good Or Bad For America? [hpmctorque]
Jan 25, 2009 (9:02 am)
BAD! BAD! BAD! BAD! OK, I think you get my point.
#5 of 874 Re: A Higher Gasoline Tax: Good Or Bad For America? (kernick)
Jan 25, 2009 (1:09 pm)
You make some excellent points, but I don't entirely agree with your conclusions.
I'll respond to your points in the order you presented them, as follows:
1) True, but what you leave out is the fact that the vast number of people are not wealthy or even well off, so the fact that the behavior of the wealthy may not be affected by a gasoline tax has less impact on total usage than you imply.
2) I don't really understand your logic here of "...and then they cut other stuff instead, which hurts the economy", especially if the incremental gasoline tax were to be revenue neutral.
3) The higher gasoline tax would reduce energy consumption, and that reduction could come entirely from our purchases of foreign oil. Domestic production would be unaltered; that is, it would be neither more nor less than what it would have been without the gasoline tax increase.
4) True, unlike most western countries, our population is increasing. Whatever our energy needs are, given our population, we'll use less if prices are higher. That can translate into less demand for foreign oil than would be the case without the tax increase. In the short term people will adjust their driving habits. In the longer term, people will make changes in vehicle choices and how far they choose to live from work.
5) I agree. Consumers will continue to decide whether, and/or to what extent they want to substitute the convenience and other advantages of hydrocarbons with other types of power, as they do in Europe, for example.
6) I agree with you 110%. I favor simplification of the tax code. To your point, though, how would raising the federal tax on gasoline make doing your tax return more complicated? You would just pay more at the pump than you do now.
7) The total amount of our gross domestic product that's taxed would remain the same if the gasoline tax were offset by tax reductions elsewhere (made revenue neutral). Look, I'm as horrified and concerned by the huge budget deficit, the national debt and wasteful spending as other concerned citizens are. We're in total agreement on the need to cut waste and pork. Beyond that, whether it would be preferable to reduce government spending or raise taxes to balance the budget, or some combination of these two, is subject for another discussion. There's no need to get into that here.
"I'm for everyone keeping their money and not giving it to DC to build a bureaucracy around, and waste the $.
I'd rather have a freer society that makes individual blunders, then have a government that we feed, to herd and protect us like sheep. The U.S. government was NOT created in the 18th century to alter (coerce) consumer choices."
You won't get any argument from me on these points.
Jan 25, 2009 (1:54 pm)
an increase in the gas tax, incremental over, say, 10 years, but only if it is revenue neutral. We've got refineries claiming they have to stop refining gasoline because they can't make a profit. In a time of the lowest oil prices in a decade our gas has been going UP in price for more than a month.
The old gasoline supply chain has many broken links, folks. Time to ease future pain for ALL of us by levying a tax and getting us off the stuff.
#7 of 874 Re: A Higher Gasoline Tax: Good Or Bad For America? (kernick) [hpmctorque]
Jan 25, 2009 (3:39 pm)
1) If you look at who the 10M people are who are buying new vehicles this year, you will find that most people are in the upper 30 -40% of the income group. People making $40K/year are not your typical new car buyer. The typical new car buyer is going to probably have an income of $70K if single or a combined family income over $100K. These people are not going to be overly concerned if gas is $2.00 this year $2.10 next year and $2.20 ..., such that it means they're going to buy a Fiesta instead of an Altima or Highlander.
2) What I meant was you assume that people will cut back on gas consumption with every increase; I think you may find many keep using the same amount of gas and start cutting back on going to restaurants instead.
3) I don't want to see people forced to cut back on energy consumption. Energy provides a better lifestyle. If you want to cutback on foreign energy, I want an increase in domestic energy.
4) Same as 3). I want the same or more energy per person.
6) You were talking about offsetting the tax increases, and the usual proposals are for people to fill out forms to get rebates. I'd assume you'd need to keep records of what gas you bought, and keep track of what miles (commuting, but not recreational driving) you drove and what would be deductible, and this would be another section to fill out.
#8 of 874 Re: I'm all for [nippononly]
Jan 25, 2009 (3:42 pm)
an increase in the gas tax, incremental over, say, 10 years, but only if it is revenue neutral.
You might see how that could easily be done as a whole, but when you go to apply that all hell breaks lose on trying to get that neutral on the individual level.
For instance drop the sales tax on other items 1/2% to compensate, and what happens. The rural minimum wage worker driving 40 miles each way to work, who doesn't have the money to buy much is hit hard, while a guy living in NYC working on Wall Street taking the train, says "I love this new program". You run into the same inequities when you start trying to reduce property or income taxes to compensate. You get a big mess arguing over what's fair. Taking extra tax from 200+M drivers and then trying to get them back their share in some other tax is next to impossible.
#9 of 874 Re: I'm all for [kernick]
Jan 25, 2009 (5:50 pm)
Using your arguments, no changes in the tax code would ever be made, because there would be winners and losers. Further, some winners would win more than other winners while some losers would lose more than other losers. That's life, and the way it almost always is when changes are made. That would be true even if you eliminated the gasoline tax, would it not?
I think simplicity is a virtue regarding taxes, and I assume, from your comments, that you would agree with that. Therefore, I would make the gasoline tax increase revenue neutral on an overall basis, and accept the consequence that some would benefit from this change while others wouldn't. That happens with virtually all tax changes. Overall, however, the country would be better off, in my opinion, than if we continue along the current path.
I'd prefer to let those with more experience and facts than I have decide the size of the incremental increases, and whether they should continue, for 10 years, or 8 or 11. The purpose of this discussion, at least at this point, isn't to get bogged down on these details.
#10 of 874 Re: I'm all for [hpmctorque]
Jan 25, 2009 (8:25 pm)
I would make the gasoline tax increase revenue neutral on an overall basis
You have mentioned revenue neutral in every post. Just what tax do you plan to cut to neutralize this new gas tax? You have to remember that about half the citizens do not pay much if any income tax. So the guy on minimum wage driving grandmas old 88 Buick to work will be hit the hardest with the least chance to survive this gas tax.
I find it a big mistake to even think about.