There's nothing new about your suggestion. It's been touted about a number of times before. Just putting a dress on a pig IMO. Another veiled attempt at a socialist program designed to redistribute wealth without earning it.

All taxes are wealth redistribution, it's just a matter of how you want to implement them. If the goal is to reduce energy consumption, the cost of energy has to increase significantly. If you don't want to do it through taxes/duties, you will have to put mandates in place that will drive up the price (just another form of tax).

See, that is where we differ. I don't see the need to reduce consumption. I like the market driven cost senario we have now. What is your reason for wanting to see a reduction?

The U.S, consists of about 7% of the worlds population that is using about 20% on the energy. At the moment we are importing close to half of our oil needs, creating a significant trade deficit and further weakening the dollar. The energy consumption in the developing world is going to increase significantly in the next few decades, which will further drive up the price and make the U.S, more dependent on oil exporting countries. Even if we ignore the environmental aspect of the issue, this behavior is not sustainable from an economic/political point of view. Clearly, we do not have a "market driven cost scenario" today, the cost is being controlled by external factors.

Maybe the U.S. could live with this imbalance when they were in the manufacturing business, but that horse has left the barn and isn't coming back. If we do nothing energy prices will increase sporadically based on global supply and demand, leaving the U.S. economy at the mercy of the folks who control the resource, that does not sound like a very good plan to me. The U.S. could try to increase oil production to meet demand, but I don't think that is a realistic option either (at least not at current consumption levels). A certain amount of oil consumption could be off-set with alternative energy sources, but most of them are simply not cost competitive today.

The only realist option is to increase the cost of energy in a somewhat controlled manner, this can be done by taxes (as suggested) but I'm not confident that the revenue will be effectively applied to the energy issue if it's managed by the government. I would prefer to see the imports either limited or taxed to drive up retail prices. At that point I believe that market forces will start to work. I know that will increase the profits of the "evil oil companies," but who cares? Hopefully, in 50 years a combination of reduced consumption, increased production, and alternate sources will combine to (more or less) fix this issue. In the mean time, it's not going to be pretty but something has to be done.

Good summation of what is at stake here! About 45% of the US trade deficit is represented by the oil import bill, and getting worse. Oil just touched $110/barrel today, with the spring and summer demand to be felt yet. Classic economics don't work when the value of your currency and energy security are key issues, and we are not even talking about the environment yet.

Wealthy countries without oil or a car industry, such as Denmark, Finland, Ireland, New Zealand, Singapore have always had to put artificial restraints on car ownership and fuel pricing, since the automobile, more addictive than any drug, can bankrupt an otherwise healthy economy if left unchecked.

A $20,000 car will incur about $20,000 worth of maintenance and repairs over its lifetime, and use about $20,000 in fuel at todays prices. If all that (except for the labor part of the repairs & maintenance) has to be imported, it will severy distort the economy of any country. That's why in Japan cars are cheap but gas is expensive since the gas part is imported.

The US got spoiled because historically, gas, cars and parts were all domestically produced and did not affect the balance of payments.

I don't agree that artificially inflating the cost to the end consumer is the answer. There are many reasons it will not work and there is also some history to show it won't. As one example, people have already cited instances where the taxed money is not used as intended. I'd prefer to see some type of taxes placed on the *profit* made by the oil companies rather than the consumer. The government already has precendents in place for this type of thing in the way of cost-plus contracts. They control the amount of profit allowed on a project/program. Excessive profits could be heavily taxed. The companies still make reasonable profits to keep their shareholders happy and rules about passing these costs on to the consumer could be made. I prefer to attack disease at the root of the plant rather than the end of the branch....

"The government already has precendents in place for this type of thing in the way of cost-plus contracts. They control the amount of profit allowed on a project/program."

I've worked on enough government cost-plus contracts to understand why they don't work, the contractors bid low and continuously increase scope to maximize profits; government oversight is usually expensive and inadequate, they try to micro-manage the contract to try to control costs and they are always behind the curve. It is essentially a blank check, contractors love cost-plus.

However, I do agree that taxing the end user may not be the answer. I would rather see imported oil taxed at a higher rate than domestic oil. Taxing profits would not work because it would be too hard to enforce. I have a one person corporation, and I could easily hide my profits from the government, imagine what a big corporation could do.

BTW, we all know this isn't going to happen anyway. The U.S. does not have the political will to make a serious effort, energy prices will increase on their own and it will not be predictable. In about 20 years we will be in the same situation with or without intentionally driving up prices, it will just be more painful if we do nothing.

BTW, we all know this isn't going to happen anyway. The U.S. does not have the political will

Said but very true. In addition it is not going to happen that the politicians would allow all that tax money to be returned to the taxpayers.

I made the suggestion as what I believe would be an effective, fair and just way of dealing with the subject. However I was not under any impression that it would be a realistic option.

"I made the suggestion as what I believe would be an effective, fair and just way of dealing with the subject. However I was not under any impression that it would be a realistic option."

I understand, I think we are all just going to have to watch this train wreck.

Twinturbo said "There's nothing new about your suggestion. It's been touted about a number of times before. Just putting a dress on a pig IMO. Another veiled attempt at a socialist program designed to redistribute wealth without earning it."

All corporations do is redistribute wealth to the CEO and stockholders without working for it.

I'm not sure a tax is the way to go, but if so I don't think a decreasing tax structure will work. If everyone knows the tax will be reduced, bubba will still go buy his big truck based on the assumption that it will become more affordable when everyone else reduces their consumption.

As an alternative, what about a duty on imports of oil/gas. That will drive up prices and it might actually help the value of the dollar which isn't being helped by the trade deficit. The revenue from the duty can become tax incentives for alternative sources.

"I don't think a decreasing tax structure will work."

Sorry I was not as clear as I should have been. That would be a total of 50¢ the first year and ADDITIONAL 50¢ the next year and maybe and additional 25C (total $1.25) the following year.

OK, that makes more sense. You are talking about reducing the rate of increase over the years.

I understand that you are trying to create an incentive for people to use less energy, essentially a tax credit for using less than average. If 100% of the tax is refunded, the total cost will stay the same; Im not sure that will result in an overall reduction. It seems more likely that it would just reward the folks who are willing/able to use less fuel (i.e., my 17 year old can go get a summer job and qualify for a refund, or just file a tax return to reflect her passive income if I put a mutual fund in her name). Some people (like me) are simply going to pay whatever it takes to drive as usual. I believe this would also result in a discrepancy between low income urbane and rural folks. I'm also afraid that it would just end up being another tax that people don't associate with behavior and will probably have the biggest impact on the "working poor" who need transportation and can't afford an efficient vehicle.

I honestly don't see a painless way of doing this, if you want to reduce consumption you are going to have to increase the real cost of energy to everyone.

"I understand that you are trying to create an incentive for people to use less energy, essentially a tax credit for using less than average. If 100% of the tax is refunded, the total cost will stay the same"

The intention is to refund the tax in an equal amount to anyone filling a tax return. So if you use less fuel you will pay less tax, but receive the same refund as someone who uses ten times as much. The person who walks will not pay any of the tax, but they will also rreceive the same refund. That will help pay for the cost of commercial transportation built into the cost of delivered products and the additional cost we all pay for pollution.

I would agree that it would not be logical to tax everyone and then return the same amount each individual paid to that same individual.

1. There is some overhead cost to collect and distribute the proceeds. I think it will be significant. That money needs to come out of fuel taxes so that this tax plan doesn't cost us more than we pay already. But how do we know where the money goes? It seems to me that the opportunity to use the tax proceeds for other things is great, and eventually a lot of it will fund other projects. How can this spending growth be stopped?

2. Is this a plan to reduce illegal immigration? Illegals won't file tax returns yet they will pay the fuel tax.

3. The first thing that might happen is that more people will carpool. If 2 people carpool and gas doubles due to taxes, they pay as much as they did before, yet use about half as much gas. More economical cars and trucks would come several years later.

I am not sure where you are going with this. Your suggestion is terribly vague. As near as I can tell, if I use an average amount of gasoline I will pay X dollars in federal taxes and later get X dollars in a tax refund. And if I come in 1000 miles under average, how many nickels or dimes will my trusted congressman reward me with? Let's simply say that this idea needs more work.

"if I use an average amount of gasoline I will pay X dollars in federal taxes and later get X dollars in a tax refund."

Half right. You pay the tax as you buy fuel. The tax is then refunded not based on how much you paid, but rather it is evenly refunded to everyone who files a tax return, not just those who paid the tax.

Problem with this and other similar ideas is that they ignore commercial realities.

If you could sell the idea worldwide, that would be another thing. Otherwise you are handing opportunities to undercut US manufacturing costs to global competitors on a plate so to speak. Increase the costs of fuel in the US and China (who I suspect will not impose such a levy) will have an even greater commercial advantage over 'responsible' countries.

One country alone cannot fix this problem, at the moment fuel prices are regulated by OPEC and global market forces, that is as it should be and any consumption controls should originate there.

I'd also be wary of levying government taxes without a clear mandate, fuel taxes in Europe are sky high though very little of the money contributes to improving transportation infrastructure. Without trying to sound too cynical, it wouldn't take long for some government bean counter to realize the potential of reducing your tax refund by 50% for use on some of those 'special' projects.

"If you could sell the idea worldwide, that would be another thing. Otherwise you are handing opportunities to undercut US manufacturing costs to global competitors on a plate so to speak."

My suggestion was not for all fuels uses, only over the road transportation. Since it would be neutral overall (returning to the public the same amounts charged) it should not cause any disadvantage in global competition, in fact it might provide and advantage.

"it should not cause any disadvantage in global competition, in fact it might provide and advantage."

So you're saying that increased fuel costs in the USA will not increase manufacturing costs. Is that right ?

Even were these increased costs negated in the USA by your proposed tax refund, those costs will have no offset overseas, therefore US products will cost more than their competitive counterparts from other countries.

In any case why road transportation ? Automobile engines are very efficient when compared to aero jet engines, why not go after the airline industry ? Or is it as usual that individual motorists are easy prey ?