Ray's Modest Proposal: A Graduated Gasoline Tax

i travel over 1,000 miles a week. and i get about 34 miles to the gallon. that .50 cents will hurt at fill up. it is what it is i guess.

The only problem with Ray's Modest Proposal is that it is too modest, considering that the total social costs of a gallon of automobile fuel are estimated at between $12 and $20, $6 is far too little. But, yes, it's a start. As for the ignoramuses who suggest we should trust the market; the problem is that the market doesn't work the way neoclassical economists like to think. The subsidies for cars and petroleum are over $10 per gallon, so a $3.00 tax doesn't even begin to address the economically inefficient subsidies to this socially inefficient means of mass transit. But, hey, it's one of the best modest proposals I've heard in a long time. Thanks, Ray!

Dr. Lapin, thanks for pointing out the fact that every item has an internal and external economic cost. The total cost to society of having automboles is huge; so taxes to recoup some of these costs and channel money into rapid transit, alternate energy sources and new propulsion technology make sense.

Even without these external costs, there would be good reason to reduce gas consumption, since the country simply can't afford these oil imports any longer.

I would prefer to let industry do this development with government incentives and direction. I'm sure American ingenuity is up to the task.

The next president will not to likey be married to the energy industry and can hopefully create a rational policy that is good for all citizens.

Trying to save the US auto industry is a lost cause, since it is the architect of its own destruction.

Costs to society depend on who says they are costs. Therefore, they are fictions.

Economic decisions can never be made collectively. Individuals choose what to buy and when. This is why the government can't control the economy.

to quote you talking to your brother..... "are you nuts?"

1. giving more money to Washington is as smart as pouring more money into some of his cars.... sometimes you just to realize that old, worn-out things need to be traded in for something new and dependable...... Washington has proved beyond anyone's capability to understand that if you send them a dollar, they will spend TWO dollars. So let's get a new vehicle for Washington that says.... "we aren't sending you more money..... make it work with what you have, even if it means that you have to serve hot-dogs for dinner like Eleanor Roosevelt did" (check it out..... she did, during the depression.....)

2. it's not soccer mom's in SUV's that consume the majority of the gasoline..... it is commercial vehicle use. so adding a tax to gasoline is giving a double-whammy to the public....

a. so you add ANY amount of additional gasoline tax (by the time the Senate gets done with this, it will ultimately apply to diesel, so this is fair.....). Trucks delivering your FOOD to Homeland pay MORE for fuel, that cost is passed on to the grocery store, who passes it on to US (the wonderful citizens of the United States.....)..... SO.... we pay more to get to work in the form of gasoline taxes and guess what? OUR GROCERY BILL GOES UP AS WELL!

b. how many gasoline powered vehicles does your electricy provider have? all of them.... guess what? we pay more to get to work in the form of gasoline taxes and guess what? OUR
ELECTRIC BILL GOES UP AS WELL! as does your NATURAL GAS, CITY UTILITIES and i know its a luxery.... but you CABLE TV BILL!

c. and you are absolutely going to LOVE this one..... you see, like you..... i am self employed..... have my own engineering consulting business..... SO.... you and i both are going to have our gasoline expenses go up, and we are going to pass that increase on to our customers.... we HAVE to..... we incurred the expense in order to provide a service to them! SO.... we should be able to recoup that expense......

BUT..... oh man..... you are going to love this...... that additional gasoline expense is....

i can hear you right now..... you figured it out and i havent even got there.....

that additional gasoline expense is TAX DEDUCTABLE!

SO.... can we recap real quick?

1. everyone pays more in additional gasoline tax
2. Washington says...."HEY! LOOK GUYS! we have a dedicated source of revenue to fix roads and built bridges in Alaska that go nowhere! we dont have to pay that out of the general budget anymore and we can build more bridges that go to nowhere in...... Death Valley, CA!"
3. the average citizen pays more for groceries, utilities, cable TV and..... yeah.... NPR radio before its all over......
4. then..... we business people that drive HUNDREDS of miles every day...... we DEDUCT that additonal expenses from our incomes!

sorry.... to me its sounds like you fell for the emotional hysteria and then Stumped the Chump on this one..... you are usually right on, but please..... think this one over?

Mike

Ray....why use negative tax policy to control behavior. When I taught, positive incentives aleays worked better. Rebates on more efficient cars. Auto manfacture tax incentives to produce more fuel efficient cars and inovative ideas to produce alternate energy source.

And a big reward for the first guy that gives you a wack on the head for that bone head idea.

I agree w/you but I think it shouldn’t be so modest. I think we should raise it by $1 this year, then 75-cents...then in 3 years for it level at 50-cents. In 3 years, the tax would be at $2.25. After that, it needs to be studied, if we can maintain the tax there or raise it again. I think 50% should go to the state, and 50% to the federal government. But that tax increase goes to infrastructure, public transportation (nationwide i.e. rail system, bus, etc) and renewable. The information on how the tax is being used should be public (over the web).

Raising the tax would serve a couple of purposes...It will lower demand, people will conserve and it will increases jobs.

We as a nation have one of the cheapest gases in the developed world. Also due to inflation, we are not paying that much compared to previous generations. The problem is that income has not kept pace w/inflation.

-You don't want gov. interfering with oil supply? guess what
-You don't want to pay $6/gal? Be more than that if we do nothing and let free market oil companies have their way.
-High gas taxes will ruin our economy- right, lets not talk about the effect of spending several hundred million a day in Iraq
-You want to drive the big gas guzzler and let CAFE standards fix the problem? what do you think CAFE standards will do to your gas guzzler?
-Countries that won't sell us their oil for cheap are the problem??? The US has 5% of the worlds oil reserves and uses 20-25% of the worlds oil

-No viable alternative fuels-check out the movie "who killed the eletric car?" Even producing electricity from dirty coal fired plants is cleaner than the internal combustion engine
-Put your blinders on and stay the course, your kids are going pay!!!!!!!

Right; we live in a global economy and oil is a truly global product, bought and sold at world prices of now $118/barrel and heading up. Most developed countries, even ones with lots of oil, have some mechanism to reduce consumption through high user taxes, fuel economy/emission standards, and an annual road tax.

Once a year I get a Dutch car catalogue. Besides the prices and specs of each vehicel is the annual road tax to keep the plates on. This is steeply graduated against high HP, and car weight. This is on top of the $98,000 that a Jeep grand Cherokee costs there, which also has to burn the $7.50/gal. gasoline. You get the picture.

At one time in the past the US was more than self-sufficient in oil, it was a net exporter of cars, trade deficits were unknown, and Global Warming was not an issue.

We are still behaving as if those conditions still existed.

How about adding a new twist. Add 50¢ or what ever each year but if the consumption of gas goes up say over 3% then add 75¢ over 6% add $1.00 Then if it decreases by 3% then make the increase only 25¢ by 6% then 0 increase a 10% decrease would decrease the tax.

We need to be careful not to create economic hurdles the neediest cannot get over. But for where I live, $6.00 would actually be too low to even influence daily driving decisions, let alone car buying decisions. So I don't believe "conservation" would necessarily follow. I suggest we stop selling gasoline by the gallon. Sell it by the quart (or liter) as it is sold elsewhere in the world. Right now, Germans pay about $2.15 per liter, which comes out to something over $8 per gallon. I look at th Smart fortwo purpose-built commuter car as a possible extra car, but the arithmetic of purchase, financing, insurance, maintainence, and the current low cost of fuel keep making it a no-win situation. As part of the overall cost of ownership, fuel cost is still relatively insignificant.

Something over $8.00 per gallon, however, would tip the balance. Right now, my 28 miles per day out and back commute costs me $6 in fuel, or about $1200 per year based on 200 days of driving, $3 per gallon and 14 mpg. A Smart fortwo would cut the fuel cost by about $800. But the other costs of ownership trump that, so I'm at a net loss. At $8 per gallon, my yearly fuel costs for my daily commute right now would be $3200. I think a Smart fortwo would save maybe $2000 based on better fuel economy. Annual savings like hat would cover the annual cost of insurance and maintenance and even a little of the purchase price.

What do you drive now?
I would imagine that a Smart would have a similar (or lower) TCO (excluding fuel) than MOST cars.

I'm not a Big smart fan personally, I feel that the mileage simply isnot high enough for me to justify trading the TDI In on one (Worse Mileage than my car and Smaller)

Great idea Ray. Does the tax apply to OTR rigs also? How about our great government give tax rebates for all those who purchase alternative fuel vehicles. And by tax rebates I mean serious rebates that will make these hybrids cheaper than gasoline vehicles. Supply and Demand will force the Big 4 to focus more on new technology. A solution is out there. Just remember, the oil companies are enjoying record profits (read BILLIONS) at our expense. But as they told congress, they are also paying record taxes. Let's use their taxes to help us for a change.

+1

Until I see at least 2 people in at least 50% of Large SUV's Gasoline is far to cheap.

How about higher taxes on oil companies that don't invest the mega-profits we give them in further exploration or alter.fuels

I thnk that people should use public transportation not raise the price of gas, walk to work, use a bicycle to work. I MEED MY VEHICLE FOR WORK A PICK UP TRUCK!!!!! I live on a fixed income, so raising the price of gas or taxing gas makes me poorer and poorer. What are you thinking about, yes walk, bike or use public transportation it is available in WISCONSIN MILWAUKEE buy a bus pass leave your gas guzzling vehicle at home save money.

How do I use public transportation when I work in three different towns on different days of the week, and the bus goes to each town once a day?

How do I carpool. Nobody else has the same work schedule.

You econompoops who use pocket calculators to figure general costs of different vehicles, and then make up one rule for everyone, belong in jail. You have no right to intrude into the lives of others to satisfy your groundless fears.

As long as government keeps its big fat destructive nose out of the economy, it will take care of itself. It's government meddling that makes messes. And that includes the OPEC governments.

If any senator introduces such a tax, he will be voted out by many angry citizens who resent government meddling in their lives.

We need a global reduction of government, not driving. That would eliminate the hot air rising from politicians.

The economics works like this. Many jobs that might have been economically feasible with gas a 25¢ will not be when gas is at $4.00. With the price of gas going up at a known rate will alert those who have those jobs or employ people in those jobs that something much change.

There are several possible changes. The cost of the product or service may go up or the delivery method change orit will not be delivered.

Some people will find themselves without a job. They will then find that there are new jobs opening up. With the cost of fuel higher, then the corner food market will become more desirable (economically feasible). Likewise public transit will need more employees etc. and others will end up there.

Under these conditions there are winners, loosers and whiners. You chose which you want to be.