If I understand Joseph's plan, it would be revenue neutral with no overall increase in overall fuel cost (it would just transfer the cost to the individuals who use the most fuel and reward those who use the least). In theory, that wound not increase the (average) cost of manufactured goods it would just favor efficient operations.

However, I believe we do need to see actual energy costs increased (not revenue neutral) to significantly reduce consumption. An actual increase in energy cost would increase the cost of manufactured goods. Personally, I thing trying to save the remains of the U.S. manufacturing sector is a waste of effort anyway. The manufacturing sectors biggest problem is their inability to control labor costs, they are going away anyway. When it comes down to it I would rather see us export jobs than import energy, not everyone will agree with those priorities.

It's a consumption tax, pure and simple.

Consumption taxes on necessities can be unfair taxes. In New England and in much of the country commuting is a part of the environment. Commuters would be directly hurt by additional gas taxes, whereas those in urban areas that have access to public transportation would not.

I understand that the goal is to reduce consumption, but that will only happen for those who CAN reduce their consumption. Commuters would be severely penalized for something they have to do.

And directing the use of the tax revenues is meaningless.... the government dipping into new tax revenues for porkbarrel projects would not exactly be unprecedented.

The free market system is polluted enough with improper additives. I'm not in favor of any more.

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

While I only addressed individual tax, the same type of idea could also be applied to commercial users. In that case if a commercial user were to reduce his use of fuel more than others, he would be rewarded by paying less tax than he would receive back in refunds.

"In any case why road transportation ?"

Because CarTalk is about road transportation.

okay, so your idea is a little 'raw'.

"Because CarTalk is about road transportation" - Then why are you hijacking it to pontificate about some unworkable political agenda then ?

Unintended effects of legislation plague lawmakers. Do this and discretionary driving will plummet. Resorts will be hurt, and those affected the most will be the ones living on the edge, already in debt. Recessions put people out of work--ever been without a job and a family at home? Far better to increase mandatory mileage for vehicles while developing alternative sources of fuel.

"Do this and discretionary driving will plummet."

I believe that is the intent.

"Do this and discretionary driving will plummet. Resorts will be hurt, and those affected the most will be the ones living on the edge, already in debt."

I think not. Some resorts will be hurt, but only those who cater more to out of area guest. Those who cater to local guest may benefit. And for those who are on the edge, remember that they will likely be among those who receive more back than they pay giving them more disposable income.

All resorts cater to out of area guests. That's their primary business.

Tourism would also be hurt. Ski slopes, beach areas, The Flume, Santa's Village, you name it.

I should have said... "Unintended effects of legislation 'that are completely unforseen'..." What can hurt is what we don't know, and the effects of tax changes of this magnitude can never be completely predicted. There are many examples of small changes to the tax code making extensive economic changes--completely unforseen.

I support the direction that Joseph Meehan's idea is taking, for several reasons.

1: Higher fuel prices will be the only thing that causes us to fix our energy problems (eg innovation for alternate fuels, fuel efficient cars, mass transit, ...)

2: If the higher prices come in the form of taxes, then that extra revenue largely stays with us. We can disagree on how it might get spent, but spending it on programs in the United States means the money keeps giving back,(ie, if it goes toward hiring a teacher or law officer, they in turn buy a house, which pays for a plumber and carpenter, who buy a car, go out to eat, and go on vacations, etc)

3: If the higher prices do not come from taxes, then that extra money either goes to the oil cartels or fills the pockets of the wealthy oil execs.

There is no question we'll be paying more for energy. I sure would like to see that extra money be used in a way that helps all of us in the long run.

Joe

I agree in principle, but I simply don't trust the government to implement the tax at the retail level, much of that money will simply disappear into the overhead of the program. I would actually prefer to see the oil producers make the profits, at least some percentage of the money would find its way into R&D. If the government needs to intervene, I would prefer to see it done though import duties (to encourage domestic energy capacity) of through mandates that require a reinvestment in energy R&D. I do not believe we can simply tax our way out of this, the issue is more complicated. BTW, the government is indirectly raising the price now by allowing the dollar to devalue. Lowering interest rates and putting more currency in circulation will increase the cost of all imported goods/services, including oil.

"but I simply don't trust the government"

Sorry to say it, I agree. Implementing the plan as I described it has about a 0.0000000127% possibility of happening. If it were passed they it would almost certainly funnel off a good percentage to special projects and not returned to the taxpayers.

Craig: Eisenhower did just that with the 4 cent/gallon federal tax in the 50s to build the Interstate Highway System. That's today's equivalent of about 24 cents per gallon. A very successful program in my opinion. Diverting a portion of a gas tax to research in alternate energy sources and funding public transit will KEEP ALL THE MONEY AT HOME. Gas consumption could decrease by 30% as we shift to more frugal cars, and none of the money saved will end up in the Middle East. A win-win situation.

I'm in favor of funding both alternate energy and public transportation, but I think decreasing consumption by 30% would be a significant challenge.

A significant challenge, certainly. But not an insurmountable challenge.

a 30% drop in consumption could be achieved by increasing average mpg to 34 mpg while keeping miles driven per year constant. Or we could push to drop the mileage. It wasn't long ago that people put an average of 9,000 miles per year on their cars (in the 90s, IIRC). Pushing back to that amount of driving would easily reduce consumption 30%. People (even professionals) used to ride the bus. Now bus service is so sporadic and often poorly planned that bus riding is difficult at best for many people. I'd *love* to ride the bus to work. It takes me 20 minutes to drive and 1 gallon or so per day, or I could ride the bus and take about 1.5 hours each way. If they laid out the system better and I didn't literally have to ride the bus 20 miles out of the way each way it could easily get me to work in 30 minutes on surface streets and I'd be on it every day.

Or what about flex work / telecommuting? Our office finally started opening up to that a bit more. Work 4 long days a week instead of 5 shorter. Or work from home 1 day a week... I could cut my overall consumption by 15% easily by doing just that.

Plenty of options, but people and politicians are far too interested in preserving the status quo, which has been proven to not be that great of an idea.

"A significant challenge, certainly. But not an insurmountable challenge."

I agree that it could be done, but it's simply not going to happen with $3 gasoline. There is no incentive with fuel this cheap. Maybe $6-8 gasoline would cause enough change to reduce consumption significantly. I'm certainly not going to ride a bus to save $50 per week (actually I work from home when I'm not traveling), but it might be more attractive to save $150 per week. Very few people are going to get rid of their 20 mpg SUVs at these fuel prices, again there is no real incentive because the payback is too long.

I've been a strong supporter of the exact same idea for ages, and have proposed the same idea all the time. I think its the fairest situation you can think of. You have all the power to decide what you'll pay under such a plan.

For those wanting more specific numbers, here's an idea of what it means:

The average american drives about 12,000 miles per year in a vehicle that gets about 24 mpg (courtesy NHTSA). That means about 500 gallons per person. Throw a $2 per gallon tax on gas. That means that the average revenue would be $1000. Take the total revenue and divide it equally among all people with a w2 filing a tax return. Because a good number of drivers are not employed, the revenue for each person would in actuality be closer to $1300 (taking March 2005 gas consumption with March 2005 labor force statistics and estimating for retirees still paying income tax).

So what's the benefit? If you want that 12 mpg vehicle, you can still buy it. But by buying 1000 gallons of gas a year (12k miles per year), you pay $2000 in tax. Take out the $1300 rebate, and you have a $700 net tax each year. Or say you buy a 30 mpg vehicle instead. 400 gallons per year = $800 tax-$1300 rebate = $500 credit for driving a fuel efficient vehicle. Say you wanted to live farther from work and drove 25,000 miles per year in a 12 mpg vehicle -> $2867 net tax. Do the same in a 30 mpg vehicle -> $367 net tax. Take the bus to work and drive just 5000 miles per year in an average vehicle? $883 net credit, more than enough to pay for that bus pass in most cities.

Some people may call it socialist, but it lets people make conscious decisions about how much tax they want to pay, exactly like the "FairTax" that so many conservatives are in love with. Such a proposal would not take a single cent from someone working and give it to someone who wasn't. All it would do is give you an incentive to do better than average.

There are numerous other benefits I could see as well:

- More demand for public transit from those not wanting to spend $ on gas.
- While you have the choice to decide what you want to do, the high cost would shock many into conserving more
- Not a regressive tax
- No forced wealth redistribution
- Encourages people to file tax returns (no rebate otherwise), thus eliminating some cheats and noncompliance from the current code that costs $330 billion in lost tax revenue each year.
- Discourages sprawl and encourages urban renewal
- Pushes back to restore lost services, like school busing.
- fewer vehicles on the road because of mass transit = less spending needed on roads = lower taxes elsewhere.

You're ignoring the impact to goods and services that will seriously impact each and every one of us when the cost of fuel is increased 200%. Start refining your plan to exclude certain groups of users and it quickly becomes onerous and impossible to manage or control. The end result is a plan that requires a pallet jack to move around and has all of the waste and fraud issues we see in every form of government controlled commodity today. Insanity is defined by doing the same thing over and over and expecting a different result ;)

I do agree that none of these plans can "exclude certain groups of users." For this to work it has to be across the board and the entire economy will have to take a short term hit to pay for past stupidity. This is sorta like living on nothing for a year so you can pay of all you credit card bills and get on with you life.

I'm opposed to any plan that involves government force. This falls into the socialism category and I don't subscribe to that political theory at all.

I do not believe in taking money from Person A by force so it can be donated to Person B.

If we're going to use this theory then I propose a tax to really further energy conservation. Perhaps a 25 cent tax on each internet post, 30 cents for each worthless email sent, 50 cents if a file is attached, and a buck for each person that a worn out joke is sent to.
Each person would get a printout before tax time and the people not wasting time on the net would get a rebate for conservation and the consumers would pay dearly for their wasteful habits.

There's no difference that I can see between the two.