Friday, June 6, 2008
Gas prices
Charles Krauthammer's column in today's WaPo is worth reading, I think, primarily because in the first half he offers an exceptionally simple explanation and justification for an already simple concept that governments, and even individuals, refuse to accept year after year and decade after decade, namely that the most effective way to accomplish something is to hit people on the wallet. He then describes an apparently long standing proposal of his that I was not familiar with until now but, upon reflection, one I agree with. In general, it is highly unusual for me to support any proposal that advocates a new tax, but his actually makes logical and economic sense and, due to the fact that it includes a tax reduction elsewhere in the system, would do more good than harm.
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4 comments:
In Political Science 101 at ASU, Charles Krauthammer was held up as the model of conservative thought. So I'm blinking my eyes wondering how he could be okay with a tax -- except that it's becoming more apparent that traditional conservatives are their own breed, a class to be listened to once again.
It all depends on your definition of "conservative." It's one of those terms that everyone bends and flexes to fit their own agendas. Intuitively, most people think of it simply as the opposite of "liberal," but that's not helpful, since in that case, they first have to define "liberal," and even then there is more than one opposite.
While I do agree with Krauthammer that a tax is the easiest, most efficient way of changing behavior, I have a couple of problems with his argument:
1. There is no way a gas tax would be "instantly refunded to the American people in the form of lower payroll taxes". Lowering the payroll tax essentially means cutting social security or medicare benefits. Even if it that were somehow politically feasible, I'm not sure it's such a good idea considering the problems those programs are heading for.
2. A gas tax is regressive. Think of a poor immigrant who has no choice but to drive to their job. Now we hit this person with a $2/gallon gas tax. And the reason Krauthammer wants to do this is.... not entirely clear. While reduced US demand for gas would reduce the global oil price slightly (assuming the rest of the world's demand for oil is fairly inelastic), and thus the profits of the Saudis, Venezuelans, etc, what is the goal here exactly? Moral satisfaction? Destabilization of the Saudi regime? I don't think so.
A gas tax for environmental reasons? That's another story and another debate.
CS
CS,
Regarding #1, ignore political feasibility. Krauthammer's tax itself would not be politically feasible any more than cutting social security or medicare. We are firmly in the realm of the hypothetical here. Now, in theory why couldn't the proceeds from the gas tax be applied to pay for a program like social security? Who says the money has to come out of a payroll tax? That, of course, is if you even agree that social security is a desirable program that needs to be funded. I, for one, disagree, and I suspect Krauthammer would too.
Regarding #2, any consumption tax is by definition regressive. That's just an unfortunate part of reality. If the goal is to reduce consumption (and you may disagree that that's a desirable goal -- that's a separate question), why shouldn't the poor immigrant be responsible for carrying his part of the burden?
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