The gas tax idea -- a follow-up on Kevin's post

[Tim Elston]

now the government is wanting to tax gas so it will always stay around $4.00 a gallon so we buy smaller cars it is ABSURD. I don't care if they cut sales tax or federal tax it is ridiculous.

Kevin, I thought it was entirely appropriate not to dignify Coulter with an actual discussion of ideas, so I pulled this out into its own thread.

I like your concern for good ideas, and I'd like to know why you think a gas tax is absurd. To me it makes a lot of sense. Gasoline pollution costs society and is a limited resource, so it makes sense to make the cost of its consumption include those realities. The cost of gasoline use is not only in its production and supply chain, but also in its post-consumption effects and relative depletion. While I admit that in practice government rarely applies economic theory to tax policy well, in theory it is in accordance with economic sense to affix true costs to a product. The cost of gasoline consumption should include the costs of pollution mitigation and R&D for alternative energies for when the oil supply diminishes and in the interest of energy independence. It makes a lot more sense to build conservation incentives into the cost of gasoline rather than not, and to make consumers pay the total cost of consumption rather than have them pay only the production and supply chain costs. Otherwise consumption comes at an artificially low price, to be subsidized by arbitrarily derived revenues.

I encourage you to read a book called The Undercover Economist, by Tim Harford. Economic theory is essential in setting good tax policy. I have come to recognize you as an intelligent, sincere processor of information. I think you would gain a lot from the book. I wish every American were required to take a spate of economics courses--especially politicians, who are the ones who violate economic law, it seems, as a profession. The book lays and elaborates on a foundation for economically sound tax policy in one of its chapters, but I found a quick blog on Harford's opinion on Britain's gas tax policy here: Green lite, in case you're interested.

[Full Quiver]

Tim, I suppose all governments already tax gasoline. I know the feds do and TN does. What makes you think that the Feds will actually use the money generated from a gas tax on the environment?

The reason I ask is because the gas tax in TN is supposed to be used on road construction. The fact is that over the past decade or so the state legislature run by democrats has squandered this revenue on other things. There is almost zero accountability in government and I believe you have said you agree with that. With that said why would we want to allow the government to have one more penny of our hard earned money?

[Tim Elston]

There is almost zero accountability in government and I believe you have said you agree with that. With that said why would we want to allow the government to have one more penny of our hard earned money?

I hear you. It would be nice to think that theory meets practice, but our politicians--both Democrats and Republicans, equally--are such traitors to the national interest that being a policy-minded citizen is nearly a waste of identity.

In theory it is a good idea to price according to cost and to pay for cost with price revenue. A part of me thinks that it is not entirely reasonable to write off all tax policy to cynicism, and another part of me thinks that if we don't even tip our hat to economic reality, we're doing more than doubling our national debt every eight years.

There is also the matter that disincentive to consume a limited resource is effective independently of the benefit gained through the disencentive, so even if we are too busy watching American Idol to hold our politicians (or ourselves!) accountable for squandering our disincentive revenue, we at least postpone our self-wrought demise by the amount we conserve.

But I'm with you: The degree to which America has betrayed itself is almost too depressing to survive. I suppose hope springs eternal when it comes actually to implementing a good idea, let alone getting past partisan rhetoric to think of one, let alone not getting run over by the lobbyist truck with it in hand in the halls of Congress. Come to think of it, why do we even waste our time caring or voting? What a forsaken mess.

[one love]

Tim thank you for making this a thread I need some sleep and will hopefully reply to this tomorrow in detail and explain why I think it is a disastrous plan of Major proportions and I mean that. i understand what you are implying regarding the vehicles and as I mentioned the big three especially ford sold more trucks then cars again this month.
A few hints:

It will hurt business
I hate unnecessary taxes and do not believe taxing and increasing government is the way to bring about change.

But I am a firm believer in the fair tax anyway.

Let me really reply to this tomorrow with the attention it deserves, thanks again

[Tim Elston]

I understand what you are implying regarding the vehicles and as I mentioned the big three especially ford sold more trucks then cars again this month.
A few hints:

It will hurt business
I hate unnecessary taxes and do not believe taxing and increasing government is the way to bring about change.

I hear the point. Ford, for example, is making profits off of its large trucks, so to impose a tax on gasoline will undercut that glimmer of hope for them and, thus, our long term economic viability. It's a good point and has merit.

Thinking through this, without taking an unequivocal position on it, for the sake of my own thought process, if the premise is valid that the true cost of gasoline consumption is more than the cost of production and supply, would not a price of gas that does not reflect real cost be, in effect, a subsidy to the auto industry? And if business in general is hurt by the true cost of oil consumption, isn't it counterproductive in the long run to continue to subsidize it, only to pay the piper in real cost after it has accumulated over decades?

But I am a firm believer in the fair tax anyway.

Yes, I like the fair tax, too. It goes a long way toward applying costs where they occur and providing incentives to preserve and conserve. On the other hand, it is weak in addressing real but intangible costs. For example, how does the fair tax target the costs of pollution, congestion, and health care that is provided in remedy of, for example, the consumption of junk food, which is cheaper than healthy food?

I think the fair tax meets the criteria of being a foundational component of sound tax policy, because it inherently targets consumption. But since it does not address real but intangible costs, it needs complementary "fair tax" components that target intangible costs on their own terms. The closer we target the source of cost in our tax structure, the less we undermine economic law, which in turn creates real economic growth instead of the illusion of it.

Anyway, I'm interested in what you have to say. I need to get a degree in economics.

[one love]

Tim I am heading out the door for work I will respond to this I am very interested in digging deeper into this.

I will say I believe we as citizens need to take some personal responsibility and do not need Government to decide what is good for us or not by taxing things. It reminds of the tax that is starting on a certain candy I think (i cant remember) so people will not buy as much , to help the obese. I would be firmly against ANY such thing.

[Dr. Ron]

Any tax on goods and services is NOT a good idea if it is being used to create a reduction in consumption and abuse.

The flat tax is the nearest thing to being what I would consider a "constitutionally correct" tax....either that or a national sales tax which has been proven to be the real answer to the budget problems.

The more government intervention (rep/dem/ind) we have the worse off we are as a people.....

[Tim Elston]

Any tax on goods and services is NOT a good idea if it is being used to create a reduction in consumption and abuse.

In economic terms, why not? What's the rationale for your objection to this? The economic rationale for it is that consumption of limited resources and abuse incur costs that must be paid. Someone, somewhere will inviolably pay for it. To attach the price directly to the consumption and abuse offers a disincentive to consume the limited resource or to abuse and offsets the cost of consumption and abuse. It leverages the laws of economics to effect resource managment. The same principles are at work, for example, in making people pay for their own health care; if they incur costs for health care, they will ration their use of health care supply (i.e., they will submit their decisions to go to the doctor to economic reason). To me, this is the ultimate responsibility principle. You abuse, you pay. You use, you pay the total cost. Don't expect everyone else to subsidize your extravagence. In my mind, this is the ultimate conservative principle.

[Dr. Ron]

It is not a good idea because it gives control to the government on how "they" want us to live our lives in a free society. There are many things "I" think we can live without.....but I don't think taxing them is the way to eliminate them or to control them.

I do understand the concept....and I can well understand your belief that it might just be a good idea.

When I lived in South Dakota for example, all the liquor licenses were owned by the state or county...can't remember exactly how that worked, but you could not own a liquor license ....you could only "lease" it from the government. The taxes were set by the goverment and collected to pay for drug and alcohol rehab......sounds like a good plan...but soon the government decided to let medicare and medicade pay for that and the taxes were increased to pay for "God knows what" and didn't get to the root of the problem after all.

So, I base my statement on having lived in that environment and seeing that it might be a nice theory, but it NEVER seems to be practicable.

Again, the best tax is a national sales tax. Same rate of tax on everything you buy and every state recieves a percentage of the revenue collected in their states and no state taxes, no property taxes, no gas taxes.......

According to the experts I have read,.....and there are many.....this would end inflation, balance the budget, and eliminate the IRS. It would be fair and equitable to all......prostitues would have to pay their fair share jus tlike drug dealers, pastors, and everyone.......NO exemptions for anyone,....churches and non-profits included.....Now that is a plan.

[Tim Elston]

Again, the best tax is a national sales tax. Same rate of tax on everything you buy and every state recieves a percentage of the revenue collected in their states and no state taxes, no property taxes, no gas taxes.

The national sales tax is essentially the Fair Tax that one love mentioned, and you won't get any argument from me against it. I would vote for it in a heartbeat, precisely because it disincentivizes consumption and incentivizes conservation without disincentivizing wage earning. The Fair Tax does not calibrate for true cost and does not disincentivize more costly behavior, and thus is not "the fairest of them all," but it may indeed be the most practical, as a compromise.

By the way, the government would be the one who determined the rate of the national sales tax, so the argument against targeted tax by virtue of government "telling us how to live" is weak. The Fair Tax would be, in essense, the government telling people who make conservative choices to foot part of the bill for those who make extravagent choices. Cost is not measured dollar for dollar by production and supply, but, in addition, by effect. So the Fair Tax misses the cost of effect. But it's much better than our present morass, which disencentivizes wage earning.

[Dr. Ron]

I understand what you are saying Tim, and I agree with either flat or sales tax.....I also am aware that the amount of tax would be set by the government....but given the way it would increase the revenue, it would be harder to sell it to the public and keep political jobs, if there was all of a sudden (God forbid) a balanced budget and a surplus......and then try to justify a larger tax..

I do understand your point on the "power" of the government to interfere with our lives, and it might take a few elections to straighten that out, but God knows we are in a collosal mess now.....I know you will agree with that.

Btw, I have a member who bought a new luxury car today. His accountant called him and told him that he would get a $10,000.00 tax write off if he would do that , and a 50% depreciation next year on the car. He bought a nice car....

If one has the means, one can get some seriously good deals (at tax-payers expense). I am beginning to think I might need to start a church on the Mexican Riveria.......

[MacUser]

Global Warming is bunk. Let's enjoy the cheap gas and buy large SUVs.

[Mike Vande]

Wow, hadn't heard the Democrats wanted to tax gas back up to $4 a gallon, but it's true to form. They never learn; they get elected by acting like "centrist-conservatives" with a conscience, and then willfully lose the offices by performing like the tax & spend liberals they are. Well, if it happens, you can bet they will lose both houses of Congress in the next election, and the Presidency in the one after that...

[Tim Elston]

and then willfully lose the offices by performing like the tax & spend liberals they are.

The spend party is now the Republicans. At least Democrats have sense enough to tax when they spend.

[Mike Vande]

The spend party is now the Republicans. At least Democrats have sense enough to tax when they spend.

And the Democrats are the tax party, obviously. It's why they end up losing elections after they've been in office long enough to think people will continue to vote for them even if pick their pockets for their pet social engineering projects.