The gasoline tax has little to do with whether it makes any sense for Americans to be paying taxes on an energy source that is absolutely essential to our daily lives and the welfare of the national economy.
With the cost of a barrel of crude oil edging toward $100 (remember the good old days when it was only $70?), it’s time to look at the gas tax. In August, the Cato Institute published a “Policy Analysis” that was titled, “Don’t Increase Federal Gasoline Taxes — Abolish Them.”
Masters of turgid prose, Jerry Taylor and Peter Van Doren, Cato senior fellows, authored sixteen pages of a tightly reasoned argument against raising the taxes on gasoline, plus seven small-print pages of footnotes documenting their position. A prodigious amount of scholarly effort was invested in this analysis.
Fortunately for me, there was an “Executive Summary” on page one that helped to identify the major themes. “Gasoline consumption does not necessarily distort American foreign policy, impose military commitments, or empower Islamic terrorists organizations,” say the authors.
“State and federal gasoline taxes should be abolished.” That’s the kind of thing that catches my attention.
I was thinking about it the other day as I drove a short distance on New Jersey’s Route 280, a testament to potholes and the ruination of roadways imposed by a combination of Mother Nature and relentless commuters. As a lad in the 1960’s, I was the editor of a weekly newspaper and recall watching the highway’s construction. Why, I wondered, wasn’t this roadway being maintained properly?
Then I remembered that I was, after all, in New Jersey! Spending money on highway repair is far less glamorous than creating more entitlement programs and borrowing into the next century to pay the pension demands of teachers and other civil servants.
You just have to like people like Taylor and Van Doren who say things like, “In fact, we find no compelling reason for a federal gasoline tax at all and call for its repeal. Nor do we find any compelling case for state gasoline taxes.”
According to the American Petroleum Institute, “The nationwide average tax on gasoline is 45.8 cents per gallon as of March 2007, up 0.3 cents from October 2006 . . . the federal tax on gasoline is 18.4 cents per gallon. The average state gasoline excise tax remained consistent at 18.2 cents per gallon.” Other taxes such as sales, oil inspection, underground storage tank, and miscellaneous environmental fees add 9.15 cents per gallon to the average tax. Do the arithmetic.
Taxes differ, however, from state to state. New York extracts 60.8 cents per gallon, while Arizona takes only 37.4.
One of the common arguments for taxes is that the world is running out of oil, but Taylor and Van Doren note this concern is based “on shaky ground . . . concerns that conventional crude oil is becoming scarce in any meaningful sense have not withstood close scrutiny.”
They go on to note that our frequently cited “dependency” on oil imported from “unstable countries” is the result of a conscious decision to continue this practice because it is, in fact, cheaper in many ways.
To those politicians calling for higher taxes to force people to drive less, conserve energy, or switch to solar or wind power, “government solutions have the dubious distinction of being more expensive not just most of the time, but all of the time.”
Citing the price fixing in the 1970s when the government wanted to reduce import dependency, the authors note that, “Consumers were made worse off as a consequence.” Anyone who remembers the long lines at gas stations can testify to that.
Listening to George W. Bush say that we are “addicted” to oil makes about as much sense as saying we are addicted to water.
The Greens have, as long as my memory serves, hated gasoline as much as DDT. We instinctively know that taxing gasoline “will not discourage highway congestion and reduce accidents on the roadway.” And common sense tells us, “A national emissions tax would be inefficient because it would ignore the large geographic variation in damages associated with pollution.” That is to say that Los Angeles gets more than, say, Bozeman, Montana.
“Many foreign policy analysts think that U.S. oil imports are dependent on friendly relationships with oil-producing states. The fear is that unfriendly regimes might not sell us oil.” Well, tell that to Hugo Chavez in Venezuela or Iran’s Mahmoud Ahmadinejad whose economy is dependent on selling oil and not influenced by whether they think George W. Bush is the Devil Incarnate.
Moreover, “The fact that Saudi Arabia and Kuwait paid for 55 percent of the cost of Operation Desert Storm suggests that keeping the Straits of Harmuz free of trouble is certainly within their means.” To those who say we are in Iraq because of that nation’s oil, the memory of 9/11 has grown very dim indeed. We are also in Afghanistan, a nation famous for its heroin, not oil production. Keeping one’s eye on the ball, i.e., terrorism fueled by Islamic fanaticism, is essential when all manner of spurious reasons are given to raise taxes on gasoline.
“Once oil leaves the territory of a producer, market agents dictate where the oil goes, not agents of the producer, and anyone willing to pay the prevailing world crude oil price can have all he wants.”
What gasoline taxes do is “extract revenue” and this is what politicians live for. It has little to do with whether it makes any sense for Americans to be paying taxes on an energy source that is absolutely essential to our daily lives and the welfare of the national economy.
If I thought the potholes on Route 280 would actually be fixed, I wouldn’t mind that much about the gasoline tax I pay every time I fill up the tank, but I stopped believing in the Tooth Fairy about the time I concluded that government is a confiscatory enterprise with little concern for my well being or wallet.
ACaruba@aol.com
http://www.anxietycenter.com/
Read more articles by Alan Caruba
"…government is a confiscatory enterprise with little concern for my well being or wallet."
We should remember this when Hillary tries to pass her socialized medicine.
Comment by sedonaman | November 10, 2007
Alas, gasoline taxes will most likely move in precisely the opposite direction. Governement always tends to tax mostly heavily those things that are considered "naughty" such as alcohol and tobacco and yachts. Fossil fuels are rapidly approaching that same category thanks to Algore and the merry band of theives that want to mint their own new currency of carbon credits.
Comment by Steve Sabin | November 11, 2007
The author says: “We instinctively know that taxing gasoline will not discourage highway congestion and reduce accidents on the roadway.” Instinctively know? Rather than rely on our “instincts”, maybe we should rationally discuss the question of why the frequent increases in the price of gas doesn’t reduce consumption.
Think about our daily commute for a moment. Here you are at the light waiting for it to go green and you look over at the car next to you. There’s a gal alone in a 3,500 pound car staring straight ahead with the same bored look you’re wearing. And, the guy on your other side is sitting alone in his 6,000 pound SUV fiddling with the radio. Each morning, we’re an ant army marching individually off to our respective anthills to make a living.
Our alternatives are public transportation which is great if you live in a densely populated area with efficient public rail lines. Or, you can go for a more fuel efficient vehicle – my motorcycle gets 54 miles a gallon during the warm months in California – and 45 to 50 miles per gallon during the cold months. Great gas mileage and fun to ride, but what about the guy in Minnesota or Buffalo, New York trying to ride a two wheeler in snow or driving rain? Or the mom with 3 kids to schlep around – motorcycles and bicycles aren’t a universal alternative to full size cars.
What’s the point? Maybe we should look closely at the reasons for highway congestion? And that’s hardly a brilliant, new insight either. Self-appointed experts have been discussing urban sprawl for decades, but somehow they keep missing the underlying problem. As a nation, we insist on moving people back and forth from their homes and condos to their place of business daily. And not only to the local office parks but across the country as well.
About 10 years ago, I was associated with a firm that spent over $300,000 on video conferencing equipment for all their U.S. and European offices. The idea was to cut down on the constant air travel and have meetings electronically. Your big screen television presented your opposite numbers on the other side of the country and you could discuss budgets, tell jokes, swap rumors, view sales graphs, argue about strategy – geez, it was almost like being there.
Today, all of this firm’s expensive video equipment is gathering dust in the video conferencing studios. Nobody uses the equipment anymore and, even if they wanted to for some strange reason, the equipment instructions were misplaced long ago. What happened? Nobody liked the idea of not traveling to remote meetings. One senior executive claimed he couldn’t manage his group unless they were physically present in the meeting – maybe he missed sampling their bad breath – the reasons were never clear. And this firm is only one of many firms that haven’t utilized their expensive investment in video conferencing to its maximum potential.
Another fad that hasn’t sustained momentum is “working from home”. Most office and service workers can’t function without their computer terminal – typewritten memos were replaced by emails, file cabinets were replaced by databases, companies even have websites to disburse corporate policies and procedures. The electronic age has revolutionized the work environment – you can work from your cube, you can work on the plane, you can work in the airport terminal, you can work from your hotel room in Diddlebum, Arkansas – heck, I’ve even worked from a houseboat in Lake Shasta. So, it seemed only logical to let folks work from the comfort of their home as well.
At first, workers embraced the idea of working from home and there were even claims individual productivity had increased without the usual workplace distractions. But, then reality set in. People missed the interaction with other employees, they wanted the distractions, the frequent group meals, lunchtime shopping trips and sitting around the conference table in the thrice weekly status meetings.
The computer department elves didn’t like the technical problems associated with work from home electronic setups, the human resource department mini-tyrants felt there needed to be strict rules and monitoring of “work from home” employees and the managers felt they were somehow losing touch with their employees. From the company’s viewpoint, work from home provided no business incentives and lots of drawbacks. But it wasn’t limitations of the technology as anyone with a Blackberry will tell you – the boss can track you down in an airport restroom if necessary. So both management and employees rejected extensive working from home hours, each for their separate reasons.
But, if gas prices continue their upward march, these are solutions that would work if we place our trust in simple economics. People are almost infinitely adaptable to their environments and video conferencing and liberal work from home rules save gas in straightforward and logical ways. My “instinct” tells me we need to let market forces work rather than trust in new gas taxes or other government meddling. Prices seem to be rising anyway without the help of additional taxes and the countervailing forces and gas-saving, electronic alternatives are available now and have been available for years. The question is how do we get more people to use them, how do we convince companies higher gas prices affect their bottom line and how do we override the human herd instinct and the monkey-house at the zoo workplace environment?
Comment by Pat Skurka | November 11, 2007
Pat Skurka:
“…why the frequent increases in the price of gas doesn’t reduce consumption.”
Perhaps it does, but we just don’t detect it. This report http://www.consumerfed.org/pdfs/CFA_REPORT_The_Impact_of_Rising_Prices_on_Household%20Gasoline_Expenditures.pdf claims that, “over 15 percent of the vehicle miles traveled by households are for work and work-related.” How much over that amount is not mentioned, on cursory look. If it is just a little over 15 percent, it would explain why work-at-home schemes like “telecommuting” didn’t work out – they just weren’t worth it. Another reason might be that productivity actually went down, because an employee who is watched is more productive than one who is not. As a first level supervisor of a group of engineers, I noticed that virtually all the employees who asked to be allowed to telecommute were women. I concluded that it was a carefully disguised program to give women what they have been demanding for about a century: to get paid for staying home and keeping house and taking care of her kids.
During WW-II, a lot of consumer products were rationed, among them meat, butter, and gasoline. Although Americans accepted the rationing of other items, there was no chicanery below which they would not stoop to get an extra gasoline ration coupon or two. This was in an era in which public transportation was a lot more widespread. What I conclude from all this is that an automobile is the individual’s freedom machine. The courts, I understand, have held that there are three basic rights: First Amendment rights, the right to vote, and the right to interstate travel. I can stand on the corner and rant away, but the world doesn’t change; I can vote, but one vote on the margin is meaningless; but I can get in my car and go anywhere that I think will increase my happiness. It provides me with my last remaining freedom.
Steve Sabin:
“Governement (sic) always tends to tax mostly heavily those things that are considered ‘naughty’ such as alcohol and tobacco and yachts.”
When it was all over, a Whiskey Rebellion participant said, “The day will come when not a shirt will be washed without an excise.” I don’t think it’s the “naughtiness” of an activity so much as its prevalence. That’s why there is a Ways and Means committee. Even though Congress passed a law banning taxes on the use of the internet, that tax is inevitable.
Comment by sedonaman | November 12, 2007
Well not to dispute the problems with NJ, but we still have FAR BETTER roads than the states bordering ours with the exception of New York.
Cross the Delaware Water Gap into Pennsylvania and it is a noisy ride. COnnecticut is not much better.
Still I have lost 2 tires on Route 280.
Comment by Carl | November 12, 2007
Does any of you know what the level of British taxation was, that Americans rebelled against? I have heard it was under 5% per year.
Comment by gz9gjg | November 12, 2007