Congressman John Dingell, D-Mich., has proposed enacting a 50 cents-per-gallon tax hike on gasoline in an effort to force Americans to reduce their consumption. The federal government already collects 18.4 cents of tax per gallon of gasoline in addition to whatever state or local taxes may apply. We strongly resist the idea of the federal government implementing such a large tax on gas, especially now in difficult economic times.\nCheap transportation has been one of the catalysts allowing the U.S. to become such an economic force. In a time when the economy is already suffering, to talk about punishing production in this country by significantly raising fuel costs is unthinkable. \nFurther, such a tax would hurt low-income families and individuals. Because fuel is such an inelastic product (that is, people need it so much, they will purchase it at similar quantities regardless of a price increase), people who still need to travel the same distance every day will be forced to cut back in other areas to cover the new tax.\nMany of us care about environmental issues and alternative fuel investment, and we might be willing to consider a gas tax hike if it were offset in other ways, such as tax cuts on private and corporate income. This would make gas more expensive relative to other goods but would not punish producers or consumers.\nBut the bottom line is the market has always been the engine of innovation. Inefficiency always results when the government steps in to control market forces through subsidies or taxes. We all look forward to alternative sources of energy. Some of us want to protect the environment, some want to reduce the power of oil producers and some are just looking for cheaper, more efficient fuel sources. But alternative forms of energy will come about the same way that other inventions are created – when demand is great enough for someone to make money off a better product, it will be produced.
DISSENT – Jennifer Miller
“Taxes are economically inefficient because they create dead weight loss.” Sure.\nBut you know what else creates dead weight loss? Monopolistic quantity curtailing – i.e., what’s going on right now with the cartel of OPEC. If people worry about an artificially higher price on an already-expensive commodity, they’ve got to remember that the price we’re paying now is already much higher than the true equilibrium price, simply because of OPEC’s cutting back on quantity supplied to secure higher profits. At least with a tax, the U.S. government – not oil barons abroad – gets a big chunk of tax revenue, which we can reinvest into smarter energy alternatives, among other things.\nAnd that’s just economically speaking. In light of the greenhouse gas issue, the world (not just America) will have to seriously cut back sometime soon. It’s better to do it now with a tax than later if we simply run out of gas. (Think of it as “kind of screwed now,” versus “really screwed later.”) I’m not in love with the idea of super-high gas prices either. But this is our best alternative.
