Sunday, January 11, 2015

Charles Krauthammer: Raise gas tax a buck a gallon

The Case for a Revenue-Neutral Gas TaxWhy it actually makes sense to raise it by $1 per gallon

By Charles Krauthammer

or 32 years I’ve been advocating a major tax on petroleum. I’ve got as much chance this time around as did Don Quixote with windmills. But I shall tilt my lance once more.

The only time you can even think of proposing a gas-tax increase is when oil prices are at rock bottom. When I last suggested the idea six years ago, oil was selling at $40 a barrel. It eventually rose back to $110. It’s now around $48. Correspondingly, the price at the pump has fallen in the last three months by more than a dollar to about $2.20 per gallon.

As a result, some in Congress are talking about a ten- or 20-cent hike in the federal tax to use for infrastructure spending. Right idea, wrong policy. The hike should not be 10 cents but $1. And the proceeds should not be spent by, or even entrusted to, the government. They should be immediately and entirely returned to the consumer by means of a cut in the Social Security tax.

The average American buys about twelve gallons of gas a week. Washington would be soaking him for $12 in extra taxes. Washington should therefore simultaneously reduce everyone’s FICA tax by $12 a week. Thus the average driver is left harmless. He receives a $12 per week FICA bonus that he can spend on gasoline if he wants — or anything else. If he chooses to drive less, it puts money in his pocket. (The unemployed would have the $12 added to their unemployment insurance; the elderly, added to their Social Security check.)

(More here.)


Anonymous Anonymous said...

This is a great idea, but I see no reason it needs to be revenue nuetral. Why would we raid a depleted Soc Sec trust to pay for roads? A 1$/gal increase would be steep all at once so it should be phased in. A better idea would be to have a floating tax pegged to a given $ amount representing he price of gas plus tax. So if $4 is decided to be that amount, when gas prices (w/o taxes) falls below $4 a tax makes up the difference. This eliminate the ripples in our economy that result from the wild swings in the oil market.

12:31 PM  

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