Friday, April 6, 2007

The Case for a Higher Gas Tax

I'm usually not one to advocate for higher tax rates but at this moment in history it seems like the right time to raise taxes on gasoline and imported oil. Tax policy is often used as both carrot and stick to cause certain behavior by both businesses and consumers and can take the form of higher or lower rates of taxation or tax credits.
Nearly everyone agrees, publicly anyway, that the US needs to lower its consumption of oil, especially imported oil, for any number of reasons; reduce CO2 emissions, reduce dependence on 3rd world despots, promote energy independence, etc. What better way to achieve these multiple goals than to increase the price of the commodity at the root of these problems?
Given the run up in the price of fuel these last few years with virtually no negative effect on the economy it's obvious that Americans are capable of paying the higher rates. Even the sale of gas guzzling trucks and SUV's weren't too negatively impacted.
A higher gas tax should be something all politicians should be able to agree on. The Democrats will get us to reduce our consumption and accompanying emissions of CO2 as well as a new revenue stream. Republicans can get a revenue source for subsidizing the search for alternative fuels and both parties will benefit by reducing our reliance on foreign sources, especially those from unfriendly regimes. The most severe blow we can deal to our oil revenue fed enemies is cut off the flow of petrodollars.
What will this compromise require from Dems? Allowing the US to develop domestic supplies while we transition to alternative fuels. That means getting enough backbone to fend off the environmentalist whackos that would have us all living in caves. What will this mean for Republicans? Agreeing to higher taxes. Not all taxation is bad and in this all American should agree that the goals are worthy of the cost.
If we had a real leader in the White House he would issue a Kennedyesque challenge to America that calls for shared sacrifice and a common goal of energy independence. Unfortunately most politicians are too cowardly and lack principles, reelection being their only motivation.
For example, instead of raising fuel taxes and letting the market cause automakers to raise fuel standards and produce more fuel efficient cars Congress takes the heavy handed approach of raising CAFE standards. And we Americans still drive gas guzzlers. Why? Because we can afford to.
The major downside to this plan is that we can't trust government with our tax dollars. Instead of funneling the tax revenue to energy research and transportation infrastructure they will likely blow it on pet projects and other pork.
The recent troubles in the ME ought to be a wake up call that we can't expose so much of our economy to the happenings in the most unstable part of the world and spend precious dollars preserving the stability there to ensure the flow of oil.

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