Sunday, January 4, 2009

My Opinion of New Gas Taxes for the Sake of New Taxes

Wired Magazine (as well as many others) are advocating for a motor fuel tax increase. Or in Wired's words:

We've already shown we can live with gas at $4 a gallon (less than half what some European countries saw during the price spikes last summer) without inviting the apocalypse. That pretty much shoots down the argument that people won't stand for higher gas prices. And, as Time magazine notes, an increase in the gas tax could be offset by a cut in the payroll tax, which has a far greater impact on our pocketbooks, anyway.

This argument (because we can afford it) is a horrible way to build a consensus around energy. Often referred to as an Apollo Project like grand marshaling of effort. That is what the US and world need now. A grand wide-ranging effort.

This argument though is unconvincing to me. In fact its the height of ivory tower belligerence in my opinion. As someone who has taken the bad debts of bankrupt businesses recently unable to cover the cash flow needs of high prices I differ about how "we can live with gas at $4" compared to those disengaged with the actual customers of this product. Its hard to justify a tax simply to improve the policy goals of our government in conflict with the actual cost of operating effect of small business and the low rungs of our economy.

Seeing the impact of $4 a gallon heating oil to my elderly customers it is painful. It hurts emotionally and stuns me reconciling my own belief in the free-market with a desperate want of an affordable option for these customers impacted. When you need to talk to trucking companies and other industrial diesel users with decades of good credit history now struggling to pay for the fuel cost of operating requires a tough choice on my end is also equally as hard.

High energy prices is dangerous and hard. It is not something we can live with. Especially if its just to tax and then spend. We need an actual policy. One that doesn't solely raise prices but allocates the incentive for a diverse, domestic, and sustainable portfolio of energy.

Our energy shouldn't be that high prices are okay. Our policy should be as inexpensive as possible with an ever improving requirement for reducing impact. I have no doubt that we can have extreme-low-impact energy at a cost far below $4 a gallon. All it takes is more competition and improved technology.

To move our energy infrastructure forward is not the job of a gas tax. A Btu tax maybe. A CO2 tax probably. Those would allow the market to support long range innovation and more importantly a wider/smarter grid to allow for more players. These would work if the money was directly placed in off-setting the Federal tax deductions for utility and refiners investing in new capital and infrastructure.  Regardless of what tax though it needs to be evenly distributed on those sources of energy that come from outside North America and bolster an incentive for new locally produced energy.  

A gas tax to rebuild infrastructure for gasoline users. That I agree with if it is connected (users of roads paying for improved roads is good policy). The real catch is that legislators (be they Federal or State) don't connect a $1 or revenue with a $1 of infrastructure.  Even when mandated usually the added revenue gets sucked up by the Administration of departments long before it sees the laying of asphalt or raising of bridges.  

Don't fall for those knee-jerk taxation lovers looking for an angle for any more revenue to dole out. Ready, shoot, aim with the US tax code will not move us forward.  Likely only backward. Without a clear results oriented policy taxes rarely accomplish anything but more special interest involvement restricting further progress.

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