Are Voters Stupid Enough to Sell Their Votes for Just $27 and Change?

Hillary Clinton is hoping that some are

Ronald Bailey | May 6, 2008

During the 1992 Democratic presidential primaries, former Massachusetts Sen. Paul Tsongas denounced rival Gov. Bill Clinton (D-Ark.) as a "pander bear" who "will say anything, do anything to get votes." Sen. Hillary Clinton (D-N.Y.) is clearly following in her husband's electoral footsteps by proposing a "gas tax holiday" for the summer driving season. When primary votes are at stake, who needs to heed the laws of economics or even good sense?

Clinton's idea, which is also endorsed by Republican presidential hopeful Sen. John McCain (R-Ariz.), is to suspend the 18.4 cents per gallon federal gas tax for three months in order to give cash-strapped motorists relief at the pump. Assuming that dropping the tax would actually lower the price per gallon by the full 18.4 cents, how much would this actually save the average family?

Let's make a rough calculation, using an average commute of 20 miles per day in an automobile with a 15 gallon tank getting the corporate average fuel economy (CAFE) mileage of 27.5. A commuter would then fill up every 20 days. There are 98 days between Memorial Day and Labor Day, so that means five fill-ups over the summer. Five 15 gallon fill-ups at 18.4 cents per gallon less would mean that motorists would save a total of $13.80 for the summer. Let's double that for vacation driving and shopping and that comes to a grand total of $27.60 in savings. About enough to buy five Big Mac Combos.

But would prices actually go down by 18.4 cents? Not likely. As the Tax Foundation reports, most economists assume "that a temporary gas tax holiday would merely increase the profits of the oil industry due to the inability of domestic supply to respond to increased demand in the short run."

In addition, if the federal gas tax is dropped for the summer, the highway trust fund that pays for the upkeep of our crumbling roads and bridges will be short $10 billion. Not to worry, says Sen. Clinton: We'll make up for that fiscal shortfall by taxing the excess profits of Big Oil.

Clinton clearly hopes that primary voters will want to stick it to the greedy oil companies. After all, Exxon Mobil just announced $10.9 billion in profits for the final quarter of 2007. So Sen. Clinton says she'll take away some of those profits to pay for her gas tax holiday. And Clinton's not alone. Her Democratic rival, Sen. Barack Obama (D-Ill.) is also calling for a windfall profits tax on oil companies. But will it work?

The last time the United States imposed a windfall profits tax on oil companies was in 1980 and it lasted until 1988. The result, according to a 1990 Congressional Research Service analysis, was that the tax on oil company profits decreased domestic production by 3 percent to 6 percent and increased dependence on foreign oil by 8 percent to 16 percent. Keep in mind that the big private oil companies actually control only about 6 percent of the world's known oil reserves—the rest are owned by gigantic foreign national oil companies. And just where do private oil companies get the billions they invest in projects to increase supplies? That's right; their profits. In other words, Clinton actually ends up sticking it to consumers when she tries to stick it to Big Oil.

Sen. Clinton may be feeling the pain of motorists right now, but once she's in the White House, she plans to inflict more pain at the pump. In fact, all three presidential hopefuls plan to do this. Why? Because Clinton champions "the most aggressive approach to reducing global warming out there." She wants to cut the emissions of greenhouse gases that warm the planet by 80 percent by 2050. To do this she favors a cap-and-trade market on carbon dioxide emissions. The Progressive Policy Institute has calculated that a relatively modest $15 per ton price for carbon dioxide emissions would boost the price of gasoline by 15 cents per gallon. But Sen. Clinton is counting on voters failing to connect the dots between gasoline prices and her global warming policies.

This past weekend, on ABC News' Sunday talk show, "This Week," Sen. Clinton was asked by host (and former Bill Clinton aide) George Stephanopoulos, "Can you name one economist, a credible economist who supports the suspension?" Sen. Clinton replied, "I'm not going to put my lot in with economists." For their part, economists are certainly not putting their lot in with Clinton. According to Bloomberg News, 200 prominent economists, including four Nobelists, have signed a petition denouncing Clinton's gas tax holiday as a "bad idea." Even the New York Times' Clinton votary economist Paul Krugman grumbled that her ploy is "pointless, and disappointing."

We will find out soon if Democratic Party primary voters are really stupid enough buy into this cynical Clinton pander.

Ronald Bailey is reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

Comments

x,y|5.6.08 @ 3:30PM|#

I haven't followed this too closely, but what is the libertarian gripe with less taxes (even if it is only temporary)?

Barnum|5.6.08 @ 3:33PM|#

You can fool all of the people some of the time, and some of the people all of the time . . . and that's sufficient for most purposes.

Elemenope|5.6.08 @ 3:37PM|#

I haven't followed this too closely, but what is the libertarian gripe with less taxes...

Because it is a bait and switch. The government is already committed to a certain level of spending (in this case to repair roads and bridges) which will still be spent regardless of the disposition of the gas tax.

Without reducing spending, tax cuts are a cruel joke and nothing more.

Colin Clout|5.6.08 @ 3:37PM|#

x,y

I think part of it is that more taxes will have to be raised in the future to offset the current tax break. I've also heard arguments that most people won't realize anything near the potential 18 cent per gallon reduction.

Neil|5.6.08 @ 3:37PM|#

You can get a bunch of economists from Harvard in a room and they will pan it.

But get a bunch of regular heartland working-class folks and they will endorse it.

|5.6.08 @ 3:39PM|#

Then he asks: Are voters stupid enough to fall for it?

Hmm... Let me think long and hard about that one.

|5.6.08 @ 3:40PM|#

Barack Obama's plan -- Pander to voters who really love big government by adding a permanent new tax to gas.

Hillary Clinton's plan -- Pander to stupid voters by temporarily dropping the tax on gas, but adding a new fee (possibly permanent) upon oil companies to cancel out the drop, making the price at the pump remain the same, then accuse the oil companies of acting in bad faith by not passing on the "savings" to consumers.

McCain -- Pander to tax-cut voters by temporarily dropping the price of gas to try to cheaply buy some voters, but not hurt revenues in the long run by making it permanent, and not cutting government spending by a corresponding amount, thus driving up inflation so over time your savings are devalued by the amount of the tax cut.


Not voting for any of these clowns, but must say McCain is the least worst on this issue.

|5.6.08 @ 3:41PM|#

Are voters stupid enough to fall for it?

Yes. The voting public is like a squalling toddler, red in the face, incoherent as to it's demands and prone to lashing out at whoever or whatever is near. The voting public needs a swift, efficient paddling, a trip to the time-out corner and to be sent to bed early and with no supper. If it keeps this up, the voting public is going to scream it's way right out of that trip to Chucky Cheese.

kinnath|5.6.08 @ 3:41PM|#

So Neil, do you piss in public pools just for fun?

|5.6.08 @ 3:45PM|#

What's your point, Neil?
Almost every economist believes that tariffs are bad for the economy, but that doesn't stop dumbfuck steel workers from demanding them.

Neil|5.6.08 @ 3:47PM|#

My point is if you want to help the regular folks, McCain is the way to go. Clinton even isn't that bad (thats why she will blow B. Hussein out of the water tonight).

|5.6.08 @ 3:51PM|#

The Progressive Policy Institute has calculated that a relatively modest $15 per ton price for carbon dioxide emissions would boost the price of gasoline by 15 cents per gallon.

Incidentally, since Pigouvian taxes pay no heed to how the revenues are used, I find proposals to tax carbon on top of the existing excise tax to be rather disingenuous.

So long as the federal excise tax on gasoline is higher than the tax on the carbon dioxide emitted, such taxes should be treated as concurrent, not additive. We should simply consider the first 15 cents of the 18.4 cents the Pigouvian penance and otherwise not change the collection or spending at all.

x,y|5.6.08 @ 3:52PM|#

So we can't cut taxes without cutting spending? What about vice versa? I agree that both would be ideal, but I'll take one over neither.

Neil|5.6.08 @ 3:53PM|#

Gotta starve the beast, folks. Starve the beast.

Fluffy|5.6.08 @ 3:55PM|#

Here are the reasons to not support the McCain gas tax holiday, even if like me you would generally support lower taxes even if it's for a limited time:

1. The tax cut will be paid for with borrowed funds, so it's not a cut as much as it's a deferment with interest.

2. There are no accompanying spending cuts.

3. Given the tightness of the gasoline market, it is likely that none of the tax decrease will be passed through to the consumer anyway.

I heartily agree with #1 and #2. I am not sure of #3, but credible economists have made this representation.

Neu Mejican|5.6.08 @ 3:55PM|#

Neil,

I haven't been following too closely, but last time I saw a poll on the gas tax holiday, something like 43% supported it, while the majority did not...most saw it as nothing more than pandering.

MikeP,
If the purpose of a carbon tax is to reduce usage below current levels, considering the tax we already have as a mechanism to reduce usage is silly.

Just silly.

You usually avoid silly arguments.

Fluffy|5.6.08 @ 3:56PM|#

Neil,

Starving the beast only works if you, you know, starve it.

Borrowing money and raising spending by record amounts is not "starving" anything.

Colin Clout|5.6.08 @ 3:56PM|#

As long as the government can continue to borrow money (I'm not quite sure how governments do that - can someone with some economics training chime in?) and they pay the interest, etc. on that debt starving the beast isn't much of an option. At least that's the way I see it.

Colin Clout|5.6.08 @ 3:57PM|#

Fluffy beat me to it.

Neil|5.6.08 @ 3:57PM|#

Fluffy the idea is to get debt to a high enough level where people are forced to chose between social security, medicare, and other big government programs on one hand and a strong military on the other. Of course, they will chose the latter.

That should happen in a few decades at this rate.

|5.6.08 @ 3:59PM|#

I'd sell my vote for $27, and it's not because I'm stupid. My vote is worth a whole lot less than that (and it's not worth anything to me). If someone is ready to pay me $27 for my vote, they can have it.

Neu Mejican|5.6.08 @ 4:00PM|#

Neil,

So you are telling me GWB's spending spree is really just a long-term strategy to reduce spending...

[sarcasm]

Now I see...he is an evil genius.

[/sarcasm]

Naga Sadow|5.6.08 @ 4:07PM|#

Neil,

Can I borrow your magical future-foretelling crystal ball when your done with it?

|5.6.08 @ 4:10PM|#

If the purpose of a carbon tax is to reduce usage below current levels, considering the tax we already have as a mechanism to reduce usage is silly.

The purpose of a carbon tax at $15/tCO2 levels is not to "reduce usage below current levels." It is to price in the social costs of the unaccounted externalities. That price has nothing to do with the present-day non-externality tax on gasoline. Note, for instance, that such proposals would apply the same modest harmonized carbon tax in high-excise-tax Europe as in the US.

I do agree that proposals for punitively high carbon taxes that actually are designed specifically to reduce consumption make more sense when added on top. I of course disagree vehemently with such taxes.

|5.6.08 @ 4:14PM|#

"There are 98 days between Memorial Day and Labor Day, so that means five fill-ups over the summer."


Yeah, whatever, Guy

|5.6.08 @ 4:16PM|#

As long as the government can continue to borrow money (I'm not quite sure how governments do that - can someone with some economics training chime in?)

Like everybody else - they sell bonds.

The purpose of a carbon tax at $15/tCO2 levels is not to "reduce usage below current levels." It is to price in the social costs of the unaccounted externalities.

Of course, pricing in these externalities is meaningless if (a) usage isn't reduced and/or (b) the funds raised aren't used to ameliorate the externalities.

Elemenope|5.6.08 @ 4:17PM|#

Fluffy the idea is to get debt to a high enough level where people are forced to chose between social security, medicare, and other big government programs on one hand and a strong military on the other.

Ah, so the idea is to dig a hole so deep, we'll reach China! I get it!

You can get a bunch of economists from Harvard in a room and they will pan it. But get a bunch of regular heartland working-class folks and they will endorse it.

Offer a "regular" guy two choices:

A. Get $1,000 now.

or

B. Get $5,000 five years from now.

The vast majority will pick A. Which just goes to show that most people are not rational when it comes to fiscal/economic decisions. I would hesitate to call them fucking idiots, only on account of the fact that many educated non-economists make the same choice.

Neil|5.6.08 @ 4:19PM|#

Elemenpoe I'd choose $1,000 now because in five years inflation may make $5,000 just like $1,000.

Daniel Reeves|5.6.08 @ 4:20PM|#

Bailey,

You're completely wrong on the savings department in terms of Clinton's plan. prolefeed already covered it, but I'll reiterate. She plans on making up lost revenue by taxing profits. Apparently she believes that tax payers receive all the burden and that people being taxed don't change their incentives. But so long as the money comes from somewhere, it's going to get paid. Clinton is famous for her fairy godmother economics, however, so I don't put this pass her.

Krugman is a total Clinton shill and he says that McCain's plan is "evil" and Clinton's plan, because it wouldn't actually do anything when enacted, is just "pointless." I must disagree: misleading the public with stupid economics is evil no matter what.

I haven't followed this too closely, but what is the libertarian gripe with less taxes (even if it is only temporary)?

Because libertarians can best get behind taxes on gas than anything else because they're very practical. For one, there's the tragedy of the commons. It's one of the big reasons why socialism is a dumb idea and it's THE biggest reason why property rights are important. But you also need to realize that air is a common resource and it's very hard to claim possession over air. So what do we do? Government intervention (gasp!). But I think that when it comes to negative externalities, government has a valid role in inhibiting them. Negative externalities are a problem and if you know basic economics, you know that the private market can't solve the problem. Don't deny it. This is one area where the free market can't optimize outcomes or even get close to it.

Secondly, governments own nearly all of the roads. Not that I approve of that, but while they're owned by the government, I'd rather have government maintain their roads at least a little bit.

|5.6.08 @ 4:22PM|#

I become nervous when people talk about the irrelevance of the uses to which carbon tax revenues are put. My expectation is that any new revenue from the additional tax will be used in foolish and counterproductive ways; it will only produce a frenzy of rent-seeking.

The gasoline tax should not be a sin tax, it should be a user fee. If you want to fund some sort of "mass transit" boondoggle, fund it out in the open.

|5.6.08 @ 4:23PM|#

Remember the anti-immigrant politics that were going to hand the 2006 elections to the GOP, and determine who got the presidential nominations in 2008? And how they fell completely flat? People like Neil were assuring us that "regular people from the heartland" were going to rise up around this issue, but it never happened. The polling turned out to be hugely lopsided against the pandering policies that everyone just assumed would be wildly popular.

The same thing appears to be happening with the gas tax holiday. Opponents outnumber supporters 49-45% in one poll I saw. 70% say it's a pander, three times the number that say it's a serious policy proposal.

The public is not in the mood for pseudo-populist political stunts.

Like the collapse of the anti-immmigration politics that

Neil|5.6.08 @ 4:25PM|#

Thats wrong Joe. After having many true conservative call his office, write letters, and protest, McCain saw the light and now is against amnesty.

Gilbert Martin|5.6.08 @ 4:26PM|#

"Of course, pricing in these externalities is meaningless if (a) usage isn't reduced and/or (b) the funds raised aren't used to ameliorate the externalities."

Or (c) the alleged externalities do not, in fact, exist in the first place.

Elemenope|5.6.08 @ 4:26PM|#

Way to be a dunderhead and miss the point, Neil. Make them constant dollars; people will still choose option A.

|5.6.08 @ 4:28PM|#

Mike P,

Shouldn't the gas tax cover all of the externalities of driving, both the road repair/expansion AND the environmental externalities?

Elemenope|5.6.08 @ 4:28PM|#

After having many true conservative call his office...

True conservatives? What, do they administer a quick multiple-choice test over the phone to determine your conservative bona fides?

Neu Mejican|5.6.08 @ 4:28PM|#

Mike P: The purpose of a carbon tax at $15/tCO2 levels is not to "reduce usage below current levels." It is to price in the social costs of the unaccounted externalities.

RC DEAN: Of course, pricing in these externalities is meaningless if (a) usage isn't reduced and/or (b) the funds raised aren't used to ameliorate the externalities.

Exactly.

I suspect that b is more expensive than a...

Daniel Reeves|5.6.08 @ 4:30PM|#

Or (c) the alleged externalities do not, in fact, exist in the first place.

I'm praying to Dawkins and Harris and Shermer and every other holy deity out there that you're not implying that there are no negative externalities to oil consumption.

|5.6.08 @ 4:30PM|#

Neil,

Not quite. McCain is still in favor of what you call "amnesty." His flip-flop is about "securing the border" FIRST, as opposed to alongside, that "amnesty." And, of course, that's just during the primaries. We'll see if Senator Maverick sticks with the GOP's immigration message from the 2006 midterms during the general election. Something tells me he won't.

Neu Mejican|5.6.08 @ 4:31PM|#

Gilbert Martin,

c?

Really?

None at all?

Really?

|5.6.08 @ 4:31PM|#

I'm praying to Dawkins and Harris and Shermer and every other holy deity out there that you're not implying that there are no negative externalities to oil consumption.

Ask him about evolution. I dare you.

Neil|5.6.08 @ 4:32PM|#

Well we will see tonight how people really feel about the gas tax holiday wont we Joe?

I bet white working class voters flock to Clinton because of it and B. Hussein is steamrolled.

|5.6.08 @ 4:32PM|#

I suspect Neil is unfamiliar with the concept of "present value."

Neu Mejican|5.6.08 @ 4:33PM|#

Neil,

I bet white working class voters flock to Clinton

Flock?

Or do you mean "marginally prefer?"

|5.6.08 @ 4:34PM|#

Of course, pricing in these externalities is meaningless if (a) usage isn't reduced and/or (b) the funds raised aren't used to ameliorate the externalities.

That's neither the theory nor the point behind Pigouvian taxes: Their only purpose is to expose the cost to the social costs of his consumption. You can imagine applying the revenues to relevant purposes, but as others have noted, that isn't always easy or even wise.

Episiarch|5.6.08 @ 4:35PM|#

Not quite. McCain is still in favor of what you call "amnesty."

joe, I can give you Neil*'s answer to that right now.

(sticks fingers in ears)

LA LA LA LA LA LA LA LA LA LA





* not a real person

|5.6.08 @ 4:35PM|#

The vast majority will pick A. Which just goes to show that most people are not rational when it comes to fiscal/economic decisions.
.......

Elemenpoe I'd choose $1,000 now because in five years inflation may make $5,000 just like $1,000.
Thanks Neil for demonstrating the validity of Elemenope's point.

Neu Mejican|5.6.08 @ 4:35PM|#

RC Dean,

To clarify my comment: I suspect it is more expensive to ameliorate all the externalities than it is to reduce usage.

Neu Mejican|5.6.08 @ 4:38PM|#

MikeP,

Their only purpose is to expose the cost buyer to the social costs of his consumption.

Doing this makes no sense without an end goal. If those costs do not matter enough that exposing buyers to them either reduces usage or leads to amelioration, then the exercise is, as RC Dean defined it, meaningless.

Daniel Reeves|5.6.08 @ 4:38PM|#

Ask him about evolution. I dare you.

Sorry, but I'm not particularly in the mood to laugh hysterically. Maybe later.

|5.6.08 @ 4:39PM|#

Shouldn't the gas tax cover all of the externalities of driving, both the road repair/expansion AND the environmental externalities?

joe -- with a little rephrasing -- wins the argument. Since the gax tax is -- or should be -- a user fee, it isn't a "tax" as such.

If the roads were paid for in the best way -- by congestion-variable toll -- then the excise tax on gas would (properly) be zero. Then any nominal carbon tax would necessarily be added on top. If, through efficiency or idiocy, the costs of the roads must be paid for by tax, that doesn't change the larger picture.

Okay... I take back my original comment.

|5.6.08 @ 4:42PM|#

Why does Ron hate tax cuts?

Neu Mejican|5.6.08 @ 4:44PM|#

If the roads were paid for in the best way -- by congestion-variable toll -- then the excise tax on gas would (properly) be zero.

The best way?
Properly?

Defined as "the way MikeP thinks is best/proper?"

Would this optimal solution be best implemented by a properly worded federal mandate?

=/;^)

x,y|5.6.08 @ 4:46PM|#

1. The tax cut will be paid for with borrowed funds, so it's not a cut as much as it's a deferment with interest.

2. There are no accompanying spending cuts.

3. Given the tightness of the gasoline market, it is likely that none of the tax decrease will be passed through to the consumer anyway.

1-2. This the same present wrapped in two boxes. Again, I'd rather have one (tax cuts or lower spending) than neither. And even if it is a deferment with interest, it's less coercive than tax and spend. This seems to be a plus.

3. So what? If there is extra value, I don't care if the producers or consumers capture it, so long as it's one of the two. What's important is that the state will not distort the market (or, in this case, distort the market less).

|5.6.08 @ 4:47PM|#

Shouldn't the gas tax cover all of the externalities of driving, both the road repair/expansion AND the environmental externalities?

A driving fee should cover road repair/expansion. Note the use of the word fee and not tax...very important distinction.

Oil should pay for its environmental externalities so long as the externalities are not fairy tale made up ones like global warming.

x,y|5.6.08 @ 4:48PM|#

And who, by the way, are the jackasses who oppose the policy because McCain and Hillary are pandering? Their pandering has nothing to do with the merits of the proposal.

Neu Mejican|5.6.08 @ 4:49PM|#

Joshua meet Gilbert...Gilbert meet Joshua.

Neu Mejican|5.6.08 @ 4:50PM|#

x/y,

"Pandering" is usually reserved as a description for proposals that have no merit beyond their ability to garner votes, at least implicitly.

A good idea that gets you more votes is not pandering, it is a good idea.

Elemenope|5.6.08 @ 4:51PM|#

And who, by the way, are the jackasses who oppose the policy because McCain and Hillary are pandering? Their pandering has nothing to do with the merits of the proposal.

Perhaps not. But it does have everything to do with the merits of McCain and Hillary.

|5.6.08 @ 4:52PM|#

If those costs do not matter enough that exposing buyers to them either reduces usage or leads to amelioration, then the exercise is, as RC Dean defined it, meaningless.

Nominal social-cost Pigouvian carbon taxes do reduce consumption, but, at their proper levels today, only marginally. I don't find it appropriate to say that the purpose of the carbon tax is to reduce consumption. Rather its purpose is to make people pay for their consumption, collaterally reducing marginal consumption.

Indeed, coming back to the main point of the article, if you tacked on a new 15 cent carbon tax on gasoline, the price at the pump would not rise anywhere close to 15 cents. The same argument that yields the result that oil companies cannot pass a tax holiday onto consumers implies that oil companies cannot pass a tax rise onto consumers. It will come out of their profits instead.

Of course, in the long run the supply and demand will properly factor in any new tax increase, and we will be rewarded with less investment by oil companies in future supply. Yay.

|5.6.08 @ 4:55PM|#

Are voters stupid enough to fall for it?

Neil is a voter, so the answer is - at least some are.

x,y|5.6.08 @ 4:56PM|#

LMNOP,

Ha. They are terrible.


NM,

I think the proposal does have some merits, which I mention above.

|5.6.08 @ 4:57PM|#

Defined as "the way MikeP thinks is best/proper?"

The federal excise tax on gasoline is intended to fund roads. If roads are fully paid for by other means, then this tax would (properly) go to zero.

I insert the parenthetical "properly" because the chance of government actually ending a tax is virtually nil.

My opinion on "the best way" is based on my understanding of markets and is more open to argument.

Neu Mejican|5.6.08 @ 4:58PM|#

I don't find it appropriate to say that the purpose of the carbon tax is to reduce consumption.

Fair enough, but I don't find it appropriate to say that the purpose of the carbon tax proposals is to "make people pay for their consumption."

The purpose, or motivation behind the carbon tax proposals is exactly and ultimately to reduce the environmental harms associated with putting CO2 into the atmosphere.

Whether that reduction in harm comes through reduced usage or active amelioration of those harms, the purpose of the carbon tax proposals are to reduce that perceived harm.

Neu Mejican|5.6.08 @ 4:59PM|#

x,y,

NM,

I think the proposal does have some merits, which I mention above.

But those who claim the proposal is just pandering do not...hence their use of the term "pandering."

No?

Daniel Reeves|5.6.08 @ 4:59PM|#

If the roads were paid for in the best way -- by congestion-variable toll /blockquote>

Congestion-variable tolling is extremely efficient at what it does. Singapore implemented it and once the system moved from manual to wired, it effectively reduced congestion. My only (minor) concern with it is that if people are really concerned about congestion, wouldn't the avoidance of congestion be incentive enough to spread out congestion?

I always imagine myself as the owner of a company whose hours are quite a few hours off from ordinary work hours. To cover the costs of working abnormal hours, I could give free Tivos and slightly boost their pay (or give them more sick days) in exchange for the massive amount of efficiency I get from employers who work slightly more by getting to work super-quickly.

|5.6.08 @ 5:04PM|#

I always want to slap dishonest politicians and stupid people who talk about tyaxing corporations. Corporations, and other businesses, do not pay taxes. They collect them.

Neu Mejican|5.6.08 @ 5:06PM|#

JsubD,

See MikeP's comment above.

Only kinda true...or I guess "Truthy."

|5.6.08 @ 5:12PM|#

See MikeP's comment above.

Oh no you don't! My saying that the tax will come out of corporate profits does not mean that the tax no longer touches humans and is therefore okay.

Corporations are collections of people. And taxes on corporations or taxes paid by corporations are taxes paid by people.

In fact, it is arguable that taxes on corporate profits should be paid exclusively by the stockholders of the corporation as part of their respective personal income taxes.

Gilbert Martin|5.6.08 @ 5:15PM|#

"I'm praying to Dawkins and Harris and Shermer and every other holy deity out there that you're not implying that there are no negative externalities to oil consumption."

No proven negative ones that aren't already priced into the costs of driving.

The price of cars already includes pollution control equipment.

Man-made global warming has not been proven to exist at all in the first place.

Drivers are already over-paying for road construction and maintainence due to the fact that highway trust fund money is being siphoned off to pay for mass transit AND because the cost of every construction project has been inflated for the last 70 years or so due to the Davis-Bacon Act which is nothing more than a politcal giveaway to labor unions.

|5.6.08 @ 5:17PM|#

Way to be a dunderhead and miss the point, Neil. Make them constant dollars; people will still choose option A

At the risk of further missing the point (or simply belaboring same), I'll add that even if they were not constant dollars you'd have to have a yearly inflation rate averaging 37.97% for those 5 years in order for the $5000 in 2013 to be the same as $1000 in 2008.

As far as I know the country has never seen anywhere near that in our entire history.

TallDave|5.6.08 @ 5:19PM|#

I don't understand the opposition to this.

Is it small and piddling and ultimately meaningless? Yes.

Am I happy anytime government lowers taxes? Yes.

If the current tax is good, is a higher tax better?

Neu Mejican|5.6.08 @ 5:22PM|#

MikeP,

Take deep breaths.

I was not citing you to imply that you supported corporate taxation. Only that "corporations" can not always readily pass along their taxes to consumers...as implied by JsubD's comment.

Corporations are, of course, collections of people. We agree.

Tacos mmm...|5.6.08 @ 5:23PM|#

Are voters stupid enough to fall for it?

Are bears Catholic? Does the pope shit in the woods?

|5.6.08 @ 5:24PM|#

I don't understand the opposition to this.

I don't think there's outright opposition to this as much as a refusal to let the idiots proposing this get away with such blatant vote buying.

Neu Mejican|5.6.08 @ 5:26PM|#

Gilbert Martin,

I admire your high standards for proof.

How is life living in a world of fantasy*?


*where everything taken to be true by others is simply solipsismal artifice.

Kolohe|5.6.08 @ 5:29PM|#

This is why I don't use that firefox blocky thingy:

Fluffy the idea is to get debt to a high enough level where people are forced to chose between social security, medicare, and other big government programs on one hand and a strong military on the other. Of course, they will chose the latter.

That should happen in a few decades at this rate.

That's some funny shit right there.

Neu Mejican|5.6.08 @ 5:29PM|#

A dedication, for Gilbert:

Come with me and you'll be
In a world of pure imagination
Take a look and you'll see
Into your imagination

We'll begin with a spin
Trav'ling in the world of my creation
What we'll see will defy
Explanation

If you want to view paradise
Simply look around and view it
Anything you want to, do it
Want to change the world, there's nothing to it

There is no life I know
To compare with pure imagination
Living there, you'll be free
If you truly wish to be

If you want to view paradise
Simply look around and view it
Anything you want to, do it
Want to change the world, there's nothing to it

There is no life I know
To compare with pure imagination
Living there, you'll be free
If you truly wish to be

Tacos mmm...|5.6.08 @ 5:29PM|#

Am I happy anytime government lowers taxes? Yes.

Every time I hear that, I wonder if it's really true. Would you support racially targetted tax decreases, for example? Or religiously targetted ones?

|5.6.08 @ 5:31PM|#

Take deep breaths.

Sorry... I'm already treading a pretty positivist line on this thread, and I wanted to forestall any misunderstanding.

Neil|5.6.08 @ 5:33PM|#

Global Warming is a fraud and a fiction. Its just another way for liberals and socialists to steal money from the successful.

Daniel Reeves|5.6.08 @ 5:34PM|#

Man-made global warming has not been proven to exist at all in the first place.

Is there an equivalent of Godwin's Law for anti-science babble like this?

Tacos mmm...|5.6.08 @ 5:40PM|#

Global Warming is a fraud and a fiction. Its just another way for liberals and socialists to steal money from the successful.

I'll be sure not to mention "evilution" in your presence.

Oops.

Icl|5.6.08 @ 5:40PM|#

Neal,

Why don't you say something original instead of regurgitating Ann Coulter's bull shit. If you really are Ann Coulter, then you are in the wrong blog.

Kolohe|5.6.08 @ 5:41PM|#

If the current tax is good, is a higher tax better?

In the specific case of gasoline, as of May 2008,

Yes.

Gilbert Martin|5.6.08 @ 5:49PM|#

"How is life living in a world of fantasy*?"

Try to imagine how little I care what a windbag like you thinks.

Salvius|5.6.08 @ 6:00PM|#

Maybe I'm just too cynical, but...

Step 1: Temporarily drop the gas tax. Every economist seems to agree that this will increase oil company profits without actually causing (much) price reduction at the pump.
Step 2: Accuse the oil companies of immoral price-gouging. As evidence, cite the fact that during the gas tax holiday, their profits went up while gas prices at the pump stayed about the same.
Step 3: Use this as justification to create permanent new regulations/taxes on oil companies, to curb their wicked ways.
Step 4: Profit! (In the form of increased government power.)

|5.6.08 @ 6:08PM|#

I think it would only buy 4 Big Mac value meals.

|5.6.08 @ 6:09PM|#

I'm praying to Dawkins and Harris and Shermer and every other holy deity out there that you're not implying that there are no negative externalities to oil consumption.

There are both positive and negative externalities to oil consumption. I would be very hesitant to asssume that the net externalities of oil consumption are negative.

|5.6.08 @ 6:12PM|#

So, here's one economist who supports the gas tax "holiday", for the following reasons:

1. Any reduction in government revenue at this point is a good thing
2. The idea of earmarked revenues is an accounting fraud. The government has multiple revenue sources which it could tap to pay for infrastructure.
3. Gasoline consumption is relatively inelastic in the short term, so an 18 cent drop in price would not greatly impact demand.
4. Since demand will remain relatively unaffected, prices will actually drop by very close to 18 cents, which is good for consumers and bad for beaurocrats.

Daniel Reeves|5.6.08 @ 6:19PM|#

R C Dean,

Not to oil consumption, but energy consumption, I think you mean. And they're pretty indirect. But anyway, in the long term, environmental damage and global warming are very bad. Carbon taxes would not work efficiently at reducing consumption in the short term because oil demand and supply are inelastic; however, it will increase the cost of operating a car that consumes only 25 mpg instead of 50 mpg, which may convince people to hop on board for cleaner technology.

|5.6.08 @ 6:21PM|#

3. Gasoline consumption is relatively inelastic in the short term, so an 18 cent drop in price would not greatly impact demand.

4. Since demand will remain relatively unaffected, prices will actually drop by very close to 18 cents, which is good for consumers and bad for beaurocrats.

Given that the price of gasoline has risen 60 cents a gallon in the last three months, don't you think there are indications that supply will remain relatively unaffected too?

If not, why are gas prices not dropping 18 cents per gallon today as oil companies try to capture new customers with their supposedly higher supplies.

|5.6.08 @ 6:24PM|#

The tax suspension will not directly cause prices to fall but will reduce the amount required to do business and therefore increase supply which will lower prices. This is assuming that the tax holiday will last more than a day or a week

Daniel Reeves|5.6.08 @ 6:24PM|#

What I forgot to add is that it doesn't really reduce congestion and energy consumption that much at all; fossil fuels, nuclear energy, wind energy, etc. are substitutes. So if you tax fossil fuels, you'll encourage people to use clean energy. I don't think many people expect energy consumption to lower that much at all in the short term because cars are very durable goods; that's why I and I'm sure many economists would like to see raised carbon taxes be met with lowered income taxes (which is, by the way, a wonderful libertarian reason to support carbon taxes).

Daniel Reeves|5.6.08 @ 6:27PM|#

"I don't think many people expect energy consumption to lower that much at all in the short term"

I meant either of the following sentences when I wrote that (in reference to carbon taxes):

(a) I don't think many people expect OIL consumption to lower that much at all in the short term

or

(b) I don't think many people expect energy consumption to lower that much if at all

Probably (b), but (a) is important to point out, too.

TallDave|5.6.08 @ 6:35PM|#

I don't think there's outright opposition to this as much as a refusal to let the idiots proposing this get away with such blatant vote buying.

That does make more sense.

Still, I wish more attention was paid when politicians pandered by raising taxes.

Georgist|5.6.08 @ 6:36PM|#

We must get rid of all taxes except the single tax on the unimproved value of land.

Paul|5.6.08 @ 6:42PM|#

I bet white working class voters flock to Clinton

*sigh*

Here we go again. Definition, anyone? Beuller? Anyone?

concerned observer|5.6.08 @ 6:46PM|#

all the wingunts are dointg is creating andf environmental catastrophe be promoting global warming by reducing the gas tax. It should be raised, not lowered. if people could get past the fucking fox news rhetoric they could see that but they won't because theyve been brainwashed by bush and hsi corporate cronies tyo think 'market good, taxes bad'.

Neu Mejican|5.6.08 @ 7:02PM|#

I don't think many people expect energy consumption to lower that much at all in the short term because cars are very durable goods;

Just a note: your home and the building you work in are both more durable than your car and heating/cooling/lighting them use a greater percentage of your energy than your car. The biggest bang for the buck on reducing energy usage is not in the transportation sector.

The Bearded Hobbit|5.6.08 @ 7:04PM|#

Hillary Clinton is hoping that some are Ronald Bailey

.. did anyone else read the subtitle this way??

.. Hobbit

economist|5.6.08 @ 7:07PM|#

Neu Mejican,
Are you sure about that claim? I don't think I've heard it before.

Neu Mejican|5.6.08 @ 7:11PM|#

economist,

Pretty sure.

The reason being that many of the functions that we actively power in common practice can be eliminated through designed efficiency.

The Rocky Mountain Institute are the folks with the demonstrations projects on this issue.

Neu Mejican|5.6.08 @ 7:13PM|#

economist,

The (very) rough breakdown.

http://en.wikipedia.org/wiki/Image:USenergy2004.jpg

Transportation falls below 30%.

Kyle`|5.6.08 @ 7:42PM|#

Ahh, very good Mike P - but unfortunately the global warming ruse is about increasing taxes, not decreasing them. The very idea of trying to change the climate through regulations, this is a depraved government-expanding tax-hiking sheeple-mocking bureaucrat's wet dream.

Eric Cartman|5.6.08 @ 7:54PM|#

Kyle,
Shut up, you goddamn Jew! Jews are the reason there's wars in the world! God, I hate you guys!

|5.6.08 @ 7:57PM|#

My plan for decreasing fuel prices is nationalizing one or a small subset of refineries/oil companies and running it as a non-profit forcing all other companies to compete against its reduced-price product.

|5.6.08 @ 7:57PM|#

I agree with Mike P. ;-)

Neu Mejican|5.6.08 @ 7:58PM|#

economist,

I did a bit more digging.

It looks like energy costs for the average household are close to equal for the heating/cooling/lighting/cooking end of things and transportation

Neu Mejican|5.6.08 @ 8:05PM|#

That means of course, that when you add in the heating/cooling/lighting/running whatever machine you use at work end of things, these outweigh the transportation sector in terms of overall energy usage.

And as mentioned previously, they are more amenable to efficiency fixes than cars/buses/trains etc...

Neu Mejican|5.6.08 @ 8:07PM|#

Try to imagine how little I care what a windbag like you thinks.

I imagine you care just enough to respond, grumble to yourself, and feel satisfied that your retort put me in my place somehow...

Tra la la...

Neu Mejican|5.6.08 @ 8:09PM|#

Tra la la,

Gilbert Gilbert eating grapes, can't believe we descend from apes.

Tra la la,

Gilbert Gilbert just a brave, takes no warning of so-called global warming.

Neu Mejican|5.6.08 @ 8:11PM|#

Tra la la...

Just AND brave that is...

Neu Mejican|5.6.08 @ 8:13PM|#

Tra la la,

Gilbert Gilbert sharp of wit

Takes the wind from windbags ships...

Popping windbags with barbs of steel...

Knowing just how it makes them feel...

Tra la la...

|5.7.08 @ 3:02AM|#

After reading the discussion, I'm convinced a libertarian will never win the Presidency.

Of course it is a stupid idea, and of course most Americans are stupid enough to buy it, as am I for taking/wasting the time to read this entire thread.

Chad|5.7.08 @ 6:54AM|#

MikeP | May 6, 2008, 3:51pm | #

The Progressive Policy Institute has calculated that a relatively modest $15 per ton price for carbon dioxide emissions would boost the price of gasoline by 15 cents per gallon.
Incidentally, since Pigouvian taxes pay no heed to how the revenues are used, I find proposals to tax carbon on top of the existing excise tax to be rather disingenuous.

So long as the federal excise tax on gasoline is higher than the tax on the carbon dioxide emitted, such taxes should be treated as concurrent, not additive. We should simply consider the first 15 cents of the 18.4 cents the Pigouvian penance and otherwise not change the collection or spending at all.

Mike, the 18.4 cent tax is for roads, and it fails to cover even that. There is ZERO environmental tax on gasoline. Additionally, you ignore the effect of all the other pollutants that are spewed out a tailpipe. There are a lot more that just CO2. Add up all their prices, plus the price burden of the entire road system - THAT would be the proper Pigouvian tax on gasoline. You are talking a dollar per gallon at least.

|5.7.08 @ 10:48AM|#

She plans on making up lost revenue by taxing profits.

Well, that will do wonders for the investment by oil companies necessary to increase supply and bring prices down.

Not to oil consumption, but energy consumption, I think you mean. And they're pretty indirect.

No, I mean oil and carbon fuel consumption specifically. As the cheapest source of energy, they spin off positive externalities for everyone. The most obvious is lower prices for nearly everything in a modern industrial economy, which in turn has all sorts of knock-on effects which are also positive.

anyway, in the long term, environmental damage and global warming are very bad.

The negative externalities and net externalities of carbon-fuel global warming are speculative at best, and not the best basis for driving public policy.

So if you tax fossil fuels, you'll encourage people to use clean energy.

You'll be forcing a distortion on the energy market, which brings its own negative externalities.

|5.7.08 @ 10:50AM|#

Add up all their prices, plus the price burden of the entire road system - THAT would be the proper Pigouvian tax on gasoline.

Again with the fallacy of focusing solely on negative externalities. This kind of thinking would mandate a 3 mph speed limit on all roads, because it would take into account only the costs of driving faster, and not the benefits.

|5.7.08 @ 12:18PM|#

Yeah, think of all the good things about burning fossil fuels.

Some people like storm surges, and wish they were larger.

Gilbert Martin|5.7.08 @ 1:46PM|#

"Yeah, think of all the good things about burning fossil fuels."

Yes - like allowing the Industrial Revolution to occur.

We are all indeed a lot better off because of that.

Neu Mejican|5.7.08 @ 2:09PM|#

joe,

I am with RC Dean and Gilbert (gasp) on the importance of considering both the positives and negatives of any energy choice.

Efficiency is the primary positive of fossil fuels (the reason they dominate the current energy market). That efficiency is paired with some significant negative environmental effects (including both pollution and destruction of habits for extraction). It is the balance between the two that matters in the final analysis...and the current evidence of AGW suggests that we haven't until recently been including all of the important information in the calculation.

Neu Mejican|5.7.08 @ 4:54PM|#

On topic...for a dead thread?

http://www.nature.com/nature/journal/v453/n7192/full/453155b.html

Chad|5.7.08 @ 5:04PM|#

Again with the fallacy of focusing solely on negative externalities. This kind of thinking would mandate a 3 mph speed limit on all roads, because it would take into account only the costs of driving faster, and not the benefits.

No, it wouldn't. You clearly do not understand these types of taxes. IF it were possible and practical to measure, high-speed drivers SHOULD be taxed in order to decrease their dangerous behavior. But mandates are never part of these systems.

I do not know of any positive externalities of driving, but if they exist, they should offset the negative externalities in any calculation.

|5.7.08 @ 5:18PM|#

I do not know of any positive externalities of driving, ...

Wow.

...but if they exist, they should offset the negative externalities in any calculation.

How would you know?

|5.7.08 @ 5:21PM|#

Sorry. I misread. That was a positive "should", not a normative "should".

|5.7.08 @ 9:22PM|#

Repealing the gas tax would be best for everyone but I seriously doubt that Hillary or John McCain would suspend it because it is money the government is losing but if you do not agree with the tax suspension then I think that you are nothing short of a STATIST

|5.7.08 @ 11:40PM|#

No, I mean oil and carbon fuel consumption specifically. As the cheapest source of energy, they spin off positive externalities for everyone. The most obvious is lower prices for nearly everything in a modern industrial economy, which in turn has all sorts of knock-on effects which are also positive.

I'm not an economist, but it seems to me that you are rather casually conflating effect and externality here. My understanding of externalities is that they are, by definition, outside of the market.

There are at least good arguments that there are negative externalities to oil use in the forms of pollution and distorted foreign policy.

Can you cite a significant positive externality of oil use or explain why "paying less for stuff" is an externality and as opposed to a benefit inside the market?

DragonScorpion|5.12.08 @ 4:24AM|#

It appears as though the public is rejecting the latest McCain/Clinton 'how to suck up to voters' campaign tactic.

I would hope that Americans aren't stupid enough to buy into this pandering nonsense. I try to have faith that Americans overall have the sense to see through cheap political stunts and "populist" gimmicks that cause more harm than good. Sometimes I find myself reassured. But then other times I think back to the 2000 & 2004 elections and I get a sick, sinking feeling in my stomach.