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Gas tax holiday won’t help
Wednesday, May 14, 2008 | No comments posted.
Speaking of highway repairs, the “gas tax holiday” backed by Sens. Hillary Clinton and John McCain needs to fall into a pothole.
The idea won the unsurprising support last week of Gov. Ted Kulongoski, a Democratic superdelegate who coincidentally is committed to Clinton. It encountered equally unsurprising opposition from Oregon Congressman Earl Blumenauer, a Democratic superdelegate committed to Sen. Barack Obama.
Blumenauer correctly dismissed the proposal as a political gimmick. A lot of economists agree. More than 200 of them put out a letter warning that suspending the 18-cent federal gas tax would deplete the government’s much-needed fund for fixing highways.
Kulongoski argues the money will be replaced by a “windfall” tax on oil companies. But how does he suppose the oil companies will pay the tax, if not by siphoning it from the wallets of motorists? Suspending the federal tax is an invitation for oil companies to take up the slack with higher prices.
Additionally, the tax holiday idea ignores a painful but important truth: High gas prices create an incentive to conserve. In that sense, expensive fuel may be considered a good thing, even though it can hurt tourist-dependent regions such as the Oregon coast. Artificially depressing pump prices with a temporary tax cut would weaken the incentive and delay the day when Americans learn to guzzle less gas.
Generally speaking, any proposal to leave more money in the hands of taxpayers is automatically appealing. But this one is pure political pandering.
The idea won the unsurprising support last week of Gov. Ted Kulongoski, a Democratic superdelegate who coincidentally is committed to Clinton. It encountered equally unsurprising opposition from Oregon Congressman Earl Blumenauer, a Democratic superdelegate committed to Sen. Barack Obama.
Blumenauer correctly dismissed the proposal as a political gimmick. A lot of economists agree. More than 200 of them put out a letter warning that suspending the 18-cent federal gas tax would deplete the government’s much-needed fund for fixing highways.
Kulongoski argues the money will be replaced by a “windfall” tax on oil companies. But how does he suppose the oil companies will pay the tax, if not by siphoning it from the wallets of motorists? Suspending the federal tax is an invitation for oil companies to take up the slack with higher prices.
Additionally, the tax holiday idea ignores a painful but important truth: High gas prices create an incentive to conserve. In that sense, expensive fuel may be considered a good thing, even though it can hurt tourist-dependent regions such as the Oregon coast. Artificially depressing pump prices with a temporary tax cut would weaken the incentive and delay the day when Americans learn to guzzle less gas.
Generally speaking, any proposal to leave more money in the hands of taxpayers is automatically appealing. But this one is pure political pandering.





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