Is Raising The Fuel Tax To Curb Oil Consumption In Exchange To Tax Relief Elsewhere A Good Idea?
Charles Krauthammer thinks so, and consummate supply-sider Art Laffer is backing him up. And economist Greg Mankiw has been behind this idea for years.
That’s some serious pedigree behind this idea, but I don’t think it’s something I can get behind. Here are the problems as I see them:
First, it makes me think of the (usually erroneous connotation of) that Ben Franklin quote opponents to Bush’s national security initiatives are always throwing around: “Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.” It seems to me that by agreeing to a higher gas tax for the sake of behavior modification (!!!) in exchange for, say, lower income taxes would be selling us down the river. Because the fuel tax would never come down again, but the income tax would most assuredly go up again.
Second, there’s the idea of using the tax code to manipulate the behavior of American citizens. I know we’re doing that already, but it’s not right. Trying to tax people away from using oil isn’t really any different than taxing people away from tobacco or fast food. Which is something big-government nanny-staters around the country are doing. I don’t think it’s the government’s business to tell us what to eat, and I don’t think it’s the government’s business to tell us what can power our vehicles (outside the confines of public safety, that is).
Third, this is being sold as a way to make us more energy independent, but would it really? Artificially inflating the price of gasoline at a time when domestic oil producers are already nervous about the plunging price of oil (ask a North Dakota oil worker how he/she feels about $17/barrel oil) seems pretty crazy for people who want us to be energy independent. Like it or not, for the foreseeable future, our country is going to keep running on oil. There simply aren’t any good alternatives on the horizon. Americans don’t want to drive around electric cars, which are essentially glorified golf carts, and biofuels like ethanol have been the “fuels of the future” for over 30 years now. I’d love to see a good alternative to petroleum debut in the market, and if one does I’ll support it (as long as its purely market-driven), but as of right now it’s oil.
Finally, I think it’s a little dangerous for conservatives to oppose the government using policy to pick and choose winners and losers in the market…except when it suits them. We cannot support a policy like this and continue to claim that we’re for limited government. If the government can force people to stop using something like oil with high taxes, then we open the door to them using the tax code to stop us from using other things as well. Like fast food, etc.
And that is not a door we should want to open.
A “pigou tax” (as Mankiw has dubbed it) may seem like a good idea on paper, but in the long run I think it would amount to bigger government, less freedom and few solutions to energy problems.
