Tuesday, April 29, 2008

What Will Eliminating the Federal Gas Tax Do?


St. John McCain and Hillary Clinton, working as a team again, have both called for eliminating the 18.4 cent/gallon federal gasoline tax for the summer. That will roll back the pump price of gas by less than a fortnight. Nationally, gas prices averaged $3.603 yesterday. Subtracting the federal tax and the price would be $3.419. The national average gas price on April 14 was $3.389.

The tax on gasoline in the United States has an insignificant effect on the price. What is needed is an increase in the gas tax. For example, set the tax at $1 a gallon and send a check for $1,000 to to every car owner. It is revenue neutral but would have the effect of encouraging people to use less gas. Of course, this is an intelligent idea which puts it beyond the grasp of McCain or Clinton.

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