The One-Dollar Gas Tax and Idiot Economics

There seems to be an epidemic of sorts sweeping the American political scene, with a number of writers calling for a dollar-per-gallon national tax on gas. Among the more well-known writers who are calling for the tax are Thomas Friedman and Andrew Sullivan, however the idea has more than a handful of proponents.

The case for the tax is usually presented in much the same way that other taxes are proposed -- that is to say, without much serious thought and saturated with oversimplifications, omissions, and flat-out lies. As an example, lets look at Andrew Sullivan's posting Tax Gas More, which can be found on his blog (link here).

Sullivan first proposes that gas prices are too low (he never explains exactly how this judgement is made) and that this problem can be rectified by an new tax: "...gas is woefully under-taxed in this country - a state of affairs that is both bad for the economy, bad for drivers, and bad for our foreign policy." Of course Sullivan never explains how the lack of a tax on gas is "bad for the economy" or "bad for drivers". Instead, he says that, "by adding a cost to the wanton consumption of gasoline, you actually encourage conservation, accelerate fuel efficiency, reduce pollution, cut traffic..."

First off, Mr. Sullivan ignores the fact that any rise in gasoline prices translates directly into a rise in prices in virtually every single good in our economy -- from bread to TV's -- because food, appliances, and almost everything else you've ever bought was shipped from factories far away, usually in trucks that consume large amounts of gas. Any increase in the costs of transporting goods will have to be offset by an increase in the price charged at the supermarket.

With prices for transportation and goods rising across the board, the economy will slow considerably. Contrary to Sullivan's unsubstantiated claim that low gas prices are "bad for the economy", a $1/gallon tax on gas (effectively a 30% tax) would be extremely harmful to the economy. Transportation is the lubrication for the economic engine of our country, and any tax that increases the costs of transportation will bog down the "engine" as it becomes more expensive for producers to provide goods and services to consumers.

If low gas prices are bad for the economy, as Sullivan claims, why aren't low car prices, low food prices, low natural gas prices, or any other kind of low prices bad for the economy? How can people being able to get where they want to go and transport goods where they are needed cheaply be a bad thing? Sullivan never even attempts to back up this absurd claim, which is natural since even a high school level familiarity with economics shows it to be total nonsense.

When Sullivan talks of encouraging conservation, accelerating fuel efficiency, and cutting traffic, he really means that everyone will have to decrease their mobility and pay for expensive new cars that get better gas mileage just to offset the cost of the tax. This is not to say that increasing fuel efficiency isn't good, but rather that forcing such advancements by increasing everyone's cost of living doesn't benefit anyone. Similarly, if individuals want to conserve more and drive less, they will save money and will be better off for it. However, if people are forced to drive less because they find themselves unable to pay the rent because of a huge increase (and 30% is a huge increase) in necessary transportation costs, it is obvious that such a tax is making things worse, not better.

In response to objections that the tax would unfairly burden the poor, Sullivan says that "the truly needy tend to consume less gas than their middle-class compatriots". This is nothing but an admission that current gas prices are sufficiently high that the "truly needy" cannot afford to drive very much, and Sullivan wants to make them worse off with this tax. What of the poor who must drive a distance to work, and whose gas spending already cuts into their earnings? An even more absurd response is given to the objection that the tax would unfairly burden those living in rural areas (who are often poor as well) -- Sullivan simply says "So what? Very few taxes are perfect..." In other words, Sullivan says screw poor people, whether they live in rural or urban areas.

Overall, Sullivan approaches the issue with a complete lack of common sense or economic knowledge, and completely fails to present a single way in which low gas prices are bad or a tax would be good. After this total failure to support the tax, Sullivan falls back on the well-worn argument that people should be forced to "sacrifice" because we're at war. That is to say, Sullivan believes that people should unnecessarily suffer economically so that the world can be in accordance with his moronic vision of what a nation-at-war should be.

If Sullivan, Friedman, or the other pro-gas-taxers get their way, our country may quickly find its way into a deep recession, with the poor, elderly, and other most vulnerable members of society suffering the most. It is easy for wealthy talking heads to throw around silly ideas, but not so easy for the rest of us to pay for their foolishness.