Democratic Gov. Rendell Calls for Increased Federal Gas Tax.
With gasoline prices down, former Pennsylvania Gov. Ed Rendell is calling for an increase in federal gas tax. Read below the video for talking points on why raising the federal gas tax is such a bad idea.
Why Rendell is Wrong:
There are several reasons Rendell is wrong on raising the federal gas tax. Here are a few talking points you can share with your friends.
The Federal Gas Tax is Unfair to the Middle and Lower Classes
1. It directly affects the lower earning consumers the most. Taxing gasoline is essentially a tax on consumption and it is most unfair to the middle and lower classes. Why? Because these classes spend a larger part of their discretionary income on buying gasoline than the upper class. A 5% increase in a gallon of gas has a much bigger overall tax increase on someone who spends 10% of their discretionary budget on gas, than someone who spends 1%. If more people studied economics, I think people would see right through the incorrect assumption that Democrats advocate for the middle class. This is a great example of how they actually give the 1% a better advantage over the rest of us.
2. The indirect cost of the federal gas tax makes consumption more expensive, especially for the lower and middle class. Transportation of goods, especially food because it is perishable, would add costs directly to the things that are needed most by consumers. Businesses simply pass this expense onto consumers.
3. The federal gas tax does not directly affect business as much. More and more trucking fleets are switching to natural gas because it is far less expensive. It is easier for business to take advantage of this switch than consumers. This is taking place because one byproduct of fracking is huge amounts of very clean natural gas. These large trucking fleets would not have to pay a tax on gasoline, yet they use our infrastructure.
Numbers 2 and 3 create a kind of double whammy for consumers. When their goods are shipped via gas-burning vehicles, it eats away at discretionary spending and when it is shipped via natural gas vehicles, consumers pay an unfair burden for infrastructure.
Gas Prices Are Not Likely to Stay This Low
We should not aim at pricing a commodity at a particular point. We should let the market determine the price. We should never look at a price of gas and say, “you know what? Gas is too inexpensive. We should increase the price now.” This kind of thinking is shortsighted for two reasons: 1. Free markets are the most efficient and will drive innovation, and 2. Oil is a volatile market and the dynamics can change quickly.
The free market works. If you don’t believe me, read my article “Keystone Pipeline is Key to Sustainable Economics.” In part, it cites Bloomberg’s article about why fracking has been the primary reason the United States has cut its greenhouse gas output by 12%.
The Solution to the Federal Gas Tax is Common Sense
A common sense approach to government and infrastructure is needed. Our government does not need more money. It is bringing in huge amounts of revenues. What we need is less subsidies for things that don’t work, and economic growth which raises everybody up and produces more taxable income.
It doesn’t take most kindergarteners more than 2 minutes to understand the energy politics in this country. On one hand, the federal government has spent billions of dollars propping up alternative energy. What did we get for it? Some very expensive projects that made a few people very rich. These projects produce very expensive energy with very little impact on the greenhouse gas output. Additionally, we are a debtor nation. We are the ones paying for these projects. We paid the taxes to produce the revenue they give away and the interest on the debt we borrow. The US Government just passed $18,000,000,000,000 in debt. That is a typical mortgage for each taxpayer.
On the other hand, free markets created the fracking boom, which created huge amounts of good jobs, cut gasoline by a huge percentage, and is creating enough natural gas to replace coal in many plants. This has been the primary cause of the 12% reduction in greenhouse gasses. Plus, these companies are paying billions of dollars in taxes to the government.
We need to stop taxing more, and start spending more wisely. It is time to cut bait on these alternative energy projects and use that money for infrastructure. The fact is that until these alternative energy projects are technologically unable to produce cheap energy that will compete, they will never stand alone. Let innovation in a free market lead this development for the sake of all of us.