Saturday, December 27, 2008

Krauthammer Wants more Gas Taxes Too

After just attacking the New York Times proposal to raise gas taxes through the roof, I was apalled to see Charles Krauthammer put forth a similiar proposal in the Weekly Standard.  Now granted, Krauthammer's idea is a lot less drastic, and he would offset it with a reduction in the payroll tax; but he still wants to raise gas taxes during a recession. He admits that
today's economic climate of financial instability and deepening recession, moreover, makes the piling on of new taxes--gasoline or otherwise--not just politically unpalatable but economically dubious in the extreme.
But he then goes on to argue that we should do it anyway, because
the only time you can possibly think of imposing a tax to achieve them is when oil prices are very low.
He makes a detailed case for the benefits of his gas tax,  and argues that it would be superior to our current attempts to regulate car manufacturers.
a gas tax would render these government-dictated regulations irrelevant and obsolete. If you want to shift to fuel-efficient cars, don't mandate, don't scold, don't appeal to the better angels of our nature. Find the price point, reach it with a tax, and let the market do the rest.
That's some real utopian dreaming there.  In what world is the government going to remove regulations on auto manufacturers just because we pass a new gas tax?  Does Krauthammer, who is usually pretty astute, actually believe there is any chance of such a thing happening? What we will get instead is double government coercion.  The government will continue to regulate the car companies, plus they will impose higher direct and indirect costs on businesses and consumers through higher gas taxes.  And the indirect costs of this tax will not be offset by any payroll reduction.

The economy is in bad shape, with no sign that it will get much better in the near future. Some even speculate that we could be headed for a depression or a multi-year recession.  The government is borrowing and spending like no tomorrow, and already massively interfering with the free market -- with little to show for it.  One of the few bright spots in the dismal economic picture has been low gas prices.  It's bad enough when the NYT advocates coercing people into conservation through the blunt instrument of high taxation.  The Times is a known supporter of big government solutions, and rarely sees a tax hike it doesn't like.  But I expect more from Krauthammer.

1 comment:

  1. It's not just Krauthammer. Greg Mankiw has long supported Pigovian taxation, including taxes on gas.