Larry Summers joins me–and too few others, IMHO–in recognizing this as a good time to introduce a tax on energy, in his case a broad carbon tax. Unlike the idea I and others have touted–a small, phased-in bump up in the federal gas tax that’s been stuck at $0.18 since 1993 that would then be devoted to shoring up the highway trust fund, which is scheduled to go bust by May–Larry goes broader, advocating a “$25-a-ton tax on carbon that would raise far more than $1 trillion over the next decade would lift gasoline prices by only about 25 cents.”
According to the NYT, neither of us are being realistic.
When gasoline topped $4 a gallon, opponents of an increase in the gas tax argued that prices were already too high.
Now the average price of regular gas has dropped under $2.50 a gallon, but in the antitax environment that pervades Washington there is still scant support for increasing the gas tax to finance upkeep of the nation’s roadways and public transit systems.
The no-win dynamic is frustrating to advocates who hoped falling gas prices might reinvigorate the idea of raising the gas tax, which they view as one of the simplest, fairest and most efficient ways to pay for transportation repairs and improvements.
Is the Times right? I get Larry’s “in for a dime, in for a dollar” message, but it’s probably more realistic–or less unrealistic–given the makeup of the new Congress and where they are on taxes to think smaller and more targeted. So I’d push my idea over his. A gas tax is, of course, also a tax on carbon, but a few cents a gallon (say a nickel/gallon a year phased-in over three years) won’t be felt by drivers either now or even down the road when gas prices go back up.
On the other hand, I fear we’re probably both wasting our breath, at least at the federal level. Yet here again, the action is sub-national, and some states have moved on this. As with all those state minimum wages, this creates a useful natural experiment wherein we can collect data on the impact of these state gas tax increases on their economies, budgets, and residents’ incomes. That way, if facts should once again matter, we’ll have some evidence as to the actual impact versus the ideologically inspired cartoon impact.
Source: NYT, link above.