How high should the gas tax be?

myp · Apr 11, 2012

The gas tax is an interesting issue. The US has some of the lowest gas prices in the world due to some of the lowest gas taxes, but many economists including some politically conservative ones (i.e. Mankiw) believe that the gas tax should be higher as a sort of Pigovian tax due to its negative impact on the environment.

Of course calling for higher gas prices in the US is almost equivalent to political suicide and is why few if any people in government want to pursue it.

What are everyone's thoughts here?

DodgeFB · Apr 11, 2012

myp said:
The gas tax is an interesting issue. The US has some of the lowest gas prices in the world due to some of the lowest gas taxes, but many economists including some politically conservative ones (i.e. Mankiw) believe that the gas tax should be higher as a sort of Pigovian tax due to its negative impact on the environment.

Of course calling for higher gas prices in the US is almost equivalent to political suicide and is why few if any people in government want to pursue it.

What are everyone's thoughts here?

I think raising gas taxes at this time would flush any "recovery" down the toilet. But I would like to see them commit "political suicide". That would get some new blood in the system.

David · Apr 11, 2012

Raise it by $0.001. Drop that dangling 9 and raise millions in tax revenue.

myp · Apr 11, 2012

David said:
Raise it by $0.001. Drop that dangling 9 and raise millions in tax revenue.

Eh, not really. The 9/10 is probably a marketing thing like .99 cents (1.99, 2.99, etc.) why actually raises sales. So taxing it by $0.001 would first of all just lead to the companies changing prices so they still end in 9/10 and if the companies didn't do that, they might sell less and the overall tax revenue could actually go down.

The GMan · Jun 18, 2012

Raising the tax isn't going to solve much of the problem, what it will do is increase the profit that the representatives we've elected get every quarter. The gas tax was meant to fund the building and upkeep of the nations infrastructure. We all know how that is going, bridges barely hanging on in being safe and our highway system becoming strained with the amount of vehicles.

myp · Jun 18, 2012

The GMan said:
Raising the tax isn't going to solve much of the problem, what it will do is increase the profit that the representatives we've elected get every quarter. The gas tax was meant to fund the building and upkeep of the nations infrastructure. We all know how that is going, bridges barely hanging on in being safe and our highway system becoming strained with the amount of vehicles.

My point with this thread is less as a way to increase fiscal revenue (although that would not be a horrible thing given the budget deficit) and more as a Pigouvian tax due to the detrimental environmental effects- the negative externalities.

clax · Jun 19, 2012

i don't think applying a pigouvian tax will decrease consumption, it will raise the cost of everything, unless there was an exemption clause for commercial usage. don't forget everything that people consume relies on fuel, unless you can acquire everything without using vehicular transport. the goods in stores will ride on the same trucks on the same freeways. the professionals who use vehicles to transport themselves to their profession will have to pay more, no matter what car they own.

taxes as punisment dose not work, if you want people to consume less fuel offer a mor fuel effetiant vehical that amounts to more than a silly novelty.

one idea is making them like a locomotive

myp · Jun 19, 2012

clax said:
i don't think applying a pigouvian tax will decrease consumption, it will raise the cost of everything, unless there was an exemption clause for commercial usage. don't forget everything that people consume relies on fuel, unless you can acquire everything without using vehicular transport. the goods in stores will ride on the same trucks on the same freeways. the professionals who use vehicles to transport themselves to their profession will have to pay more, no matter what car they own.

In practice it does work though. People find ways to use less gas- carpooling, public transport if they are in cities, etc.

clax said:
taxes as punisment dose not work

Except it does and if the gain from tax outweighes the deadweight loss it creates, then it might be a good tax to have.

clax · Jun 19, 2012

myp said:
In practice it does work though. People find ways to use less gas- carpooling, public transport if they are in cities, etc.

But people commuting are not the only consumers of fuel. And it punishes everyone. Jaking up the price of fuel will raise the cost of public transport and carpooling also.

myp said:
Except it does and if the gain from tax outweighes the deadweight loss it creates, then it might be a good tax to have.

That is a matter of opinion. I think we loose something more than money when we allow our government to decide what is right and wrong for us. Basically put, if govenment dictates morality, it becomes a tyrant.

myp · Jun 19, 2012

clax said:
But people commuting are not the only consumers of fuel. And it punishes everyone. Jaking up the price of fuel will raise the cost of public transport and carpooling also.

The point is to tax everyone that uses it since it produces a negative externality (it isn't even necessarily a punishment but just asking them to pay for the costs they are placing on the market). And while it would affect carpooling/public transport, those become better options still since the costs are lower when people carpool, etc. (takes less gas per person, etc.- lower negative externality).

clax said:
That is a matter of opinion. I think we loose something more than money when we allow our government to decide what is right and wrong for us. Basically put, if govenment dictates morality, it becomes a tyrant.

Morality is subjective and someone always dictates it. Also, this isn't a moral principle, it is an economic one.

clax · Jun 20, 2012

myp said:
The point is to tax everyone that uses it since it produces a negative externality (it isn't even necessarily a punishment but just asking them to pay for the costs they are placing on the market).

what costs, how dose consumption of fuel cost the government, if anything consumption improves revenue, or at least it dose for every thing else that is bought and sold.

myp said:
And while it would affect carpooling/public transport, those become better options still since the costs are lower when people carpool, etc. (takes less gas per person, etc.- lower negative externality)

.no it wouldn't it just puts exsess burden on the poor. riding the bus is time consuming and miserable. people who can afford an older car that naturally have worse fuel economy will not buy a car and pay for fuel, making driving directly to the destination a luxury. also it decreases the market for used older cars meaning more will go to the dump, valuble parts will be harvested but all the plastic and all the rubber goes to the landfill. how dose this help the environment?

myp said:
Morality is subjective and someone always dictates it. Also, this isn't a moral principle, it is an economic one.

If it is an economic princaple then it is equivalent to economic suicide. if something costs more less people will buy it, meaning less revenue not more. the only thing that gets more money by rasing taxes on fuel is the government who wastes it frivolisly, no matter who is in office. want to get out of debt, quit borrowing.

it is the simplest thing, if you have $16,000.00 in debt you don"t trade your old car for a new one and add another $10,000.00 in debt.

adding a tax is tantamount to a mugging.

GOvernment: we need more money
tax payer: stop spending the thousands I give you annually
Government: no give me more
tax payer: no i am not going to
govenment: fine we'll knock down your door and take it.

substitute government for william and it is a crime

myp · Jun 20, 2012

clax said:
what costs, how dose consumption of fuel cost the government, if anything consumption improves revenue, or at least it dose for every thing else that is bought and sold.

The negative externality is the environmental harm and the push towards peak oil (or past it) among other things.

clax said:
no it wouldn't it just puts exsess burden on the poor. riding the bus is time consuming and miserable. people who can afford an older car that naturally have worse fuel economy will not buy a car and pay for fuel, making driving directly to the destination a luxury. also it decreases the market for used older cars meaning more will go to the dump, valuble parts will be harvested but all the plastic and all the rubber goes to the landfill. how dose this help the environment?

People aren't just going to dump their old cars because of this. Over the long run, it could well pay off even if they do. There have been several studies on this matter that look at actual costs and benefits if you are interested (Google it).

clax said:
If it is an economic princaple then it is equivalent to economic suicide. if something costs more less people will buy it, meaning less revenue not more. the only thing that gets more money by rasing taxes on fuel is the government who wastes it frivolisly, no matter who is in office. want to get out of debt, quit borrowing.

Less people will buy it- that's the point. That does not mean the net effect on the market and world becomes lower though- it could well become higher. As for the second part- irrelevant as I am making a Pigouvian argument only here.

clax said:
it is the simplest thing, if you have $16,000.00 in debt you don"t trade your old car for a new one and add another $10,000.00 in debt.

That is a very random statement to make with very random numbers.

clax said:
adding a tax is tantamount to a mugging.

GOvernment: we need more money
tax payer: stop spending the thousands I give you annually
Government: no give me more
tax payer: no i am not going to
govenment: fine we'll knock down your door and take it.

substitute government for william and it is a crime

This just sounds like a lot of political opinion that I am not interested in. If you want to discuss the facts, do so. Also, I am making a Pigouvian argument, not an argument for tax to fund fiscal expenditure.

clax · Jun 20, 2012

myp said:
The negative externality is the environmental harm and the push towards peak oil (or past it) among other things.

People aren't just going to dump their old cars because of this. Over the long run, it could well pay off even if they do. There have been several studies on this matter that look at actual costs and benefits if you are interested (Google it).

Less people will buy it- that's the point. That does not mean the net effect on the market and world becomes lower though- it could well become higher. As for the second part- irrelevant as I am making a Pigouvian argument only here.

That is a very random statement to make with very random numbers.

This just sounds like a lot of political opinion that I am not interested in. If you want to discuss the facts, do so. Also, I am making a Pigouvian argument, not an argument for tax to fund fiscal expenditure.

It is my political opinion that we shouldent raise taxes. If you don't want to hear political opinions leave. This is a political forum for such things.

Your facts are skewed to suit your opinion as always. You can have an opinion but unproven facts are not facts.

myp · Jun 20, 2012

clax said:
It is my political opinion that we shouldent raise taxes. If you don't want to hear political opinions leave. This is a political forum for such things.

Your facts are skewed to suit your opinion as always. You can have an opinion but unproven facts are not facts.

I am making a pigouvian argument based on economics. There is no room for political opinion there. If you don't like it you don't have to participate in this particular discussion

And I cite the facts that support my argument. That is how logical debate works. What exactly did you find unproven in my argument that I claimed otherwise?

clax · Jun 20, 2012

myp said:
I am making a pigouvian argument based on economics. There is no room for political opinion there. If you don't like it you don't have to participate in this particular discussion

And I cite the facts that support my argument. That is how logical debate works. What exactly did you find unproven in my argument that I claimed otherwise?

Not sure what pigouvian means

David · Jun 20, 2012

clax said:
Not sure what pigouvian means

Sin tax a more familiar term?

myp · Jun 21, 2012

clax said:
Not sure what pigouvian means

And that is a perfect example of how you do not understand a lot of my arguments or that of academia, yet you insist on bashing us without even understanding what we are saying. It does not make sense to me.

Anyway, Google and Wikipedia are your friends: http://en.wikipedia.org/wiki/Pigovian_tax

clax · Jun 21, 2012

myp said:
And that is a perfect example of how you do not understand a lot of my arguments or that of academia, yet you insist on bashing us without even understanding what we are saying. It does not make sense to me.

Anyway, Google and Wikipedia are your friends: http://en.wikipedia.org/wiki/Pigovian_tax

That is a pefect example of how arrogant you are, just use simple terms that everyone understands. Pigovian means by your link morality tax. Why not just say that. You have to use the word you just looked up in a dictionary, to talk down to every one.

Nobody can debate a subject with you unless they know all of your ridiculous jargan. I don't play your game.

Simple argument, what business is it of the government to dictate how much use is too much.

"Pigovian taxes" are anti american.

myp · Jun 21, 2012

clax said:
That is a pefect example of how arrogant you are, just use simple terms that everyone understands. Pigovian means by your link morality tax. Why not just say that. You have to use the word you just looked up in a dictionary, to talk down to every one.

That is not what I am trying to do. This is pretty much basic terminology in economics (and this is the economics subforum). I read a lot of econ in my free time and I often come across terms I do not understand- I have no problem looking them up because I like learning. If you don't feel the same way, then I don't know what to tell you, but I am not going to dumb down my posts for anyone.

Also, that is not what a Pigouvian tax means. It is not a morality tax. Morality is subjective. A pigouvian tax is a tax put on something because of the negative externality it creates. I am not sure if there is another term for Pigouvian tax, so I don't know what else I could use anyway.

clax said:
Nobody can debate a subject with you unless they know all of your ridiculous jargan. I don't play your game.

It's not my "game". This is the terminology of the world. Economics is not even my field of study- I was a Bio major and now am doing pharmacy. There are soooo many terms that you have to memorize- that is just how it is. Things get names, often based on who finds them, and everyone else just has to learn them. That is how it works regardless of the field.

clax said:
Simple argument, what business is it of the government to dictate how much use is too much.

Is it any business of the government to do something about someone being so loud that none of your neighbors can go to sleep? Is it the business of government to make sure your neighbor doesn't set fire to his house (because it could mean it will spread to yours)? Is it the business of government if your neighbor keeps his house so dirty and disgusting that everyone else's land values take a dive? If you answered yes to any of these, then you see the issue with negative externalities. It is a cost. And it can be a very real one.

clax said:
"Pigovian taxes" are anti american.

Because you decide what "American" is?

(also see above)

clax · Jun 21, 2012

You can simply post a link to a definition, and nix the condecending remark. But you did, because you are arrogant.

How high should the gas tax be?

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