1. Gas prices not very high in historical context.
2. Federal gas tax last raised in 1993, has been cut in half by inflation since.
3. Gas tax lower than the climate/road damage/congestion costs imposed by gasoline.
4. A gas tax holiday would raise profits for oil companies.
2. Federal gas tax last raised in 1993, has been cut in half by inflation since.
3. Gas tax lower than the climate/road damage/congestion costs imposed by gasoline.
4. A gas tax holiday would raise profits for oil companies.
Expanding on the last point, the "incidence" of any tax cut gets shared between the two sides of the market (whichever side is less responsive to price will get more of the tax cut). In the case of a gas tax holiday that would mean billions for oil companies.
It is depressing that the decades long link between highway financing and highway use was broken in the 1990s. If anything the gas tax should go up not down. I realize that is impossible to ask now. But at least hold on to what we have.
.@crampell did a great job laying out the arguments and evidence on this. washingtonpost.com/opinions/2022/…
P.S. Policy people are bad political predictors because they’re biased by their policy views. BUT, while I could see the announcement being a plus the follow-up could be terrible as people think the plan failed when prices barely change or even possibly go up.
(Not arguing the gas tax holiday will raise prices, it would lower them by about $0.12 relative to the counterfactual. But I wouldn’t want to be the one to explain that your gas price only went up $0.50 but would have gone up $0.62 with no holiday. All while profits are soaring.)
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