Tuesday, October 04, 2005

Huge Gas Taxes - The Tierney Cure-All

It's a bit hard to follow the writings of John Tierney these days, at least without paying money to the New York Times. Still, I stumbled across a reproduction of one of his recent columns in which he proposes higher gas taxes. I will admit some amusement that the person reproducing the editorial wrote, "Curb the deficit (Democrats would like that) and start to solve the US gas hunger." - it wasn't so long ago that the Republicans were supposedly the party that wanted to balance the budget.

For many, many years, a very left-wing radio host in the Detroit area, Peter Werbe, has been calling for an increase in the gas tax, proposing that the revenues from the gax tax be channeled into public transportation - that is, you make it more expensive to drive a car, while making it cheaper and easier to get to the same destination through public transportation. As a left-winger, he's of course attuned to the fact that an increase in the cost of gasoline without improvement in public transportation could translate into an immediate, regressive tax on the working poor who are dependent upon cars to get to work. And I have heard many others on the political left, including environmentalists, call for higher gas taxes as an incentive to reduce energy consumption. I recall hearing many arguments against Bush's demand for oil exploration in ANWR on the basis that, even assuming significant oil reserves, much greater energy savings could be achieved through conservation.

Apparently Tierney missed all of that. In his world, all that the political left has demanded are subsidies for alternative sources of energy, and for regulations which require appliances to be more energy efficient. He complains that the former hasn't worked, and that the latter causes appliances to become more expensive (which he asserts amounts to a regressive tax). In relation to cars,
Besides being costly, conservation rules produce unintended consequences. The fuel-efficiency standards for cars led to that environmentalist nightmare, the S.U.V., which became popular because of a loophole in the rules.

Consumers who wanted a big car had to buy one pretending to be a truck because carmakers were forced to downsize their fleets. As cars became lighter, they
also became more dangerous, resulting in an additional 2,000 deaths per year, according to the National Research Council.
Interesting. So nobody ever "had to" buy a full-size van or minivan, before SUV's hit the market? And we're to pretend that the "loophole" wasn't an open secret - one which, Congress willing, could have been easily closed with the stroke of a pen?

Further, it is generally accepted that when fuel prices reach certain levels, people very much take fuel efficiency into account when purchasing vehicles. That is to say, whether the increase in efficiency comes from CAFE rules being extended to SUV's or from an extra $0.50 to $1 per gallon under the Tierney gas tax, people will still move toward those vehicles Tierney describes as lighter and more dangerous.

His arguments on alternative energy present a similar question - if people won't invest in alternative energy (e.g., solar panels on their homes) because even with any present subsidy they are more expensive than the status quo, their incentives presumably will change if traditional energy sources are made subject to a substantial new tax or tax increase. You might not invest in a solar panel for your roof to save $5/month in electricity; you might think again, though, if due to a tax increase your savings would suddenly jump to $50/month.

Tierney seems to believe that a gas tax, and perhaps consumption taxes in general, are good because they "make people figure out on their own how to burn less gasoline". (Or, conversely, free people to burn as much gasoline as they want assuming they are willing to bear the cost - as Tierney also notes, "Individuals don't always make the best choices about energy use.") But unless phased in over time, a significant gas tax would be immediately regressive, hammering the working poor at a time when higher gas prices are already taking a bigger bite out of their paychecks. (But perhaps I'm forgetting that Tierney doesn't live here - he lives here - he can shrug off concerns about the working poor with "why don't they ride the subway.")

Assuming, though, that the Tierney tax is implemented, what should be done with the revenues? Improve the nation's infrastructure? Subsidize conservation programs? Invest in research into alternative energy sources? Pour it into the general fund? Nope. Tierney is apparently proposing that his "solve-everything" tax be diverted into new privatized Social Security accounts ("By raising the federal gas tax and putting the revenue in new Social Security individual accounts, we can save energy and reform Social Security.") So in the name of individual choice, we'll have the government impose a significant increase on the gasoline tax, place the money into mandatory "individualized" savings accounts that we can't control, and the world will magically be made better on all fronts. While people who must drive their old cars to low-paying jobs five or six days a week will rejoice at being liberated from oppressive CAFE standards?

Leaving aside my natural skepticism of any plan where the government supposedly allocates a new revenue stream to a specific purpose (consider, e.g., the sleight of hand by which lottery revenues "went to schools" without any net increase in school funding), and the seemingly obvious question of whether it would make more sense to increase the Social Security tax to pay for a new Social Security program... beyond "choosing" how to pay my bills despite having my pocketbook lightened by a new tax, in the world of those less privileged than Tierney, what does any of what he proposes actually do to advance individual choice?

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