Charles Krauthammer: Fix for rising oil prices is easy: $3 tax

[NewHampshireDem]

Holy crap ... I can't believe I'm actually agreeing with this guy, but I do ... is there something wrong with me, or something wrong with him?

IN THE MID-1970s, the last happy days of America's oil innocence, the average American car was a monster weighing 4,000 pounds.

The oil shocks induced belated rationality into American oil habits. By 1981, the average car was down to 3,202 pounds. By the mid-'80s, rational consumer reaction to high prices — home insulation, fuel-efficient appliances and lighter cars — had actually solved the energy crisis. We had OPEC on the run. In July 1986, oil plunged to $7 a barrel.

It is now $41 a barrel. We had a golden moment and we let it pass.

The way to lock in our gains then would have been to artificially raise the price of gasoline with a tax that would depress consumption, maintain consumer demand for fuel efficiency, and most importantly, direct much of the pump price into the U.S. economy (via the U.S. Treasury) rather than having it shipped to Saudi Arabia, Russia and other sundry, less than friendly places

<snip>

The idea is for the government — through a tax — to establish a new floor for gasoline, say $3 a gallon. (If the world price were to rise above $3, the tax would be zero.) What we need is anything that will act as a brake on consumption. Since America consumes 45 percent of the world's gasoline, a significant reduction here would bring down the world price.

But the key is to then keep the tax. Indeed, let it increase to capture all of a price reduction. Consumers still pay $3, but the Saudis keep getting lower and lower world prices.

<more>

http://www.theunionleader.com/articles_showa.html?article=38012

Sounds a lot like many on the left ... and I think Cheney, too, proposed as much at one point, but not to the degree Chuckie here is suggesting. :shrug: As my good liberal friend says of these times, "Up is down, black is white ..."

[sventvkg]

1. This is simply rediculous..We do not have anywhere near

The public transportation infrastructure to take up the slack, to get people to and fro the way our American Society has developed.I do not see This administration or any Democrat administration coming up with the $$ needed to overhaul our public transportation system in this country. They will not spend Billions of WAR $$ on social programs and you all know it. Furthermore, Americans like our freedom to be mobile and love our vehicles. We are NOT about to give them up. We will give up other things that are likey to hurt the economy and retail in order to come up with the extra $$ needed for Fuel. This is how it is, and anyone who thinks otherwise doesn't have a clue about the common person in our country.

[NewHampshireDem]

3. The point was not about Public Transport, but about

fuel-efficient cars--which I think is the same point Al Gore made in "Earth in the Balance."

SUV's get gas mileage in the teens, while your average compact car gets twice to three times the mileage--easily enough to offset the increase in the price of gas. I don't think anyone is advocating that people give up their cars, but that they give up their gas-guzzling SUV's, perhaps in the name of the social compact if not in the name of conservation.

[myopic4141]

19. The point goes beyond fuel efficient vehicles.

The goal is to reduce oil consumption; therefore, the goal includes energy efficient public transportation as well. Not only does the public transportation need to be fuel efficient, it needs to be convenient enough to entice its usage. Fuel efficiency of individual vehicles is but one goal of many to reduce energy needs.

[hamerfan]

4. Relax, Sventvkg,

You'll still get your dividend. And I expect this next year will be a good one. Almost makes me wish I still lived up there....:)

[leftyandproud]

9. "Public transportation"...

is something 98% of Americans want other people to use.

[Fovea]

17. If this happens, we would.

And we would have the tax base to build it.
Keep your private vehicle, kewl, just pay the real cost.
The health costs of automotive use should be folded into usage.

Then, if the market worked like the conservative theorists claim, fuel efficiency would rise exponentially. Of course, these vehicles would not look like a hummer. America should even subsidize consumers for trading in their 'old' autos in on new via a tax refund. Even higher if they actually traded their car in for a bicycle or a commitment to use public transit in the coming year.

Europe gets a lot of advantages from its tax structure for auto use. America would do well to emulate the success of its model.

We have to break our oil dependancy. This is not trivial. We can avoid being in a long, global conflict based on oil. That way we can concentrate on defense of our frontiers, and prepare for the climate catastrophie that is coming on us fast.

As for social programs-- taken program by program, America is far more progressive than you might think.

[ayeshahaqqiqa]

2. Even though this would very likely cost me my job

I think it is a good idea-if the tax revenue goes for research into alternative fuels. As it is, the business I'm in (pest control) relies on being able to get to people's houses to do services. Prices that high would very likely put us out of business.

[NewHampshireDem]

5. In the rest of the article ...

he suggests that the taxes be used to offset payroll taxes, not that they be earmarked for any particular use. (Which you and I both know is very, very unlikely, but so is the whole premise!)

But considering your point, wouldn't stable gas prices--even if they were higher--actually help transportation-reliant businesses better plan for their bottom line? My mother works for Mayflower Trucking (no, not as a driver :) ) and everytime diesel prices spike, business falls, as customers balk at the higher shipping prices. Ultimately, it is the drivers who are hurt by this. If fuel were a set price, those fluctuations would be eliminated.

Just my conjecture ... does your experience bear that out, or am I off base?

<edited for clarity>

[ayeshahaqqiqa]

6. Well

we lose customers if we charge over a certain amount. Its like a magic figure beyond which they aren't willing to pay. What's interesting is that on July 1, we must charge sales tax on our services (thanks, Shrub, for starving states so they have to do these things). I figure we'll lose about 10% of the business then. People around here are on low or fixed incomes, and there's just no way they will pay more.

[NewHampshireDem]

8. Yeah, I can see that ...

and it raises an intersting problem with the $3 gas, too ... that any tax based on consumption is going to be regressive.


I should have picked that up in the "replace payroll taxes" aspect of Chuckie's plan, too. Of course, if this were part of a larger overhaul of payroll taxes to make our tax schedule more progressive, it could work--especially if a way could be found to give a fuel tax credit to those who earn under a particular income threshold.

But, you are right that people do balk at certain prices ... $2.03 for a gallon of gas just seems so much more than $1.97! If you can count on anything it is that we're all illogical in that way. :)

[nodictators]

14. "Offset payroll taxes"? Then the gas tax burden would fall on seniors

and the unemployed. HA-HA! Krauthammer in a highly regressive tax to "solve" Bu$h's finacial mess.

Give a free pass to affluent SUV-driving workers who would offset their gas taxes by reductions in their payroll taxes. Meanwhile, seniors, the unemployed, and less-affluent workers who drive gas-guzzling old junkers would be Krauthammered. Heil Bu$h!

As noted in other another post, small businesses would also be hit hard by the Krauthammer-Bu$h gas tax.

[BJ]

7. Krauthammer's tax plan is "good".

If Kerry had offered up such a plan Krauthammer would pronounce it "bad."

If Dubya's re-elected look for $3 a gallon gasoline anyway, without a bugdet balancing tax.

[indepat]

10. Just another far-right extraordinarily regressive tax that would strangle

the poor and much of the middle class, but not be felt by those most benefiting from recent tax cuts: the Republican mantra.

[BJ]

12. That's why, in Krauthammerian logic, it is "good"

And and all regressive tax proposed by Repuglicans = "good"

Any tax, regardless being progressive or repressive, proposed by Democrats = "bad"

[dumpster_baby]

11. this is a REGRESSIVE tax

They know that more taxes are needed, and so they are floating this regressive tax as an alternative to raising taxes on high income earners, which is what we should be doing.

[Ardee]

13. If Krauthhammer supports this

then I automatically oppose it and wonder at those who let ultraconservatives lead them after all the events in our recent history?

60% of our oil consumption is domestically produced, so how does Saudi or Venezuelan oil prices have such dramatic impact. There are a few obscenely wealthy people making fortunes on top of their already obscene wealth and I do not refer exclusively to oil sheiks. It is these folks who relish the thoughts of 3$ oil and it is those who shrug off the hardships this brings to so very many folks.

Fuel efficient vehicles, alternative fuel sources, public transportation infrastructure are all nice solutions to ponder and to enact, taxing already overtaxed poor folks is simply business as usual, a ploy to redirect your attention and neocon business as usual.

[Jack Rabbit]

15. Sound like a modern conservative solution

The solution to unemployment is falling wages; cheaper labor means more jobs.

The solution to rising prices is to tax them so that they will cost even more, thus reducing demand, thus reducing prices.

To a point either proposition makes sense. Of course, it doesn't matter to these people that working class stiffs like you and me have to live on those falling wages that are further eroded by higher prices.

Do you know what happens to Presidents who happen to be in office in an election year with falling wages and rising prices? Ask Ford, Carter and Bush the Preppy. The same fate awaits Bush the Frat Boy.

[fortyfeetunder]

16. A new jobs programs, imagine this:

take all those young bodies being terraist fodder in Iraq and put them to work to rebuild Murka's transportation infrastructure. Can't say we don't have enough work for them to do.

[mulethree]

18. If a variable tax set prices at $3 then all oil companies

would charge $2.99 and the tax would yield us $0.01 and the oil companies would keep the rest. Setting up a tax to double as a price cap would be exceedingly dumb unless you essentially put in other price-setting measures to ensure the oil companies only charges some 'fair' price pre-tax. The oil companies and most the rest of the economy would not go for it, though you might get the industries who benefit from similar price-fixes to vote for it.

European gas prices are high and I presume thats mostly tax, what do they do with it? How are they doing on per-capita energy usage?