Dick Lugar's plan to raise the gasoline tax

[Juche]

Dick Lugar (R-Indiana) has come out with a plan to raise the federal gasoline tax by $1/gallon, while also offering taxpayers a $14/week rebate on payroll taxes. He figures that the payroll rebate will negate the higher taxes for gasoline and it will be revenue neutral. Americans use about 140 billion gallons of gasoline a year, so this is roughly $140 billion new revenue (perhaps less because in time people will drive less or buy more fuel efficient vehicles).

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/30/AR2009013002728.html

http://www.weeklystandard.com/Content/Public/Articles/000/000/015/949rsrgi.asp

On the surface it seems like an ok idea. Raise gas taxes to decrease demand while also giving businesses more incentive to create alternatives and higher MPG cars. He doesn't say if the money will be used on renewable energies or if it will be used to fix the underfunding of Medicare and Social security.

Part of me worries that this is just a covert attempt by the GOP to bankrupt medicare and social security be cutting funding for these programs by about $130 billion a year. However, again, he doesn't say if the money will just replace what is lost from the lower taxes on these programs or if it will be used to help speed up alternative fuels.

If the latter, then $140 billion a year is excessive. The Apollo alliance claims we can end dependence on foreign oil in 10 years for $50 billion a year. Seeing how we import 10 million barrels a day this sounds unrealistic. But who knows.

Sadly its political suicide, even with the payroll tax break.

[MNDemNY]

1. I'd rather see the gas tax increase, without any rebate.

[Oregone]

2. Give the rebate, but increase the cap to create balance

Gas tax is a great idea. I think many Americans have no idea how good they have it with gas tax. Yes, consumption tax can be regressive, but if it can be proven to curb consumption at the sake of the environment (whether by means of the consumer or by increase innovation), then its a good idea.

[bluestateguy]

3. Stu-pid

Prissy environmentalists will turn up their nose and say that people should just drive less if they don't want high gas prices, but that is not an option for everyone.

Rural communities do not have much in the way of public transportation.