Letters to the Editor
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CBS News shows you're wrong, Mr. Frost
As do 150-odd economists (and even Krugman, but he won't come out and admit his goddess Hillary is wrong and siding with McCain, much less that Obama is right).
From http://www.cbsnews.com/stories/2008/04/30/ap/politics/main4060360.shtml
THE FACTS:
In 2000, gasoline prices were climbing quickly, reaching $2 a gallon in the Chicago area _ a remarkable price back then. Illinois legislators scrambled to offer some election-year relief to angry motorists.
Obama voted three times for a tax holiday.
The version that ended up becoming law required a six-month suspension of the state's share of the sales tax on gasoline, a 5 percent tax paid directly by consumers rather than gas stations. It also required gas stations to post signs on their pumps saying that the Illinois General Assembly had lowered taxes and the price should reflect that cut.
The impact of the tax holiday was never clear.
A government study could not determine how much of the savings was actually passed along to motorists. Many lawmakers said their constituents didn't seem to have benefited. They also worried the tax break was pushing the state budget out of balance.
At the end of Illinois' tax holiday, there was a failed push to eliminate the sales tax permanently. Obama was among those voting against eliminating the tax.
Obama's presidential campaign says the lessons of that Illinois tax holiday influenced his decision to oppose a national tax holiday. The lack of clear results then make him dubious about suspending the national tax now.
In addition, the Illinois tax was paid directly by consumers and increased as gas prices increased. Obama's campaign points out the national tax is a flat 18.4 cents (24.4 cents a gallon for diesel) and, therefore, isn't climbing as gas prices climb. It's also paid by producers, raising more questions about whether they'd pass the full savings along to customers.
During a three-month suspension, the average driver would save only about $28, according to the American Association of State Highway and Transportation Officials.
"That assumes the oil companies are going to give it to you. That's probably not a likely outcome," said Jack Basso, the association's director of management and business development.
If oil companies did pass along the savings, tax experts say, the lower prices would increase demand. Since refineries are already at maximum production levels, the increased demand probably would drive prices back up.