Letters to the Editor
This letter is associated with the following article:
-
If Obama is right, why not raise the gas tax?
Obama's position on the gas tax sounds like the ECON 101 voice of reason: the inelasticity of supply will prop up the total cost of gasoline. Any tax cuts will go to the oil/gas producers as additional profit, without dropping the price to consumers. This conclusion suggests that the total price is also inelastic. The only variable is the portion of the total price going to taxes.
If Obama's conclusion is correct, why not raise the gas tax?
If the total price of gas price really is inelastic, the oil/gas producers would absorb a tax increase, adding to federal highway funds without hurting the consumer. Given their record profits, the oil companies can certainly afford to absorb a tax increase more than the consumer can.