Letters to the Editor
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Frost forgets to connect the dots
The gas tax is a gimmick. Frosts analysis here is actually advocating for two policies:
1. Another economic-stimulus check
2. Nationalization of the Oil Industry
Taxes have three effects: they take money from consumers, they take money from producers, and they cause a loss in consumer and producer surplus to economic inefficiency(dead weight loss). To make the argument for this tax cut is to say that cutting taxes will reduce burden on a consumer. However, both supply and demand are relatively inelastic in the short term, meaning the dead weight loss of the gas tax is near-0. That means that federal gas taxes place burden almost 50/50 on consumers and producers, with little to no deadweight loss. Cutting federal gas taxes, by 10 cents/gallon will, more or less, result in prices at the pump falling by 5 cents/gallon, and producers taking 5 cents/gallon in extra profits.
What the Frost missed in his analysis is this: While the consumers are gaining a nickel/gallon in benefit, they are also losing a dime/gallon in tax revenue. In other words, taxing gas is actually beneficial to consumers, because we could write a check from the federal gov't to everybody out there for the amount that the tax costs them, and still have money left over. This "money left over" effectively is tax on oil company profits above a specific point.
When Frost suggests the additional profits given to oil companies will be subject to a tax? It sounds great... but those additional profits were previously being taxed at 100%. The new tax will, clearly, not be that much, meaning that this policy operates as a tax break to oil companies. Frost counters that by asserting that by making it against the law for oil companies to pass the price on to consumers, the burden will stay on the oil companies. It sounds great, but what does that mean? The US Government should set gasoline prices, more or less. In other words, nationalize the oil industry. If Frost is advocating that, which it appears he is, he should make that point directly. It's a reasonable proposal, but one that should be analyzed on its own merits, not by arguing for it as some "we're fighting the big bad oil companies" policy.
In short, we can give the current policy the benefits of the gas tax holiday by:
1. Sending people a check
Or we can give the gas tax holiday the benefits of current policy by:
1. Defining a national price of gasoline
2. Taxing oil companies
3. Auditing the books of oil companies to make sure they're complying
Which one is easier?
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two things
1) when did the L enter into "Obamatrons"? is there some new meaning behind "Oblamatrons" that I'm not aware of? Can anyone enlighten me?
2) odog, your comment about trucking? Well I used to work in the trucking industry (I know, how elitist of me!) and I gotta tell ya, a VERY large percentage of their fuel comes from the black market. Scrap yards and salvage yards sell their excess diesel for pennies rather than pay through to nose to get it removed from their premises. Just figgered you'd like to know.
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Wake Up Comatose!
I was about to complain about the influence of this article only a day before the primaries, but then I remembered only us unimportant latte slurpers actually read Salon.
-- comatose
Latte sippers?! I thought we were now arugala eaters! And what if I like neither?! Oh, what is a dietically challenged elitist to do in these hard times?
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Come on Salon, get your facts straight...
Election day garbage from Salon, shame on you:
From the New York Times:
"Suspending federal and state gas taxes, however, would not necessarily lead to a commensurate drop in prices.
Since 2000, four states have enacted gas tax holidays: Florida, Georgia, Illinois and Indiana. In general, retailers did not pass on all of the intended savings.
When Illinois and Indiana suspended about 7 cents of their state gas taxes in the summer of 2000, prices fell by an average of only 4 cents, according to a study by the American Road and Transportation Builders Association, which opposed the plans. Drivers saved no more than $2.50 a month, while each state lost tens of millions of dollars in tax revenue."
If you want to learn about suspension of the gas tax, read here (http://www.nytimes.com/2008/05/06/us/06gas.html?_r=1&partner=rssnyt&emc=rss&oref=slogin).
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So Obama is taking the unpopular stance for the hell of it?
So Obama is against the gas tax holiday, because he says it won't do anything, and this is leading the knuckle-draggers in Indiana and NC to like HIllary better.
So, what this article is saying is, he's taking a position that he knows is wrong in so he can erode his own lead? I'm having a hard time following the logic there.
Also, I live in Illinois. The gas tax holiday was BS then, it's BS now.
Here's my elitist comment. If you're dumb enough to fall for this snake oil, it means we need an IQ test to qualify for voting priveledges.
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Read the Freakonomics Blog
The Illinois gas tax holiday, which you're right, Obama supported, cost the state an estimated $146 million in tax revenue. Only 70% of the tax rebate was passed down to consumers, but when the tax was reinstated, 80-100% was taken back. That means you're talking about a 10-30% price gouge over the course of the rebate. Essentially, instead of giving the money back to the taxpayers, the tax "holiday" was in reality a 14 to 44 million dollar subsidy to the refined oil industry. Tax money has to come from somewhere.
Obama was wrong about that gas tax holiday, but he's right about this one.
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Economists? We don't need no steenking economists!!!
Oh, Sacred Low Information Voters, I pray that you deliver us closer to Dear Leader's bosom on this beautiful primary day. Deliver us from the Antichrist Obama and his wares and trickery, Amen.
Hillary '08!!
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Gas tax holliday: Stupid, stupid, stupid.
Rescinding the federal gas tax during the 3-month summer holidays is a stupid idea that requires no further discussion on its merits. If Clinton is seriously proposing this scheme she is simply stupid. If she is proposing it to attract stupid voters she is cynical. Take your pick. Given Clinton’s history, my vote goes for cynical. I used to defend Clinton during political discussions. This is no longer possible for me. What a disappointment she has become.