The Case for Higher U.S. Gas Taxes

<p><strong>I Hate Taxes</strong> <br /> <br /> I have to be honest. I don't like to pay taxes any more than anyone else does. I do not feel like a patriot when I write a check to the IRS. I feel like a lot of my tax money is wasted, and I don't like the fact that I have little control over the taxes I pay. As I earn more money, not only do my taxes go up, but my tax rate goes up as well. For years, my property tax went up every year as the housing bubble grew. Now that prices are contracting, I have to go fight the appraisal district to get them to reduce my taxes. <br /> <br /> Don't get me wrong. I understand the benefit of taxes. I recognize that a good bit of my tax dollars are well spent. I am happy to pay taxes that help improve our overall quality of life, or that secure a better future for our children. I just wish I had more control over the taxes I pay. <br /> <br /> Freedom of choice is why I have always been a big fan of lotteries. People can choose to buy a lottery ticket, and a portion of the proceeds goes into the tax coffers. I can choose not to buy a lottery ticket. I feel the same about taxes on alcohol and cigarettes. I can choose not to drink or smoke, or I can drink and smoke a lot, and voluntarily pay more taxes. <br /> <br /> <strong>Why We Need Higher Gasoline Taxes</strong> <br /> <br /> I feel even stronger about certain other consumption taxes, such as gasoline taxes. I think most can agree that in the U.S. a lot of gasoline is wasted. We don't treat our fossil fuel endowment as something we might want to share with our children and grandchildren. We are going to burn through it and keep our fingers crossed that there is a solution right around the corner for future generations. This is the sort of "spend now, pay later" mentality that has gotten us into such a financial mess. <br /> <br /> I like thought experiments, so here is one. What if you knew that there was nothing right around the corner that could replace petroleum? What if you knew that at current consumption rates, your children and grandchildren would have to make far greater sacrifices as a result? I think I speak for most parents when I say that I am willing to voluntarily sacrifice a lot so my kids will have a brighter future. <br /> <br /> Therein lies the root of my support for higher gasoline taxes. In my opinion, a small sacrifice today will stretch our fossil fuel endowment and buy more time for sustainable alternatives to emerge. <br /> <br /> The advantages of having a higher gasoline tax, or more appropriately a fossil fuel tax, would be many in my opinion. They include: <br /> <br /> &bull; It would lead to conservation, which would help preserve our remaining fossil fuel endowment. <br /> <br /> &bull; It would encourage mass transit (people flocked to mass transit this year as prices climbed). <br /> <br /> &bull; It would make alternative energy sources more competitive with fossil fuels, without picking specific technology winners. <br /> <br /> &bull; It would enable people to do a better job of planning ahead, as opposed to constantly expecting that low gas prices are right around the corner. <br /> <br /> &bull; It should encourage more efficient city planning, and reign in some of the suburban sprawl. <br /> <br /> &bull; It would make the price of fossil fuels more reflective of the negative externalities that are not currently priced in (air pollution, military expenditures, etc.). <br /> <br /> &bull; It would penalize alternative energy sources with low EROEI and reward those processes with lower fossil fuel inputs. <br /> <br /> <strong>Political Palatability</strong> <br /> <br /> The most often cited disadvantage is that the tax would hurt lower-income workers the most. I think we could fix that. Let's consider some numbers. The average American consumes about 1,000 gallons of gasoline a year. If we increased the federal gasoline tax by $0.20/gallon this year, $0.30/gallon next year, and then $0.50/gallon in each of the three following years, the total tax increase would be $2.00/gallon. This would still put gasoline prices at less than they are in Europe, but by having a clear understanding that gasoline prices won't be going down, this will encourage serious conservation measures. <br /> <br /> Yet we would have put an additional tax burden of $2,000 on the average American. In order to offset the burden of these higher taxes, we could lower tax rates, or offer a tax credit equivalent to the increased tax burden for the average American. This is equivalent to $200 in the first year of the tax, and $2,000 by the time the last increase is phased in. Those who use less gasoline than the average should actually see their overall tax burden go down. Those who consume more than 1,000 gallons per year will see an overall increase in their tax burden - and will therefore have a stronger incentive to reduce their fuel consumption. For those whose fuel usage is for farm or business use, the fuel taxes could be deducted against business income. <br /> <br /> The price spikes over the past year should have shown how vulnerable our fossil fuel dependence has made us. We are dependent on regimes that despise us. It is only a matter of time before prices go back up, and vast amounts of money start once again flowing out of our economy and toward those hostile regimes. <br /> <br /> If we are to start working our way out of this, we must first accept personal responsibility for our own energy consumption. It is time to shed the belief that we are going to avoid any sacrifices, or that we are going to run this country on ethanol or biodiesel. It simply can't be done at our current level of energy usage. In the U.S. we currently import over 10 million barrels of crude oil a day (and finished products over and above that). That is over <em>12 barrels of oil imported each year</em> <strong>for every man, woman, and child in this country</strong>. We need to - as a first step - bring our energy consumption more in line with that of the <a href="http://europa.eu/index_en.htm">EU</a>. By doing this, we have a realistic chance of reaching energy independence (for now). <br /> <br /> The intent is not to increase net tax revenues, but rather to discourage excessive consumption. This is the only viable solution I see to the problem at present. We saw the impact high prices have had over the past year. People started to embrace mass transit and higher fuel efficiency. When pocketbooks are impacted, people respond. But we need to have better control over this, or the next round of price spikes will see more failures in the airline and auto industry, and it will once again play havoc with personal budgets. But as long as politicians keep promising low gas prices, some people will avoid making choices to lower their energy consumption. <br /> <br /> I close again by reiterating that I dislike taxes. But when I pay taxes, I would rather be taxed on my consumption - which I can choose to reduce. Throw in the need to stretch our fossil fuel supplies, and it seems like a no-brainer to me.</p>