A Christian Liberal is NOT an oxymoron.

Posted by XT on May 2nd, 2008 in US News

I was glad to hear Barack Obama oppose the “gasoline tax holiday“. That is truly one of the dumbest ideas I’ve heard in some time. It isn’t that I wouldn’t appreciate paying eighteen cents less per gallon – it’s just that eighteen cents per gallon isn’t enough to do anything for anyone.

Think of it this way: New Jersey has the lowest gasoline prices in the country. Last week, when I bought gas, I got eleven gallons for about thirty-four dollars. If the federal gas tax were waived; then I would have saved one dollar and ninety-one cents. I could have bought a soda and ten pieces of Double Bubble!

How’s that going to stimulate the economy? More to the point, how is it going to make a dent in my fuel bill? Listen, it wasn’t the last two dollars that hurt me – it was the first thirty-two dollars

It’s pretty easy to draw a direct correlation between $120 oil and $4 gasoline and record profits throughout the oil industry. The talk of a “windfall profit” tax is good to have – but I don’t think we should be targeting a specific industry with it. Taxation is an effective tool to curb the excesses of unrestrained greed. The goal is not to set rates so high on incomes so low that it discourages wealth (though I’ve yet to meet someone who wouldn’t want to make more money even if it cost them more tax). The goal is to create a means of earning a reasonable return but discouraging price gouging – and that is exactly what is happening now.

It costs no more to produce a barrel of oil today – with oil around $110-120 a barrel – than it did a few years ago when it was $65-70 a barrel. The difference between the price then and now is turned into pure profit. Imposing caps only ensures that doing business in the United States risks losing money – which risks actual shortages as suppliers decide it isn’t worth losing money to gain access to the US economy. A general tax on corporate profits, however, will provide an incentive to keep prices lower than they would otherwise be because extra profit just means extra tax. This is why marginal tax rates in the United States used to reach as high as ninety percent.

Yeah, there are loopholes. They would have to be closed to keep companies from avoiding the tax by offshoring profits. So do it already. They shouldn’t be able to do that anyway, should they?

And I have to disagree with this author that extra taxes “allows” the government to do things. It only allows the government to pay for things it is doing. As George W. Bush has proven, the government is going to do what the government is going to do. We can tax and pay for it today or we can pawn it off on future generations. Bush has chosen the latter. I view that as irresponsible.

There is another reason that such a tax would be a good thing. Taking money out of the economy would help boost the value of the dollar – particularly if it cuts the budget deficit.

That won’t “solve the problem” though because the real problem is that Americans feel they are entitled to have absurdly cheap fuel. They aren’t. The only way to bring fuel prices down is to break our addiction to oil. I wouldn’t look for either John McCain or Hillary Clinton to do that – the fact that they want to give a “tax holiday” would indicate that they haven’t through through the implications of their policy, but they are impressed with its ability to get votes.

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