Thursday, May 13, 2010

Gas Tax Facts

(most of the inspiration and ideas on this topic come via Mankiw)

Here is why a gas tax makes more sense than legislating fuel efficiency requirements for cars. Making a super fuel efficient car is expensive. You might have to pay an extra $5000 for your car. This means that you're going to get the car only if you really mean to use it. And if the car is fuel efficient, you'll use it to death. That is, under fuel efficiency legislation,
  • Cars cost more.
  • It costs less to drive them.
  • People with cars drive more.
  • Overall, there is very little reduction in fuel used.
Only a gas tax will hit the problems (carbon emissions + dwindling fossil fuels + oil wars) square betwixt the eyes.

3 Comments:

Blogger David Troyer said...

it might also help pay for road infrastructure by the people who are actually using it.

6:54 AM  
Anonymous Mountaineer said...

What tax rate would be effective?

12:15 PM  
Blogger My Freakwentness said...

Mankiw proposes a tax rate of $1 per gallon. Parts of Europe already have much higher taxes.

2:01 PM  

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