Ray's Gas Tax Rant

Maintenance/Repairs
41

Joseph

To my “A flat tax is regressive andpunishes those with less money.” you replied

A flat tax is regressive and punishes those with less money.

It does not “punish” People with less money are more sensitive to any price change, but a price change does not mean punishment.

Providing a base level of fuel would in effect eliminate any economic incentive to reduce consumption. In reality it would only result in a black market.

I don’t mean to lecture or talk down but I think what you said is incorrect, and what I wrote deserves more than short shrift.

“Prices” are a market outcome of the balance between marginal supply and demand for a commodity. Taxes do not fit the definition of a market commodity. A tax is not something you can forego if you don’t like the price. You must pay it. Therefore, yes, flat tax punishes those who, with less means, are compelled to pay it. These are based on economic theorems. I didn’t just make them up. Prices have a natural limit that is expressed as the price elasticity of demand. When the price gets high enough, buyers stop buying until prices go down again.

There is also a price elasticity of supply; for crude oil, for example, many countries say they cannot afford to pump for less than $76 per barrel. If they actually stop producing, supply will drop and prices will go back up, restoring a price balance at which suppliers are willing to supply and buyers are willing to buy.

Anyway: Under the plan, only excessive consumption is actually taxed at a higher rate. Every taxpayer puts some amount into the pot for a rational amount of fuel. Every taxpayer gets a right to use an equivalent amount of fuel in the form of a prepaid gas card with some number of gallons (say, based on what you actually use now) (insert complicated regional CPI-based formula and something to compensate for oversupply at the start of each year).

Government could then specifically tax cash purchases bought by those consuming an excess amount of fuel, which everyone is quite free to do. Fuel is a market commodity. So, in that way, yes, it promotes conservation based on price elasticity of demand. Some consumers will pay the higher price to buy the more expensive fuel, but some will not.

Contrary to creating a black market, it would create a completely open and honest energy credit trading market for which anyone wishing to pay something other than the official cash rate for fuel could bargain to buy fuel from someone who doesn’t plan to use all of theirs. That way, some consumers may get a better rate than the cash price at the pumps. In that way, too, it promotes conservation by those who make an economic choice between using their prepaid fuel to drive, or selling it at a profit for other uses.

It also promotes predictability because you discover what your true baseline demand is, how it shifts, where it shifts, what the marginal pricing levels are (in other words: at what price do the marginal buyers actually stop buying), how to structure future incentives and alternatives.

Energy credit swaps are in use and well proven across many industries. Those who pollute less have economic incentive to do so if they can gain marginal economic advantage by doing so. Those who want drive and pollute more pay a penalty. That, too, promotes conservation.

And what I’m saying is that Tom and Ray are proposing a draconian plan. Some level of consumption is normal and just fine. It is excessive consumption that we are trying to positively influence.

42

I heard the gas tax rant for the first time. It is about time somebody who can influence public opinion has said it. I have been shouting the same thing even when gas was over $4. If we miss this opportunity to start managing energy policy, as they do in Europe and Japan, we deserve to go through this again. Please do what you can to make this a national discussion. Rant! Rant! Rant!

43

Sorry Joseph I have to disagree. You talk about fuel as a commodity. It is on its way out as a commodity. Aside from the very important issues such as global warming, the age of oil is almost over. If we have not passed the peak oil point already we are very close to it. Even if it is a couple of decades away the time is finite. If we wait till we actually see the downward slope you will not believe the chaos you would see then. Conversion must start now to a post-oil age.

I wrote a letter during the first oil crise in 1972 to the magazine of the American Society of Mechanical Engineers (ASME). In the letter I suggested that we start then to switch away from oil. They did publish some response from those who thought I was wrong. I don’t think I was. I felt we could have done it in about 50 years. If we had done so we’d have been over 60% there by now. If we don’t make the switch starting now I’m glad I won’t be around for this discussion 50 years from now.

44

Although I generally hate the idea of new taxes and entrusting the government to spend my money wisely I believe your idea to be quite workable - if the money was actually used for the purpose it was collected. This country HAD public transportation at one time in the form of railways and could have again. Individuals, businesses and the government would all benefit from more prolific railways.

I am not normally for big government taking care of our problems but since big business has obviously failed us perhaps it’s time for the government to step in and do its job. Any government’s main function is to build and oversee the infrastructure that keeps a country running. In times of crisis such as these the rebuilding and reworking of infrastructure is vital.

However, I do not believe the current politicians in Congress to have the self-control to keep their hands out of that kind of cash flow. Soon after the inception of such a tax you will see all kinds of members of Congress stepping forward with their hands out for money for projects they will tout as just as important - at least to their own self-interests. Soon enough that cash flow will be diverted to the point that there will simply not be enough to support its original purpose.

You see, our biggest problem right now isn’t with oil dependency or crumbling infrasturcture (though both threaten to bring us to our knees), our biggest problem is that the majority of our leadership is no better than a bunch of common crooks with nothing but their own selfish interests in mind. Congress makes the creeps that ruined the banking industry look like saints.

To wit: Until we fix the problem that is Washington, D.C. we’re pretty much screwed.

45

Ray, when I heard you begin your rant on the gas tax, I was skeptical because one of your reasons why it would be so great is that we wouldn’t drive as much. Boo Hiss. I love driving, and doing so whenever I want to…but THEN, when I heard the ultimate effect of the tax would be to fund high speed trains, I thought you were brilliant! All my skepticism melted away…UNTIL, I heard you say you bought stock in Ford and GM, whose employees could all be hired to build the rail lines. I was then that I realized the whole rant was only to make sure that your STOCKS QUADRUPLE IN VALUE!
Love your show; I’d take my life in my hands and ride with you OR your brother, anytime. Pam Anthony, Hamburg, PA

46

“Tom?s proposal addresses the root problem. Our country consumes an embarrassing share of the world?s fossil fuel.”

With that energy we also are one of the most productive countries, and due to that abundance, the most charitable.

Should that be considered bad?

Also consider that to provide that level of productivity, we tend to produce products in centralized factories. The products then must be transported, which again consumes energy but overall is more efficient than having many small factories.

On the tax issue - NO NO NO NO NO. Although I am in favor of consumption taxes (e.g. I want the fair tax instead of the insane tax game currently in play), adding more federal taxes to try and change our habits is WRONG. The last thing the US Govt needs to do is grow. They can’t manage the money they have now, we need to give them LESS not more and require the US govt to shrink like our wallets do when the economy is soft. All Govt. ever does is grow - and grow - and consume more producing very little. No, the federal govt. needs to be cut so we can pay off our debt and stop paying interest to China!

And no, Tom and Ray, I don’t want to pay for your mass transit project in Massachusetts. I live in the west where mass transit makes no logical (or economic) sense as our cities are horizontal, not vertical. If you want mass transit - then you vote to raise your city or county sales taxes, or state income tax, not the federal tax that I also have to pay, but get nothing for!

One of the best lines from any movie is from the movie “Hawaii” where the Queen said to the missionaries “Laws, laws, laws, too many laws make the people mad”.

Mad taxpayer here - no more taxes!

47

“OK, Interstate Highway System. or the Weather Bureau. or the Library of Congress. There are more.”

Hmmm. So (from what I can tell from the 2007 budget), you are saying that the federal govt spends about 2.9% of the money that they get, on what it should do. If you include the military, then about 22%.

Wow - no wonder the people in charge get a single digit approval rating. Maybe they could just use the money they already are stealing from us better?

If they cut out all the mismanaged social programs, horrible retirement plans (Social Insecurity), and lousy medical plans (Medicare), we could pay off our debt to China, improve our infrastructure, and actually lower taxes at the same time.

But that won’t happen as long as sheep keep re-electing the people who are already in Washington over and over.

48

You want energy independence? Ban non-North American oil imports starting in 2012 (I can live with Canada and Mexico oil).

But we better be able to drill here and now, or blue collar workers won’t be able to afford to heat their homes or drive to work.

While your at it - get the NE off of heating oil, and onto natural gas!

49

Mr. Or Ms. Flyscrew, In Your Statement, "Although I generally hate the idea of new taxes and entrusting the government to spend my money wisely , …

I agree with one of your ideas, "… I generally hate the idea of new taxes …"
Me, too!

Also, you gave me a good chuckle with this oxymoron, " … and entrusting the government to spend my money wisely , … "

Government spending money wisely? Jumbo shrimp? Army Intelligence?

50

Hey, you asked a question - “just one” example of any government program that works. I offered several. Your reply ignores them and simply continues the diatribe. Please talk yourself down from the pointless rant and answer this question I posed to you - “Raising the price of gas has reduced consumption in the rest of the world. Why wouldn’t it work here?” Come on, contribute something - perhaps with fewer (incendiary?) adjectives . We’re in this together…

51

Your “excessive consumption” point makes sense. Please refresh my memory. Haven’t we “dabbled” in this before? Don’t we already have some sort of “gas guzzler” tax that ramps up (by how much?) the price of a new Hummer, etc.? Is that still in place? What evidence is out there to show it’s had any impact on the production of these vehicles? And is the “tax” listed separately on the sticker-price where the prospective buyer can see it? (Yes, I should know these answers but I’ve never looked at one of these tanks in a dealer’s showroom.)

And in the final analysis, I’d like to know which is a more effective tool for reducing imported energy consumption - raising the price of the vehicle or the energy it needs to move? I think I know, but I’m willing to learn differently.

Also, the adjective is often the enemy of the noun. Precisely locating the line between “normal” and “execssive” will be tricky. But I like your approach.

The Devil, however, is always in the details. The rationing approach will require a litany of “exceptions” for farmers (BTW, I’m a farmer…), truck drivers, folks who “must” commute (say…) 100 miles or more each day to work at minimum wage jobs, people with disabilities, one-eyed-one-armed-lesbian-carpet-layers-from-Philly-who-have-a-limp, etc. Sorting this out will be an administrative nightmare, but do-able (as long as no one expects us to get it 100% right the first time).

Then there’ll be the problem of enforcing it (modern laser printers sure do invite counterfeiting…). eBay is gonna have a field day (assuming it wins the opening battle with NYSE [which, doubtless, will want to be the site for this commodity trading]).

To be fair, that’s way too many questions for you to answer. Your commentary about this is provocative (in the good way). Thanks!

52

I think a larger gas tax is a good idea. The amount of conspicuous consumption in the US in the last couple decades has threatened the already tennous claim we have on being the “greatest country on earth”(Common Sense Answer). The idea that filling up the 35 gallon tank of a hummer, Excursion, etc just so wifey can drive to the food store, is rediculous. Large trucks have their place, but I see an unjustifiable number of trucks running around with empty beds, empty tow hitches, and empty wives in the driver seat. Trucks which spend more time in the garage than in the field should be promptly crushed and turned into small, efficient petrol or diesel sports cars and family sedans. Perhaps 50c per gallon of gas may keep some of the ideas of what americans need, versus what they have been told they want, in perspective.

As to what to do with the money from the gas tax. Why not infrastructure? Why is improving that ever a bad idea? Why can’t massachusets build their mono-rail, montana add guard-rails, and wisconsin fix bridges? Why on earth would common sense say that basing our infrastructure on europe or japan be bad? Have you seen their roads? Their mass transportation? Their internet speeds? Anybody who enjoys driving should welcome that. And about adopting a similar energy management policy, again how is that bad? Our power networks are old, out of date, and can’t support much more serious growth, either in supply or demand.

And I know why you horizontal cities and “real america” small towns should accept, even welcome, mass transportation. So you can get out of the city in less than an hour on a train that goes 100-200mph, so you stop driving off rural roads because they are so straight you fall asleep, and so you can see a world beyond the local waffle house.

Nothing the US has been doing is sustainable, we have been slowly making ourselves obselete. There are so few intenational measures by which we are gaining ground that something needs to change. If 50c a gallon changes even a small percentage of minds about how to make the US as we know and love it more sustainable, while improving what we have through infrastructure improvements, then I for one am all for it.

But, if you can’t look outside your country and see what is right, or look inside and see what is wrong, you are nothing more than blindly obedient, and marxism or socialism should fit you well. I’m talking to the “witty” commenter who doles out “common sense”. Jefferson said that “Lethargy is the forerunner of death to the public liberty”, and not challenging our attitiude about our place in the world is a severe form of either insolence or neglect, but neither will end well.

And as a final note, perhaps common sense could supply more than empty rebuttles and useless comments. Isn’t he the one last week that cried out sobbing when puppies were posted, and now he’s bringing up the Jetsons? for shame CSA!

53

ARE YOU NUTS!? The country’s economy is failing and you want to burden the consumer? There are already onerous taxes on gas (and any other consumable you can imagine) which our iresponsible representatives manage to divert to other causes. Did you forget about them? Make our representatives use the already earmarked money for what it was intended and you won’t need more taxes. GEEZ!!

54

i am to lazy to read all these replies before giving my own 2 cents… and 2 cents is all i have(gov employee). and as much as my wallet needs the nourishment a 50cent or maybe a little less, is needed possibly more then you can imagine.

i find that gov has gotten to small to manage itself. instead of taking care of problems it used to, it contracts out the jobs for more then cost to do in house. they do this because it looks like they are better supliminting the economy, helps pay back campaign contribuitors and it SEEMS like they are spending less money(because the have fewer employees with retirement on staff). but gov has gotten so small they cant even check and see how well the contractors are fore felling the contracts(look at the fema mess for proof). they are in desperate need of more money to turn these practices around.

as far as spending the money on lite rail made by gm. i would prefer they use it on all the bridges that are aging well past their prime(i would hate to see another bridge collapse), better city management, and city sprawl controls (the less distance you have to travel to shop the more money you have to spend once you get there).

gm & crystler need to sell off some of their assets and find its core and rebuild from that.

but maybe i am biased because i work for the transportation cabinet and when i look around my desk and see all the empty desks from retired or laid off employees i fear for my own job. but to me it just seems hard to do a job when there is no one left to do it.

55

Mismanaged social programs? Like WIC, that ensures that poor children get decent nutrition by stipulating what parents can buy with it? Social “Insecurity”? Last time I checked, those monthly checks keep showing up when all the private, defined contribution 401k’s have lost 60% of their value, and several large companies or no longer matching funds. Plus a 3.5% cost-of-living increase this year! Insecurity -hardly. Lousy medical plans like Medicare? Medicare is far more efficient than any market-based health care insurance, spending half as much on paperwork for example. One thing government has done to screw itself up is outsource its business to PRIVATE contractors, like Halliburton. What about Walter Reed Medical Center? Outsourced to private business under Bush and horribly run.

Spare us your Reaganesque bashing of good government programs…

56

I agree with you. Plus, I thank you for your service as a public employee. Unfortunately, a culture of hating public (federal, state, local) employees has erupted in our country, thanks in part to Ronald Reagan who conservatives like CSA absolutely adore, I am sure. As a result, the ranks of public servants has been decimated in every agency from the local Public Works to the FDA, making our lives a little more difficult. These people, including yourself, do a great job and work hard only to be demonized because you take a paycheck that is paid by taxpayer funds…as if you and others provided nothing in return.

57

Great job guys! I’m very proud of you guys to take such a vital andb challenging stance! Please keep this topic alive on your show…

During the past year, I’ve taken pains to manage my gasoline use… I take public transportation when ever it is practical, I try and work closer to home (or near public transportation) and I’ve become a dedicated bicyclist.

Maybe you could start a second show called “Bike Talk”?

Thanks again
Steve Miller
Dedicated Listener.

58

Oddly enough, I was commenting to my wife the day before the broadcast that, "Now that gas prices have fallen off, the federal government should impose a $.50 per gallon tax for . . . " most of the same reasons Ray pointed out (I omitted, but thoroughly support having Detroit switch to, or add to its mix, light rail cars). My only major concern at this time is that, given that I thought of almost the same idea as Ray, at nearly the same time, does that mean I am beginning to think like him?

59

RIGHT ON! Let’s do it! It’s the only way for a multitude of reasons. I’ve been advocating this for years. Let the price signal be the mechanism to motivate, choose, and reward practical energy solutions.

Where do I get the bumper sticker?

Will we see Ray in the new administration? Car Czar?

LET’S GO! :slight_smile:

60

Ray is absolutely correct. The real goal that we must reach is to dramatically cut back on our carbon dioxide (and other global warming causing) emissions. The only practical way to do that is to impose a fee on carbon emissions. One justification for such fees is that we are not currently paying the true cost of using fossil fuels. When you consider the environmental damage (air and water pollution, global warming effect, landscape destruction, etc.), health problems, and other side-effects of using these fuels, the price we currently pay doesn’t come close to the true cost to society and the earth.

Talk about a tax, we are paying many hundreds of billions of dollars to overseas oil suppliers, money that never comes back except as loans. That is a terribly expensive tax. How about adding a tax that stays right here where we can use it? It will help us reduce demand and thus reduce the amount of money we send permanently overseas, and we can use that money here to further reduce our demand, AND at the same time, create millions of jobs by creating a green economy producing alternative fuels, electric cars, solar electricity technology, all of which we can then sell to the rest of the world, and start bringing the dollars back to the USA. Only a carbon tax can stimulate the private sector to invest the money to develop these critical new technologies by showing them they can make a profit doing so. If the price of gas is $1.60 a gallon, nobody is going to invest in inventing new and efficient ways to produce bio-fuels.

If you don’t believe me, read Thomas Friedman’s “Hot, Flat, and Crowded: Why We Need a Green Revolution–and How It Can Renew America”. He connects the dots AND presents a workable strategy for fixing our economy, global warming, and many other serious problems that we face.

Sure, you can come up with lots of vague reasons not to do this but the fact is that if we don’t change how we use fossil fuels, we will soon damage our climate beyond repair.