April 16, 2004,
In Time magazine, Andrew Sullivan is arguing for an extra $1 tax per gallon of gas. He knows this is going to be tough sell for most readers of the magazine, but he makes a gallant effort. In what follows, I give my reasons for thinking that Sullivan's arguments are mostly wrong. But they're not entirely wrong, and there may be circumstances under which a gas-tax hike would be a good idea.
Sullivan's first argument is that we are comparatively undertaxed. That our gas-tax rate is lower than those in Europe cannot be denied. But are we really undertaxed when one accounts for how large and mobile a country we inhabit? As a result, wouldn't any given level of taxation on gasoline have a larger impact on us than it would on other countries?
Second, Sullivan argues that "with soaring deficits and a war to pay for, taxes are not an option they're a necessity." What about spending cuts? Sullivan could say that spending cuts are unrealistic. But a $1 gas-tax hike is no more likely to actually happen. So what's the substantive reason for preferring a gas-tax hike to spending cuts? The fact that Sullivan doesn't bother to provide any estimate for how much money his gas tax would raise, or to try to justify raising the tax by $1 rather than 50 cents or $1.50, reveals a certain lack of seriousness to the deficit rationale.
Third, Sullivan argues that gas taxes are highly visible. "But that's a good thing! Isn't it better to shift taxation to places where people notice it, so they can demand accountability?" As a general rule, I think the preference for visible forms of taxation is sound. On the other hand, it may be best from this point of view to have taxation come in as few forms as possible and in one big bill each year. People might complain about the gas tax every time they go to the pump, but will they know how much they have paid in gas taxes over the course of a year? Property taxes and income taxes may generate more accountability.
Fourth, paying a gas tax would be a "general sacrifice" that would give us all a "sense" that we're "involved" in the war effort. But giving us a sense that we are all sacrificing cannot be an independent reason for levying a tax. If the tax really does further our war aims, then it would make sense to have it. If it does not do anything to further our aims, then it is simply an appeal to some assumed masochistic streak in the populace which, in reality, seems to be more deeply felt by opinion journalists than the public at large.
So would it help the war effort? This brings us to Sullivan's fifth argument: "More important, the war is about the Middle East. A long-term strategy to protect us from constant involvement in that region would include greater energy independence. A gas tax helps pay for our current struggle and helps us avoid future ones." We "owe it to the troops."
As stated, this is the weakest argument of all. Surely Sullivan's position is not that we had to overthrow Saddam Hussein because of "jobs, jobs, jobs." Besides, a $1 increase in the gas tax is not going to make the global economy much less dependent on Middle Eastern oil, and thus is not going to make the region less important.
A related argument, however, is in my mind the strongest for a gas tax. On the assumption that OPEC is following a price-maximizing strategy, a higher gas tax would divert revenue from the House of Saud to the U.S. Treasury. In this sense, a higher gas tax would indeed further the war on terrorism. And if the tax increase were combined with a reduction in a more harmful tax, such as the payroll tax, the American economy would be helped rather than hurt.
But even if a gas-tax would be worth supporting under those circumstances, a broader strategy for breaking OPEC would still be preferable.