1. Education
Send to a Friend via Email
You can opt-out at any time. Please refer to our privacy policy for contact information.

Why should an economist support such a political infeasible thing as a gas tax?

By

Question: Why should an economist support such a political infeasible thing as a gas tax?
Answer: The full question asked by Garth Brazelton was: "Why should an economist, given the other kinds of issues on the table that could have bipartisan support, focus on such a poltically unfeasible thing? Surely there are other externalities that are just as bad if not worse than we could put our taxes to; I can think of many. Why cherrypick this one?"

I wish Garth would have provided a list of the issues where there are larger externalities, because I honestly cannot think of any. I guess your view depends on how much stock you put into anthropogenic climate change.

Anyhow, I disagree with the basic premise of the question, because I do not believe that this is political infeasible at all. As I stated in How do we know that governments will not just spend the additional revenue? I believe that the U.S. federal government will be raising taxes in the very near future. Why is a rise in the gas tax any more politically infeasible than a rise in any other tax?

In The Gas Tax - Answering NoPigou's Questions I showed that gas taxes have risen in Canada several times. Frankly, it would be rather odd if they never went up again. Ever.

In the United States, the gas tax rate has changed several times, as shown in the article The Federal Excise Tax on Gasoline and the Highway Trust Fund: A Short History. Now the tax levels altogether have historically been very small (the highest level ever is 18.4 cents a gallon), so I agree that a massive hike in the gasoline tax is unlikely. But even a small change will have some impact on consumption patterns. Given the large federal U.S. budget deficit, though, I do not think we can rule out increases such as the one suggested by Dr. Mankiw, particularly if those changes are phased in over time.

That is the end of the carbon tax/gas tax FAQ. If you have a question you would like raised, or you disagree with one of the answers I provide, I would love to hear from you. You can contact me by using the feedback form.

Previous: How is a gas tax better than just improving emissions standards?
Main: Gas Tax and Carbon Tax FAQ

©2014 About.com. All rights reserved.