Battlepanda: Regressive but Necessary


Always trying to figure things out with the minimum of bullshit and the maximum of belligerence.

Thursday, April 28, 2005

Regressive but Necessary

Of course, the gasoline tax is such a political hot-potato I guess all this talk is moot, but I have to disagree with Ezra over whether the gas tax is a good idea in theory. Ezra says no, because it is regressive (that is, it disproportionally hurts poor people), and that it is especially unfair because gasoline usage is inelastic in the short run.

Everything he says is true, but unfortunately, that is no good reason not to have the gas tax if we can. The thing is, if we keep the cheap gas coming (and it is still cheap by historical standards, despite recent hikes), we will not have any incentive to modify our behavior. But one day, the supply and demand is such that prices will have to spike. We will one day see $5, $10 and beyond.

Now when that spike happens, there is going to be pain. And you know what, that pain is going to be regressive anyhow. And orders of magnitudes greater in intensity.

I don't fear the oil running out or sky-high petroleum prices. I really don't. I'm enough of a free-marketeer that I think we'll respond to the incentives of increased petroleum prices by cars with better milage, alternate fuels and even (in the very long run) less dispersed settlement patterns. What I fear is oil running out or sky-high prices all of a sudden. I think of the gas tax as a way of smoothing out that price curve. The smoother that curve is, the less we'll feel the pain.

As for for the "feebate" which Ezra thinks can supplant the gasoline tax, I think it's nice as an additional incentive. As is Media in Trouble's ingenious idea of supertaxing any fill over 15 gallons (hah, inconvenience the rich folks into buying smaller cars). But larger patterns in how we get around can only be addressed by a direct tax on gasoline. That is to say, better fuel efficiency is nice, but eventually part of solution will inevitably involve actually driving less. The amount of driving we need to do in our daily lives is super-inelastic, which is exactly why the sooner we begin putting serious pressure on gasoline usage, the better.