State Gas Taxes

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Rising frustration with gas prices has led two presidential candidates, Senators John McCain and Hillary Rodham Clinton, to promote proposals to suspend the federal gas tax from Memorial Day to Labor Day.

But state gas taxes, which run as high as 45.5 cents a gallon, often add far more to the price of gas than the 18.4-cent federal excise tax and are the primary cause of price disparities across state lines. So lawmakers and candidates at the state level have been getting into the act.

The response speaks not just to the reality of skyrocketing gas prices. It also highlights the political potency of anything that affects Americans’ bonds with their cars. Gas is a product that no one can ignore — and one that inspires intense emotion.

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Source:
States Get In on Calls for a Gas Tax Holiday 
DAMIEN CAVE
NYT, May 6, 2008
http://www.nytimes.com/2008/05/06/us/06gas.html

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What's been said:

Discussions found on the web:
  1. Flic commented on May 9

    People just need to cut back on driving or have one less dinner out every month. Why not get rid of your V-8 powered land- barge? Sorry, I’m tired of people complaining about gas prices. Adjust your lifestyle and learn to live with it. Why do people feel like they are entitled to cheap gas?? Oh wait, this is America, we’re entitled to everything..such as McMansions, endless low-rate HELOC’s and fancy kitchens….

  2. DL commented on May 9

    I agree with Mankiw. RAISE taxes on gasoline (significantly), but LOWER taxes on ordinary income.

    This would reduce oil imports without hurting the person who drives the “average” distance.

  3. George Johnston commented on May 26

    Of course, the oil companies won’t use this relaxation of taxes to increase their pricing power…

  4. Bob A commented on May 26

    The heart of the problem is gas guzzling vehicles and consumers who refuse to act until the pain slaps them in the face.

    Raise fuel taxes to encourage fuel economy.

    The vehicles already exist and are being sold in Europe today and it doesn’t seem to be killing their economy.

  5. dervin commented on May 26

    The only problem is Europe has a 30 year head start on the US for reducing oil consumption. They can get away with the smart cars, etc because they don’t need to put 100+ miles a week on their cars. The Smart car is good for city living, but outside of that it’s seems silly to try to drive it up to Hunter mountain.

    For America to break it’s oil addiction, we need to radically restructure our style of living. No more bedroom communities, more city living and planned towns like Disney’s celebration community.

    And that’s going to take 20 years.

    And the weird thing our social classes will become more like Europe, the rich and middle class will live near the city centers while the poor will be driven out to the suburbs.

  6. MossySF commented on May 26

    Considering the gas tax only covers about half the infrastructure costs for cars (roads, highways, bridges, etc) — decreasing the gas tax just means money must be taken from other taxes. Seems like long-term, increased gas taxes to encourage more efficient lifestyles is the only real option.

  7. Greg commented on May 26

    I always find it interesting when government and wall street try to decree that we must change our lifestyles by moving closer to our work, design cars that achieve 50, 60, 70 fuel efficiency, and raise gas taxes in order to force us to conserve. It’s part of our blame culture I guess.

    We have an answer yet for some reason we are resistant to developing it further. Natural gas. Natural gas, for many technical reasons which I’ll let you google, is a perfect transportation fuel. It’s a little silly to be using it as a power generation fuel when we can do that in so many ways.

    It’s occurred to me though, maybe one reason we don’t find an answer is because ultimately we don’t want an answer. Americans are very comfortable complaining and arguing these days.

  8. John Borchers commented on May 26

    I like the high gas prices. It’s fun to see people drive in the right lane for once.

    This allows me and my 2.5L to blow right by.

    I hope gas goes to $6.

  9. wunsacon commented on May 26

    >> moving closer to our work, design cars that achieve 50, 60, 70 fuel efficiency, and raise gas taxes in order to force us to conserve

    >> maybe one reason we don’t find an answer is because ultimately we don’t want an answer.

    Greg, your first statement contained good answers. Was your second statement a confession?

  10. mojave commented on May 26

    Tax gas like cigarettes and alcohol. If the goal is to decrease consumption of something, tax the hell out of it. Tax emissions too while you’re at it, for all I care. Of course, it ain’t gonna happen, unless there’s a ‘bigger gas taxes will make us huge money’ lobby that’s vested in making it happen…

  11. Todd commented on May 26

    It’s a terrific piece by Friedman. I was unaware that alternative energies will lose their tax incentives soon unless an agreement can be reached.

    How can you not have an overarching bearish stance on the US economy and the US Dollar given the brain dead policies of both parties in DC. Absent any real centrist policies soon, this country goes down the toilet sooner than people think possible.

  12. a guy called john commented on May 26

    just back from a weekend trip to sw michigan. holy 5h!t! no traffic on the highway there or back. none. seriously, no exaggeration. this weekend had to be a major bust for many a small businessman. if this is the start of the summer driving season, it’s gonna be ugly.

  13. CEsqy commented on May 26

    Why does every American feel like they need to drag 2000 lbs of steel across the street with them to get a gallon of milk? Till everyone understands we need to conserve energy and get fit by walking or cycling, gas will keep going up. Being lazy and inefficient in the future is going to cost a lot more.

  14. SIV commented on May 26

    Absent any real centrist policies soon, this country goes down the toilet sooner than people think possible.

    “Centrist” policies helped get us in this mess in the first place. What kind of government do you think we have?

  15. Darkness commented on May 26

    >if this is the start of the summer driving season, it’s gonna be ugly.

    Excellent. About to get in the car to drive CA to NY. We already have to dodge the crazy weather, at least we won’t have to dodge so many other cars.

    SIV, is catering to the lizard brain centrist… or just politically weak-willed? Hm, now that I think about it more, it’s all been catering to business at the expense of the social good. Which didn’t use to be the left position.

    Boy do we need election financing reform in a major way.

  16. john commented on May 27

    Regarding “centrist”.

    I just had dinner with a couple I’ve known for years. I was “informed” that Obama hangs with “a known terrorist who blew up two Federal building” (I’m NOT making this up, they said it. I assume they got it from Faux News). Jeez. The “leaders” of this country are chosen by a majority vote of barely literate peasants, most of who appear to be completely psychotic.

    So, this means – at any given time – we’ve got EITHER a fascist (republican) or socialist (democratic) oligarchy. Is anything ELSE even possible? And, I’m talking about applied socialism and fascism, basically a government run for the benefit of the party insiders and their wealthy owners. Isn’t that what has ALWAYS been the case in the USA?

    If 35% of the population are guilt-ridden authority worshipping socialists (Democrats) and another 35% are mean authority worshipping fascists (Republicans), that only leaves 30% of the population that are either guilt-ridden skeptics (what used to be called “liberals”) or mean skeptics (what used to be called “conservatives”) – neither of whom have a party anymore.

    There can’t BE a center with a mix like this?

  17. VJ commented on May 27

    john,

    You need to look the words “Socialism” and “Socialist” up in a dictionary before you post anything that silly again.
    .

  18. Francois commented on May 27

    “It also highlights the political potency of anything that affects Americans’ bonds with their cars. Gas is a product that no one can ignore — and one that inspires intense emotion.”

    Emotions…exactly what has got us into this mess.

    Me-myself-and-I: I’m a self-made person and I worship my creator.

    I deserve everything that has turned right for me, and the others are entirely responsible for THEIR problems.

    Try to have a cogent energy policy when the electors react with the thalamus/lizard brain, instead of taking a deep breath and start firing the cortex’s neurons. Tough titties!

    When I look at the vast differences between Europe and the US, I can’t help thinking that Europeans are much better prepared to confront higher gas prices than we are. For one, their cars are much more energy efficient on average, public transportation is vastly more developed and efficient. Furthermore, their urban structure is more compact; it allows one to do pretty much everything without a car. If need be, a scooter works just fine. Finally, they can lower their gas taxes much more than we can.

    If these prices stay were they are, or go higher for a prolonged period, we’re in for an ugly ride.

  19. Francois commented on May 27

    “I agree with Mankiw. RAISE taxes on gasoline (significantly), but LOWER taxes on ordinary income.

    This would reduce oil imports without hurting the person who drives the “average” distance.”

    How ironic that Al Gore said the same thing in 2000 and got ridiculed and smeared big time.

    Oh! I forgot! He’s a damn librul, right?

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