
Recently John McCain proposed a Federal “tax holiday” on all gasoline from Memorial day to labor day. Hillary Clinton similarly supports the idea. The “Obamamaniacs” however, strongly oppose this idea.
Opponents of the tax holiday are as correct that it will not do much to ease the price at the pump as the proponents of the idea, who claim that it will ease the price - there are too many variables to be certain. Unfortunately, the Obamanics, in an effort to distinguish their god from Hillary and McCain have taken a very one-dimensional view of this solution. Regardless, there are some serious considerations we should make regarding taxes on vehicle fuel.
The very purpose of the tax holiday was not to directly turn thousands of dollars back to taxpayers, but to affect the entire consumer market – namely by minimizing the decrease in summer travel. Summer travel is peak business time for many small businesses across the country. If the American consumer fails to travel during the summer because of high fuel costs, it negatively affects the small business owners, who form the backbone of the U.S. economy.
Obamamaniacs, however, would have you believe that this tax holiday was bred out of stupidity and politics (are the two ever separate?) and that the real effect would be to line the pockets of big oil with more revenue, having little impact on the price we pay at the pump. The Obamamanics may be right, but that does not mean the tax holiday should not be enacted. A greater evil would befall the small business owners who rely on summer travel if travelers curtail their auto use in 2008.
Of course on one level it is hard to see how repealing any tax is a bad thing, let alone one that so negatively impacts the market. Taxes are bad, and federal use taxes, whose revenues are spread out over all 50 states, are bad for the consumer. Ultimately, what needs to happen is a total revamping of the Federal gas tax idea.
Presently gas tax is a combination for Federal, State and other local taxes, adding a not-so-insignificant amount to the price of a gallon. The trouble is that most of these taxes are arbitrary and imposed simply as a method to generate revenue. Any gas tax should be a use tax so that the revenue is provided directly to the streets, roads and highway funds the person buying the gas actually drives. Although this kind of tax on gas generates a higher price at the pump, it also results in a better road system. California, for example, has a state use tax on gasoline. Their highways are comparatively smooth, constructed quickly and the stoplight systems are near perfect - this is a use tax at work. Maintaining a world-class infrastructure is of paramount importance to the Republic. The trouble with the current system is that the tax is a federal tax, rather than a state tax, which means that the revenue is applied to projects that may have little to do with our roads. Accordingly, if we have to retain a federal fuel tax at all, it would be better were it implemented as follows:
States should independently and individually adopt use tax on all motor vehicle fuel. Any governmental tax like this should be from the local, state government, not the Feds;
Abolish all current Federal tax on motor vehicle fuel;
Implement a small federal domestic transportation user fee on all goods transported via trucks using the interstate system. Based on weight of the payload, a percentage would be paid to the Feds for Federal highway projects. Truckers are the biggest beneficiaries of the Federal Highway System, so it fair that companies using truckers to ship goods should bear a fair share of the weight for its maintenance;
Of course, if were going to solve any of fuel problems, were going to have to increase the supply, which means more (responsible) domestic and hemispheric drilling, hugely increased refinery capacity, make major strides in fuel efficiency, and a make major investment in nuclear power. To achieve all this of course, it would be nice to adopt another tax break – a reduction in the corporate tax from 35% (second highest in the world) to 25% - a move that would stimulate investment, research and development, and the retention and expansion of domestic jobs…but then again, this is an idea endorsed by Senator McCain, and pilloried as “tax breaks for the rich,” by those on the left (including Clinton and Obama) who continue to view the economy through the thoroughly discredited Marxist lens of class warfare, finite wealth, and income redistribution.
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