Gas Tax Redux

Last week I posed a simple challenge: Try to find any coherent economist willing to support the gas tax holiday proposed by candidates McCain and Clinton.

The challenge remains unanswered, but here’s some interesting commentary collected during the week:

1. George Stephanopoulos posed my challenge directly to Senator Clinton (video here), asking: “Can you name one economist — a credible economist — who supports the suspension?”

After Clinton side-stepped the question, he pushed on: “But can you name an economist who thinks this makes sense.” Clinton’s response: “Well I’ll tell you what, I’m not going to put my lot in with economists.” (HT: Mark Thoma)

2. Sam Stein took my challenge fairly directly, playing the economics version of “Where’s gas-tax-supporting Waldo now?”

He tried Clinton’s spokesperson, libertarians, conservatives, progressives, ex-Clinton staffers, even the transportation workers union or the American Trucking Association, but still couldn’t find any support for the gas tax holiday.

3. Greg Mankiw received a note from Len Burman:

Yesterday I was on the NewsHour to talk about the gas tax holiday. I asked if there was another guest and the producer said, “We tried, but couldn’t find anyone to argue the other side (that the gas tax holiday made sense).”

4. By contrast, Henry Aaron from Brookings, managed to very quickly whip up a list of 150 economists opposed to the gas tax holiday. And there are some pretty impressive folks on the list, from across the political spectrum.

This makes me proud to be an economist. In any election silly season, you can usually find someone willing to support just about any kind of nonsense. And reality T.V. teaches us that people are often willing to do or say nearly anything to get their faces on T.V.

But it appears that the economics profession just isn’t that silly.

My $0.02: This issue isn’t that important in the grand scheme of things. But hopefully sufficient negative reaction to silly ideas this early in the election season will deter future silly ideas when the election heats up.

Finally, for those interested in economic research on the effects of a gas tax moratorium on gas prices, let me suggest a recent paper by Joe Doyle and Krislert Samphantharak (available here). There are reasons to think that the previous state-level gas tax reductions they study may not provide perfect guidance to the current proposal, but it is a start.

[Freakonomics trivia: Steve Levitt was Joe’s dissertation advisor.]

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  1. Rick Aster says:

    The placebo effect wouldn’t work in this case because no one would see the prices go down. A small seasonal tax cut wouldn’t make a noticeable difference in the seasonal trends in gasoline prices that make them go up every summer and down every fall. Mike54’s suggestion to increase the gasoline tax makes sense (and I hope he is just joking about the magnitude of the increase). I think the only reason we don’t do that is that Congress really doesn’t want to stick it to the oil companies.

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  2. Lee says:

    They found a supporter of the gas tax holiday! She’s not an economist but the disgraced former HP chairman.,0,4244973.story

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  3. Steve says:

    I am from New Zealand and the AA(equilivent to AAA) is campaigning for no GST (Goods and services Tax which is paid on everything) on petrol because it charges a percentage on existing excercise taxes. I guess similar to the gas tax holiday excercise in the USA.

    I disagree with the AA that excise taxes should be a percentage, they argue that the tax should be a direct link between the number of litres consumed and the costs i.e. a fixed charge to to maintain roads and pay for the carbon footprint of burning that gas etc. Therefore gas taxes should be restructured (rather than a holiday) to be a cents per litre(gallon :p) tax rather than a percentage. My argument is that, inflation makes building roads etc more expensive and thus the govt should take more revenue when prices increase so a percentage tax may make sense. The only time a restructure of petrol tax is needed is when the cost of petrol is extremely out of step with other price changes in the economy. And yes this is the case at the moment, but the increase in fuel costs is flowing through to other goods etc, and it will all balance out in the long run.

    What the AA also forgets is that GST is not placed on petrol to pay for roads or carbon or anything to do with petrol consumption, it is there the same as it is for any other good or service to raise revenue for govt spending in general,

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