Aren’t the best solutions usually the simplest solutions? It certainly is the case when it comes to gas prices and consumption.
Instead of the interminable debates about CAFE standards, hybrid engines, and ethanol, doesn’t it make more sense to simply raise taxes on gasoline? We understand there are political issues with this policy, but there are ways to make it palatable to the vast majority of Americans.
That is the argument of Robert H. Frank in the New York Times. The proposed plan is not a simple $2 a gallon gas tax. It includes a mechanism whereby taxpayers would receive a rebate via the payroll tax, making them, on average, breakeven.
Frank acknowledges there are political roadblocks to any sort of gas tax plan. The fact of the matter is that a wide swath of constituencies support just such a plan.
The gasoline tax-cum-rebate proposal enjoys extremely broad support. Liberals favor it. Environmentalists favor it. The conservative Nobel laureate Gary S. Becker has endorsed it, as has the antitax crusader Grover Norquist. President Bush’s former chief economist, N. Gregory Mankiw, has advanced it repeatedly.
By all accounts this sort of rise in gasoline prices would reduce demand for the product in the long and short runs. This would also provide an impetus for the development of other technologies, while making current supplies of petroleum last longer.
The big question is why isn’t this policy at least discussed?