Monday, October 30, 2006

Creative Exurban Taxation: Gasoline



Excise taxes on vehicle fuels need to rise. This because inflation errosion and mission creep under funding are stressing the various trust funds. About 10 cents per gallon equivalents would be about right split evenly between States and Federal. I'd very much like to see the Feds offer to reduce the Fed Excise component 1 cent for every 1.2 cents of State increases up to say an 11 cents increase combined.

These are not sales/consumption taxes. Fuel taxes are a convienient form of use fee. They aren't perfect nor perfectly fair but they are taxes after all. I've no truck against shifting to other forms of use fees. The "gas tax" is simple and difficult to avoid. Most alternatives have the flaws of expensive to implement and subject to much political distortion.

What higher gas taxes will not do is anything to address the externalities Mankiw posits. Eurpoe has higher gas taxes and still sees the same general trend towards POV mobility choice. I am particularly enraged by the budgetary argument. These are TRUST FUND monies. Even now at both the state and Federal levels that trust is being abused and Mankiw advocates even further errosion. On the economic front mobility = wealth. Mankiw thinks that we can discourage mobility and become wealthier for it. I am not convinced.

Changing the nature of these use fees traditionally used to cover internalized infrastructure costs to one of a new general tax subject to state and federal whim is extraordinarlly poor public policy unless there's been a change in the trustwortiness of our electeds that I've missed and Mankiw has discovered.

23 comments:

Vegas crash watcher said...

No decent person wants higher taxes.

Rob Dawg said...

Of course no reasonable person -wants- higher taxes. There is a gray area where circumstance requires -some- taxes but that doesn't apply here. "Gas taxes" are not general revenues, they are use fees. You might as well try to call gym membership dues a tax.

Metroplexual said...

User fees are the best tax. A person uses something they pay, simple as that. BUt I know that is anathema in CA, right Robert. I was going over the Golden GAte a few years ago and was with an in-law from the bay area. He got so angry at having to pay the toll.

Fuel taxes are not perfect but they do not capture all of the costs of POV use. and some advocate higher taxes. Yes europe has higher fuel taxes but they dump it into a general fund then again so do we. Social security is a joke, BUsh gave tax cuts that were from a surplus of Social Security tax receipts.

Anonymous said...

IMHO the price of mandatory liability insurance and DoD funding to defend the Persian Gulf should be taxed into the cost of petroleum-based gasoline. That alone should drive the cost of gas well above $4.

So, that means that when you fill up your tank, regardless of your socioeconomic status, you are covered by mandatory liability insurance at some federally-mandated level (superceding any state insurance requirements). So no more uninsured drivers. You also are only paying for insurance that you are using, so if you only take the car out for an hour a week, you don't pay for the time you're not driving.

Of course, there will still be a market for higher levels of coverage (such as comprehensive required for financed vehicles), and diesel-powered cars would have to be insured separately since diesel should not be tampered with since it's an industrial transportation fuel.

And as for the price being high enough to keep people off the road, particularly poor people, well that sounds great. Less traffic for me!

Lex said...

When it comes to transportation, I strongly object to the comment above that if "a person uses something they pay". Under no circumstances do I want to pay anywhere near the actual cost of my train ticket from Fairfield County to Manhattan, much less the cost of my subway ride (I'm already getting killed with the nanny, the tutor, and the lease on my wife's LR3); in fact, I create so many positive externalities I think I should ride for free.

Seriously, unless economists consider all the consequences of a given activity, determining positive and negative externalities becomes a value judgment.

Metroplexual said...

Hey Lex,

What is the problem with user fees. they are the most fair tax out there. As for actual costs of your train ride. Yes your train ticket is subsidized. Think of it as a bribe not to drive and not use a limited resource (the roadways) at a given time. Electric utilities give discounts to heavy night time users in sort of the same way. Driving has all kinds of negative externalities, economists and enviros have studied it to death. I don't agree with all the enviro crap. Yes some externalities are squishy subjective nonsense but nonetheless they hooked you on the train. I am of the opinion that train travel is way superior to auto if you can use it. At least you can catch some shuteye.

BTW, I hope you are joking about your positive externalities.

Rob Dawg said...

IMHO the price of mandatory liability insurance and DoD funding to defend the Persian Gulf should be taxed into the cost of petroleum-based gasoline. That alone should drive the cost of gas well above $4.

Be careful what you wish for but first a correction. Mandatory liability insurance built into the price of a gallon is not correct. There is not even a slight association between the two. We have mandatory liabilty insurance but we don't enforce it. Thus responsible citizens are saddled with assigned risk subsidies and uninsured motorist insurance payments.

Okay on to a faqvorite subjext; "The True Cost of Gasoween." Without US military force would you suspect the price of gas to go up or go down? Up of course. Turns out paying for US international interests to be supported with force or threats of force is already built into the cost of gas.

[N.B. Metro & Lex, your turns are coming later today.]

Lex said...

Messrs. Metroplexual & Cote:

Yes, I was kidding about riding for free. However, it does reflect, to me, the reductio ad absurdum of current transportation policy in the NE.

As accurately stated, my subsidized train ride is a bribe -- the question is, why? Economists such as Mankiw, see cars & only see congestion & pollution. He forgets the positives of cars (e.g. I can work when & where I want) and the negatives of mass transit (tying place of residence to a rigid workplace).

This is a big topic -- thanks for raising it.

Metroplexual said...

Lex,

I am a transportation planner in the NYC metro area. Cars are great liberators, I couldn't agree more. The problem is we are all trying to use a resource at the same time creating a sort of tragedy of the commons when traffic snarls occur. BTW, I think it was Alan Pisarski who said traffic jams are a sign of a healthy economy. Be happy you have a choice Lex.

Bakersfield Bubble said...

Voted against all taxes and bond measures today!

I hope you did the same!

crispy&cole

Buchanan said...

Robert,
I enjoyed reading your incredibly humorous posts on CR today.

The certainty with which you predict that HB exec.'s will "do the perp walk", while at the same illustrating utter and profound ignorance about basic balance sheet accounting had me in stitches!

Brilliant!!

Rob Dawg said...

People call me stupid at their peril. Your poor reading comprehension skills are exceeded by your grasp of the social graces.

May I suggest you entertain the idea that my bringing up the idea that land values are inflated on the books and optioned properties might likewise be listed as assets was not a treatise on GAAP but rather an imputation that DESPITE accepted practices it may be occuring anyway?

If you hear laughing it is people laughing at you for not getting the joke. Oh, and kindly leave these gems of civility on the blogs in question where everyone can share the humor.

I only wish we knew your true identity so when the accounting scandals at the HBs come to light you can be quoted and given credit for your defense of accounting regulations that absolutely prevent such abuses.

Buchanan said...

Aw shucks Robert, it seems a raw nerve has been aggrevated. Who would've thought you to be such a stickler for "the social graces", much less have any actual knowledge whatsoever about HB "accounting scandals".

You DO have factual knowledge on that topic, don't you? Otherwise, wouldn't we have to conclude that you are simply a pink-faced old, nothing-better-to-do pussy living out a role-playing on-line fantasy world that you are unable to replicate in real life?

Of course, there is always the possibility that this is just another of your endless stream of humorous postings, in which case -

The joke's on us yet again!!

Brilliant!!

Rob Dawg said...

Methinks ye doth protest overly.

Perhaps your subsidized commute into work on the train is too boring and you need to go looking for entertainment at others' expense? Accept the explanation at face value and move on lest ye reap what you sow.

Rob Dawg said...

Buchanan writes:
"...much less have any actual knowledge whatsoever about HB "accounting scandals".

You DO have factual knowledge on that topic, don't you?"


Why yes as a matter of fact I do. So does everyone else following the latest KB Homes backdating scandal.

Otherwise, wouldn't we have to conclude that you are simply a pink-faced old, nothing-better-to-do pussy living out a role-playing on-line fantasy world that you are unable to replicate in real life?

Oh, I think the readers and history have already decided who rightfully wears that mantle he's sown for himself. Stop in anytime for more of the same Buchanan. Maybe next time you'll have grown a pair and actually put your name on your comments.

Buchanan said...

Jesus wept.

Robert, you are so fucking stupid, it's impossible to even describe it. Your ignorance parade is worth the peakaboo in now and again.

The KB Homes options backdating isn't an accounting scandal, it's compensation scandal. The difference being that while accounting scandals cause investors to flee, virtually ALL of the companies involved in the options back dating COMPENSATION scandal have seen their stock prices RISE afterward.

Just as KB did today. Up over 2%.

The reasons for this are far beyond your meager powers of understanding, suffice it so that you are a complete and utter Mo Ron.

Buchanan said...

""You DO have factual knowledge on that topic, don't you?"

Why yes as a matter of fact I do. So does everyone else following the latest KB Homes backdating scandal."

Robert, you caused yourself a bit of shame on CR by exposing your utter ignorance with regard to your lack of knowledge as to how purchased land values are booked, and your belief that land options are booked as a full value asset.

Your recovery attempt to explain it away as a joke was completely brilliant and unseen anywhere save elementary school yards.

Are you now telling us that you possess supernatural business scandal predictive powers?

Just wondering because it would give me another reason to swing in for the freak show every now and again.

Robert Coté said...

It wasn't a joke, it was sarcasm. I told you that you weren't getting it. I don't laugh off accusations of stuopidity. The HBs are just plain old ignoring all the legal niceties of honest accounting. For instance a minority position land deal in partnerships with the owners with the actual low cost basis has them with high value assets and low costs. I call it trading a $10,000 dog for a $5,000 cat and half interest in the dog.

I know how assets are -supposed- to be recorded. I am asserting that the HBs are not doing that. Not that you'll accept this explanation either. Good thing there are lots of readers that know me better than you do. They'll benefit from the exchange becauseotherwiseI wouldn't waste my time.

Buchanan said...

Robert, here is your post from CR:

"Cal, you are right. You repeat what I said more than a year ago; they learned from their past mistakes. Yep, they are making entirely different mistakes this time. The biggest so far is underestimating the speed of the contraction. As to land values please correvt me but I thought they used current valuations not purchase prices meaning the land bought cheap is the msot overvalued on the books. I'd find it strange that an asset be on the books at purchase and not assesment but what do I know? Yes, the options are saving their cash flow, one of the things they learned but when the options expire the asset is taken off the book value as well. I'm thinking a book to price is going to kill these stocks as surely as P/E.
Robert Coté"

It wasn't "sarcasm", it was plain old ignorance. You are an idiot, whether you can "laugh" it off or not. You know less than nothing about the "legal niceties of honest accounting". You know zilch about "how assets are -supposed- to be recorded". And you are utterly unaware of how transparent all of the above is to all but you.

Rob Dawg said...

I know what I wrote. You refer to the same post where I called illegal industry collusion a "gentlemans agreement."

I thought that was enough of a hint. I shall endeavour to consider the potential audience more carefully in the future. You might review Zeno of Elea and his method of eliciting truth by speaking falsehoods for the intent of my "correct me if I am wrong" claims. I'm sorry it leads to to incorrect conclusions about the participants. Tanta is brilliant and posessed of rare wit for but one example.

Buchanan said...

What that, old man? Speak up, you're mumbling.

Anonymous said...

check out page 33

http://www.avenue-s.org/files/publicwillpay.pdf

gas prices all figured out for all of us. most especially los angeles county tax payers, 67% of the grunt will be pulled by US to cover dissipated losses from mortgage fraud.

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