Tuesday, April 29, 2008

Nickel and Dimed to Death

"Now the two Washington candidates in the race have been attacking me lately because I don't support their idea of a gas tax holiday," Obama said.

He argued that suspending the gas tax collections would undercut highway construction, costing North Carolina up to 7,000 jobs, while saving consumers little.

"We're arguing over a gimmick that would save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say they did something," Obama said.

Hold on, hold on, I actually agree with Obama that cutting the gas tax is a bad idea. But not because of the bloated highway spending budget. Rather I think it is a bad idea because it undercuts the market. (Diesel and Fuel tax by state - click for larger view)

Markets work, "Businessweek reports that Americans appear to be burning less gasoline as a result of driving less." If you cut the tax you will encourage greater use thus forcing higher prices for a longer period of time.

If you really want to give the economy a boost then drop corporate taxes, how about cutting ALL state and federal taxes on diesel fuel only -- giving a break in the cost of all goods. The federal tax on diesel fuel is about 30% higher then it is on gasoline (24.4 cents vs 18.4 cents)


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