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Cut the Gas Tax? Not So Fast

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A Death in Texas

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All Tuckered Out

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Dissent II

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We Should Worry About Police Violence

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The American Diet II

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We've Got Inflation Now

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Rip It Apart

6/23/00 4:40 p.m.
Cut the Gas Tax? Not So Fast
A fair solution to the new energy crisis.

By Dan Mindus, NRO

t's too old to be one of the oldest tricks in the book. It predates books: Politicians have always used whatever power they have to lower prices of consumer commodities. And none of them lost a popularity contest as a result.

As gas prices rise and Al Gore predictably points fingers at all the wrong people, conservatives are calling for gas-tax cuts. Because, of course, it's popular.

That's Larry Kudlow's argument — which is, in every respect, correct. And Mr. Kudlow would not have been hard pressed to rehash the policy as well as the political reasons. It is very easy to criticize any particular tax, because the case against it is so similar to the generic case against taxes: One notes how it diminishes investment, discourages hard work, distorts behavior, protects the big guy against the little guy, robs people of what is rightfully theirs, strips some of the feeling of self-reliance and others of the ability to be self-reliant, and requires more bad guys like tax collectors, regulators, lawyers, and accountants. But if we are to have a military, we must have taxes, and gas taxes are probably the best that we've got.

Begin where it all begins: Saudi Arabia. The master of OPEC, the leader of that monopoly of monopolies on power, the country that so graciously permitted a 2.5% increase in crude-oil production this week, is lavishly subsidized, palaces and all, by the American taxpayer. The actual price tag, which far exceeds the aid we give to Israel and Egypt (generally considered the two biggest recipients of American foreign aid), is hidden deep in the recesses of the Pentagon's budget, for it comes in the form of men and materiel. There might be good reason to have American troops guarding Saudi Arabian oil, but in peacetime, at least, that amounts to a direct taxpayer subsidy of the oil industry. If we want the U.S. military to protect oil, we have to pay for it — and what better way than a tax on oil. Think of it as a fee for service.

The same goes for roads. After all, federal gas taxes are supposed to go directly into transportation block grants to the states. As a political matter, it is exactly because this is how gas taxes are used that we might want to cut them, for these transportation block grants function as a sword of Damocles hanging over the 50 states. The gas tax funds an arrangement whereby if the states want to get something back for the taxes they pay, they have to do anything and everything the Feds want. Lower gas taxes would diminish the size of these block grants, thereby increasing the likelihood that some state might rebel, and resuscitate federalism a bit. But as a policy matter, if the government is to build our roads for us, then those who use them should pay a bit more for them — through a gas tax.

Hardly any other tax — not even the payroll taxes that fund Social Security and Medicare — can be construed as a fee for service. It is hypothetically possible for you to stop driving, and stop paying the gas tax, if you don't think it's worth it.

While the non-driver has no choice but to foot the bill for the U.S. soldiers stationed in Saudi Arabia, higher gas prices, and high tax levies on gas, make it slightly more likely that the men will one day come home, when their services are no longer needed. No, a higher gas tax won't encourage domestic drilling for oil; nevertheless, it just might reduce our dependence on foreign crude by lending indirect support to — heresy — alternative energies. Conservatives generally have a good time lambasting wind and solar, fuel cell and hydro-electric as unrealistic and impractical — the fantasy of leftists who know only that they prefer organic farming to engineering. That attitude has always struck me as odd, considering conservatives' now more and more justified faith in SDI, and the technological wonders conservatives should know a free, entrepreneurial people can produce.

These alternative energy sources won't prevent the fiction known as the greenhouse effect, but they will reduce our strategic dependence on the Middle East. And, as an added bonus, they could provide an effective model for incentive-based, rather than regulation-based, environmental policies.

Cutting any tax, whenever possible, is a good rule of thumb. But if we are to be taxed at all, that tax which is, to some degree, optional, and which, to some degree, reduces our reliance on the exigencies of war and mood swings of dictators, is one that we might consider keeping.

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