2008 Woodie Awards
A By-the-Numbers Review of the Gas Tax Holiday Idea
Tom Connors
Issue date: 5/12/08 Section: Opinion
Hillary Clinton and John McCain say the government should stop collecting taxes on gasoline purchases for the summer in order to reduce prices. Barack Obama says it's a cheap-trick that will only save you $28 in three months.
Far be it from us to interfere with the readers' right to take whatever view of that issue they please. Take whatever you like, as long as you don't take a politicians word for it. Let's have a quick look at the dollars and cents of this proposal.
The federal excise tax on gasoline is 18.4 cents per gallon. So if you multiply amount of gasoline you will buy over the summer by 18.4, that's how many cents you will save.
According to statemaster.com the average American consumes 420 gallons of gasoline annually. So we can roughly estimate that the average person is will purchase about 105 gallons of gas during the proposed gas tax holiday. That would equal a savings of $19.32.
Of course, there is more to the issue than the consumer's immediate experience at the gas pump. The more you drive, the more you save; and many of the products that you buy have been driven a very long distance to reach you. If it is assumed that shippers and retailers will reduce prices and pass the savings on, then the benefits of the tax holiday do increase.
One final consideration is that taxes pay for things. In the case of the federal gas tax, money is being collected for highways.
During the proposed gas tax holiday, roughly $8 billion dollars normally generated by the gas tax would either not be collected at all (under McCain's plan) or would have to be collected through a different kind of tax on oil companies (Clinton's plan).
If that money isn't collected, either because no tax was levied or because oil companies found a loop-hole, billions in highway funds, which employ construction workers and reduce gridlock (which, incidentally, reduces gas consumption) would disappear.
There's an $8 billion argument going on, and that's worth keeping an eye on, whatever your views may be.
Far be it from us to interfere with the readers' right to take whatever view of that issue they please. Take whatever you like, as long as you don't take a politicians word for it. Let's have a quick look at the dollars and cents of this proposal.
The federal excise tax on gasoline is 18.4 cents per gallon. So if you multiply amount of gasoline you will buy over the summer by 18.4, that's how many cents you will save.
According to statemaster.com the average American consumes 420 gallons of gasoline annually. So we can roughly estimate that the average person is will purchase about 105 gallons of gas during the proposed gas tax holiday. That would equal a savings of $19.32.
Of course, there is more to the issue than the consumer's immediate experience at the gas pump. The more you drive, the more you save; and many of the products that you buy have been driven a very long distance to reach you. If it is assumed that shippers and retailers will reduce prices and pass the savings on, then the benefits of the tax holiday do increase.
One final consideration is that taxes pay for things. In the case of the federal gas tax, money is being collected for highways.
During the proposed gas tax holiday, roughly $8 billion dollars normally generated by the gas tax would either not be collected at all (under McCain's plan) or would have to be collected through a different kind of tax on oil companies (Clinton's plan).
If that money isn't collected, either because no tax was levied or because oil companies found a loop-hole, billions in highway funds, which employ construction workers and reduce gridlock (which, incidentally, reduces gas consumption) would disappear.
There's an $8 billion argument going on, and that's worth keeping an eye on, whatever your views may be.
Viewing Comments 1 - 1 of 1
travis
posted 10/06/08 @ 9:56 AM PST
where did you find information on points for im doing a simular essay on why should america have or not have gas tax and i cant find information for please email me at triske14@hotmail. (Continued…)
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