A ‘Green Tax’ Is Still A Bad Tax

My friend and former National Journal colleague Troy Schneider thinks there is a “smart way” to raise gas taxes — a “green tax swap” that offsets the higher tax on gases with a corresponding cut in the payroll tax.

I have three problems with that idea:

1) Gas taxes already are too high. Gasoline currently is selling for the bargain price of $1.97 a gallon in the section of suburban Virginia where my family lives, and the gas tax for our state is now 44.6 cents a gallon, according to the latest data from the American Petroleum Institute. That means 22.6 percent of every gallon we buy goes toward federal, state and local taxes. The percentage that went toward taxes was lower when prices were higher, but 45 cents a gallon is more than enough taxation.

2) Raising gas taxes won’t necessarily lower consumption. Troy argues that it will based on the fact that consumption has declined dramatically in recent months because of higher prices, and he is right to an extent. But think about how high prices had to go before consumers and businesses changed their behavior. I’m confident that a majority of politicians won’t support, and American voters won’t tolerate, a $2-a-gallon hike in the gas tax, and it took that much before the market forced gas prices down.

3) Payroll taxes won’t stay lower. Even if politicians were to make the swap of payroll taxes for a supposedly green-friendly gas tax, it wouldn’t last. The same politicians eventually will increase the payroll tax. As this blog proves, raising taxes is what they do. The inevitable result of a higher gas tax would be less money in the wallets of consumers, not a better environment.

4) Barack Obama promised tax CUTS. It has only been a week since America elected as president a man who ran as a tax-cutting Reaganite. Odds are good that Obama, like the last Democratic president who promised tax cuts but quickly gave us one of the largest increases in history, sold voters a bill of goods. But give the man a chance to keep his word. Don’t start pushing taxing ideas that will fall heavily on the lower and middle classes two-plus months before he even takes office.

The bottom line: There is no smart way to raise taxes.

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