Would Higher Gas Taxes Do A Better Job Of Paving The Way For Better Fuel Economy?

Would Higher Gas Taxes Do A Better Job Of Paving The Way For Better Fuel Economy?

Economists generally argue that if an activity like pollution has an externality, the optimal way to deal with it is via direct taxation of the activity. This is why economists often support dealing with the pollution and other externalities of driving a car via a gasoline tax. Fuel economy standards and other regulatory kludges are unnecessary and inefficient in comparison. A common retort to this is that consumers don’t actually consider gas prices when making their auto purchases, and so fuel efficiency is undervalued by the market and a gas tax won’t actually lead to an efficient level of fuel efficient vehicles. Under this reasoning, CAFE standards are not a second best policy to gas taxes, but are a good policy.

New NBER research from Sallee, Fan, and West suggests that this common defense of CAFE standards is incorrect. Instead, they find that consumers do fully consider the fuel efficiency savings when making auto purchases.
 


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TomMTomM - 8/18/2015 2:26:21 PM
+2 Boost
The problem with a gasoline tax is that is disproportionately paid by the poor who can least afford it. That is because these people - who cannot afford to buy even the cheapest new cars - normally have to buy older less efficient cars that also have repair problem not always attended to.

However - if you tax the cars themselves - that tax is targeted to older - and wealthier people who can actually BUY a new vehicle. It should ALSO make sense that people who actually buy cars- who are higher educated - and earn more money - take fuel efficiency into consideration.


ScirosSciros - 8/18/2015 2:58:07 PM
0 Boost
TomM -- really good point. It is indeed a burden on exactly the people it shouldn't be a burden on.

My biggest criticism of the whole fuel economy push is that, unless you just go electric, I am not sure we are really reducing the use of oil THAT much. What about all of the freight trucks on the road. All of the older vehicles. Airplanes. Boats. Cars use a lot, to be sure, but at some point I wonder if we'd get better wins by looking at new strategies altogether instead of cost-ineffective (seemingly) stuff like aluminum-bodies pickup trucks to get 2 extra MPG.


MDarringerMDarringer - 8/18/2015 6:47:05 PM
+2 Boost
This is Socialist thinking. Embrace Capitalism, the free market, and the absence of special taxes.


TheSteveTheSteve - 8/18/2015 3:37:50 PM
+1 Boost
Simple answer: Yes, higher fuel prices motivate many people to buy more fuel-efficient vehicles. We saw this in action before the prices collapsed recently.

Complex answer: Like TomM states, the people hit hardest by higher gas prices are those with less disposable income. That's the lower and middle classes. The working classes might wonder if $80/week at the pump will hurt, while the uber-wealthy might feel better burning 240 gallons per hour in their jet versus 275.


MDarringerMDarringer - 8/18/2015 6:50:59 PM
+2 Boost
Increasing taxes to motivate higher MPG is warfare against middle class because it places them at a powerful economic disadvantage. Wealthy people can buy gas guzzlers and can afford the gas. Taxing gas guzzlers disproportionately is not the answer either. People should be free from all coercion when buying a car. Taxes are coercion.


valhallakeyvalhallakey - 8/18/2015 4:08:22 PM
+1 Boost
If the purpose is to reduce emissions then simply keep moving the bar higher in that respect. I personally could care less if someone buys a car that gets 1mpg, but I do car what comes out of the tailpipe. The so one we use up the oils the sooner we will move on to something else...electric, hydrogen, fusion reactors....


MDarringerMDarringer - 8/18/2015 6:45:27 PM
+2 Boost
Forcing people to buy cars with higher MPG when gasoline can be made for cheap it simply counterintuitive.

If anything, it's time to build Keystone and drop gas taxes.


skytopskytop - 8/18/2015 7:19:54 PM
+3 Boost
Did child beatings help produce well adjusted, happy children?
What a STUPID article premise.


TomMTomM - 8/19/2015 9:34:10 AM
+2 Boost
To MDarringer:
There is no government that is completely capitalist - nor completely socialist. If having concern for those less fortunate is something that is unwanted - I cannot be part of that. Having had quite a number of Foster children - I believe that we all can do something to help each other move ahead - or at least keep their heads above water. The problem with a totally "Free" market is that it separates classes into basically those that have and those that do not. But remember - we live in a Republic where the majority of the people are supposed to rule as well - and the majority of people are not millionaires - so they have the right to adjust the balance a little here and there. And as long as there are taxes - it is still the people who pay them in the end.


W124E320W124E320 - 8/19/2015 4:08:14 PM
+1 Boost
To TomM: the top 10% pay something like 90% of taxes already. Folks that earn, are working which is good thing. Taxes don't fix anything as we are $19T in debt and most of that has not been because of hand outs to the rich. If people who don't know any better want to throw in $1T for the Iraq war fine but Barry Soetoro has added $8T in 6+ yrs and what do we have to show for that? We're worse off now that in 2000 by far. You having Foster kids is awesome, but I do know many people do that for the little money they make from it vs for the kids. I assume that's not you. Everyone MUST pull their own weight as there are so many that are currently NOT that the system is nearly wrecked as is the nation. Raising taxes for any reason promotes Big Govt and insane waste and fraud with zero accountability. Its impossible to fire a Fed Employee regardless of fraud or incompetence. The Govt does use what they take from tax payers respectfully nor will they with more. No one deserves a free anything because nothing is free, someone has to pay for it. No one is "owed" anything except what has been promised with Social Security. The Fed Govt was designed to be small with the States and Marketplace to handle everything else. Higher taxes steal from earners and encourage waste...The Fed Govt needs to be cut in 1/2 at worst more at best...


W124E320W124E320 - 8/19/2015 4:11:53 PM
+1 Boost
Oh, and why do we need better fuel economy? There is no shortage of oil nor is there any truth to the global warming farce.. there is no need for this other than Govt control of our movement. The Govt has no business telling us we have to drive cars that get 50mpg... they have zero "facts" for global warming or oil shortages. We also have the cleanest air on the planet...


Terry989Terry989 - 8/19/2015 5:29:56 PM
0 Boost
The Pope respectively disagrees with your 'the world still flat view'.


W124E320W124E320 - 8/20/2015 5:57:26 PM
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The Pope... who cares he covers up for Pedophiles... guy has zero credibility with me. He's nothing but a flawed man that some put on a pedestal. His Holiness... there is no man that is holy, except One. He also lambastes Free Enterprise which has allowed countless people to create their own futures and break free from the shackles of others. Guy has what 6 Billion other people have ... an opinion.


W124E320W124E320 - 8/20/2015 6:11:36 PM
0 Boost
Oh, and his degrees are in what? Climate Change? Oil & Gas Engineering? Was he a scientist in a previous life? Guy is voicing his OPINION which is worthless...He doesn't have a clue.


Terry989Terry989 - 8/20/2015 8:03:06 PM
+1 Boost
So now you are calling the Pope a liar? You yourself are also voicing your OPINION which is equally worthless.


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