Floating-Rate Gas Tax Could Promote Sustainability and Economic Stability

Feb. 28, 2011 - PRLog -- Alex Zorach's latest blog post outlines a plan for stabilizing gas prices at the pump through a floating-rate gas tax which would set a gradually-rising target rate, with the tax making up the difference between the market price and target rate.

Full post: http://zorach.wordpress.com/2011/02/28/a-gas-tax-to-stabilize-gasoline-prices/

The Current Gas Tax:

The current federal gas tax has not risen with inflation or rising gas prices, and is not adequate to fund road construction and maintenance:  Instead, other taxes and the deficit are used to funnel money into the road budget.

Positive and Negative Impacts of High Gas Prices

High gas prices have both positive and negative impacts.  The negative impacts are felt immediately, and include hardship on businesses and individuals, and a dampening effect on economic activity.  The positive effects are mostly only realized in the long-run, and include promoting conservation, technological innovation, and shifts in community design such as improved walkability and public transit.  The negative impacts, however, are mostly a function of short-term price volatility.

Benefits of a Floating-Rate Gas Tax

A floating-rate gas tax can curb the volatility in gas prices and create a predictable, gradual rise in prices, thus maximizing the benefits of rising gas prices while minimizing the downsides.

Advocates of a Gas Tax:

Numerous high-profile individuals have supported a gas tax, including unlikely candidates such as former GM executive Bob Lutz, an opponent of fuel-efficient vehicles, and Gregory Mankiw, an economist who served under George H.W. Bush.

Read the full post: http://zorach.wordpress.com/2011/02/28/a-gas-tax-to-stabi...

# # #

This blog is about ideas oriented towards changing the world. The blog emphasizes building consensus around common sense ideas. Topics tend to be focused on sustainability, which is often interpreted in a broad, cultural context.