Another Day, Another GOP Sex Scandal | Main | Shearman & Sterling Heroically Springs Gitmo Prisoner, Who Promptly Murders Innocents; Meanwhile, They Reap the Benefits of Their Very Lucrative Middle-East Law Practice
May 07, 2008

Some States Considering Gas Tax Holidays

Two weeks ago I wrote that a federal gas tax holiday wouldn't help consumers much because at least half of the benefit would go to sellers. I called it a pander and a waste of time, and I suggested that if we really wanted to help consumers by reducing high prices at the pump, the quickest way would be for states to have a gas tax holiday:

One avenue that should be explored is cutting state gasoline taxes. Of course, this would require action in the state legislatures, and then McCain couldn't hold himself out as some kind of hero of the people. State and local gas taxes are typically larger than the federal tax. More importantly, state gas taxes overwhelmingly increase the price for consumers more than they do for sellers.

A state gas tax holiday would work better than a federal gas tax holiday because it is much easier for gas companies to avoid high-tax, high-regulation states than it is to avoid federal taxes and regulation. That makes the supply much more elastic at the state level than at the federal level.

The last time we talked about this, I was challenged in the comments that an 18.4 cent decrease in gas taxes would result in an 18.4 cent decrease in the price at the pump. That's not the case because taxes are shared between consumers and sellers in proportion to the elasticities of supply and demand for the product. I estimated that at the federal level, about half the tax is paid for by consumers and half by suppliers. And now, I have numbers to back that up (PDF). The study also supports my contention that state gas tax holidays are where we can find a greater benefit for consumers.

Now, I'm pleased to see that states are considering gas tax holidays, including Florida, Missouri, New York, and Texas. When you get right down to it, the average savings will only be between $10 and $80 (depending on state) for the average consumer over the summer, but at least the state legislation has a chance of actually achieving what it's aimed at, especially in high-tax, high-regulation states: substantially lowering the price at the pump.


digg this
posted by Gabriel Malor at 01:26 PM

| Access Comments




Recent Comments
Hadrian the Seventh: " [i] Wow. Listening to the 1805 version of Beetho ..."

bluebell ~ get cooking, Horde!: "Aw, Salty - how nice! I get it about the language ..."

Cosmic Charlie: "Is Everyrhing Bach done yet? ..."

Side draft: "Someone upthread said that President Trump probabl ..."

Fritz: "hmm.  Why does the NFL continue to injure tho ..."

filbert: "[i] Someone upthread said that President Trump pro ..."

Your Decidedly Devious Uncle Palpatine, Booking Agent, Aero Pinochet: "302. How do you think she got outta the pen so fas ..."

ScoggDog: "[i]Pretty unbelievable stuff and if you can stomac ..."

Miklos Molnar, on the 49 meter band: "If that's the case we owe you 37 cents. Posted ..."

garrett: "The Rock stars in TRIPLE EXTANT ..."

Bruce: "Funny. they only fit a '49 Hudson Commodore. Post ..."

andycanuck: "I like andouille sausage in jambalaya though I hav ..."

Recent Entries
Search


MuNuvians
Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
News/Chat
Archives
Powered by
Movable Type 2.64