One of the best things we can to do hearten our friends, dismay our enemies, conserve energy, and enhance our national security, is increase taxes on gasoline consumption. If we want to reduce our dependence on oil we need to face up to its true costs.
Greg Mankiw would like to see a tax of $1/gallon on gasoline, phased in over ten years at a dime a year. He explains why, here: The Pigou Club Manifesto (October 20).
Now House Energy and Commerce Committee Chairman John Dingell is about to propose a carbon tax, that would increase the tax on gas by $0.50. (Dingell to propose 50 cent gasoline tax increase , Chris Good, The Hill, July 7) I'll look forward to learning more about the details. But this sounds smart to me.
I'd prefer Mankiw's higher tax, but Dingell's proposal may be a good. There should be some offsetting income tax break addressed to lower income tax payers, to relieve some of the burden for them.
Andrew Samwick took a trip to Hawaii with his family recently; he estimates his family's annual fuel consumption associated with the trip, and draws conclusons for energy taxation: Getting There Was More than Half the ... (Vox Baby, July 7).
Update: If Dingell introduces this, it isn't because he hopes it will pass. Here is Edmund Andres in the New York Times: Counting on Failure, Energy Chairman Floats Carbon Tax (July6):
The proposal came from Representative John D. Dingell of Michigan, chairman of the House Energy and Commerce Committee, and it runs directly counter to the view of most Democrats that any tax on energy would be a politically disastrous approach to slowing global warming.
But Mr. Dingell, in an interview to be broadcast Sunday on C-Span, suggested that his goal was to show that Americans are not willing to face the real cost of reducing carbon dioxide emissions. His message appeared to be that Democratic leaders were setting unrealistic legislative goals.
“I sincerely doubt that the American people will be willing to pay what this is really going to cost them,” said Mr. Dingell, whose committee will be drafting a broad bill on climate change this fall.
“I will be introducing in the next little bit a carbon tax bill, just to sort of see how people think about this,” he continued. “When you see the criticism I get, I think you’ll see the answer to your question.”
h/t to Mankiw: A saboteur joins the club (July8). If something is too good to be true, it probably isn't.
Revised July 8.