Marc Goldwein: Point: Suspending Federal Gas Tax Will Only Worsen Transportation
Marc Goldwein is the senior vice president and senior policy director for the Committee for a Responsible Federal Budget. He recently wrote an opinion piece for InsideSources, an excerpt of which is below.
As Americans face rising prices at the pump, a gas tax holiday certainly has some political appeal, but its bark is far bigger than its bite. By my estimate, a yearlong gas tax holiday would reduce household costs less than $1 per week. These savings would only reverse one-twentieth of the cost of higher gas prices and one-fortieth of total price growth. Total costs would fall by less than 0.1 percent.
Americans spend $40 billion annually on federal gasoline and diesel taxes. Were we to eliminate those taxes, evidence from state-level holidays shows suppliers would respond in part by raising their prices to capture some of the gain. The remaining consumer savings would juice demand in a supply-constrained economy, leading other prices to rise. All told, the holiday would probably reduce the total cost of goods and services this year from $22 trillion to something closer to $21.99 trillion.
Perhaps even this minuscule improvement in cost-of-living would be better than nothing if it came free, but in reality, it comes with immense costs.
Read the entire piece here.
Published works by members or staff of the Committee for a Responsible Federal Budget do not necessarily reflect the views of all members or staff of the Committee.
