The Dumb Idea That Won't Die
The week President Trump seized on one of D.C.’s dumbest policy ideas that refuses to die. Trump, facing the economic fallout of skyrocketing fuel prices caused by his attack on Iran, declared he would suspend the gas tax for a while and then phase it back in when gas prices go down.
First, we have to acknowledge the obvious nonsense of Trump, yet again, claiming he can unilaterally do something that can only be accomplished through an act of Congress. The deeper issue here is both what a gas tax holiday would do, and why this terrible idea lingers around D.C. like a bad stink.
While a gas tax holiday would, in theory, lower prices at the pump by waiving the 18¢ per gallon gas tax, saving the average driver between $1.60 -2.20 per full tank of gas, the reality is significantly different. Oil companies would not immediately lower prices by 18¢ per gallon for gas. Consumers would likely only see about 60-80% of the gas tax come through with a lower price at the pump. The rest of the waived tax would land directly in the hands of oil companies, who are already making absurd profits.
This “savings” represents pennies on the dollar of the increased cost of fuel since the start of the attack on Iran. The average consumer is now paying $23.25 more for each full tank of gas. If we want to lower prices at the pump, a windfall tax on the excessive profits of oil companies sent to consumers as refunds would, although marred with technical issues and likely tax avoidance by oil companies, do far more to lower prices and help consumers keep more of their money.
https://onecountryproject.substack.com/p/thursday-talkers-514-the-dumb-idea