One of the big buzzes lately in the American politicosphere is about Senator McCain’s bid for a “gas tax holiday” for three months, which would remove the 18 cent federal tax on gasoline purchases from Memorial Day through to Labour Day (typically when gas prices seem to rise due to increased travel). There’s lots of talk on the internet about how terrible this idea really is, citing that it won’t help to stabilize the economy, that we’ll encourage more use of a source of energy that is harmful to the environment, and that it is merely a band-aid fix or political tactic merely to gain entry into the presidency. On the New York Times’ Freakonomics blog Justin Wolfers[1] put a challenge out there for any readers to find a economist that would be willing to back up the proposed tax holiday and could not as of May 5th. This challenge spread to other news media and prompted the comment from Hilary Clinton (who also approves of the holiday) to say, “Well I’ll tell you what, I’m not going to put my lot in with economists.”[2] Ms Clinton’s economic plan on her website doesn’t even indicate such a plan, and McCain’s own plan merely glosses over the issue:
John McCain Believes We Should Institute A Summer Gas Tax Holiday. Hard-working American families are suffering from higher gasoline prices. John McCain calls on Congress to suspend the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day.[3]
Of course, considering that elections are only in November, and hoping that W. Bush doesn’t hop on the bandwagon[4], we can be somewhat certain that this issue won’t even be relevant next summer (or at least completely forgotten). The underlying issue is not the high price of gasoline (Americans should consider themselves lucky compared to other countries[5]) but the sense of entitlement that this type of political ploy appeals to. Why shouldn’t American middle class families get a break? We pay a huge chunk of our salaries that we work very hard for to feed and clothe and shelter ourselves. How are we supposed to keep up with the rising prices of food and gas? The answer is simply: deal with it.
Make adjustments in your lifestyle to accommodate for the rising prices of amenities. A popular feature in many magazines (financial[6] and otherwise[7]) these days is how to lower your grocery bill. Take advantage of public transportation if that’s an option for you. Spend less of frivolities that you can live without. The overwhelming tendency to think we deserve to live a certain lifestyle is detrimental to our financial well-being. It’s shocking how taboo it is to have a philosophy that you must live within your actual means, not your imagined ones. Obama is coming under fire for dismissing the tax break as:
“…a gimmick that would save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say they did something,” said Obama. “Well, let me tell you, this isn’t an idea designed to get you through the summer, it’s designed to get them through an election…” [8]
He, of course, uses the opportunity to reiterate why his tax cuts (some of which are eerily similar to Ms Clinton’s) are better than just a band-aid, but his opponents want to get the word out that he is “elitist” and imply that he is against the working class. I would state, rather, that this tax holiday is a prettily wrapped poison. The funding from these taxes go to help construct highways, mass transit, and other things that we take for granted, like erecting street signs and fixing potholes.[9] In all fairness, it’s a good system, with a sort of “pay per use” construct. You don’t buy gas? You don’t have to help pay for road maintenance. So why does it seem so tantalizing to get a tax break on something we can admit actually benefits the country at large?
We live in a “gimme” culture brought about by our hopes of attaining the American dream, but somewhere along the line the dream got twisted. No longer do we dream of working hard to own what we have, but we compulsively purchase on credit and dream of becoming millionaires with little to no effort invested. We either refuse to acknowledge or can’t foresee the consequences to our financial behaviour, and that includes those in political power. Their goal here is to appear to be a hero and appeal to American’s sense of greed and entitlement – a smart political move – instead of actually being the hero this nation needs to overcome this financial crisis.
[Quote in title is by Karl Hakkarainen]
Wow. I had not heard about that plan at all. It hits the double whammy of high gas prices, along with lower taxes (something I find that Republicans, and people in general, are in agreement with). It would lead to an astronomical change in the budget, though. I can’t imagine losing that many dollars for such a short-term fix.
You raise an interesting point about the taxes on gas, and if I buy gas, it ends up paying for road repairs. A concern among many people living in Halifax, as well as other large cities, is that they pay higher taxes than the people living in rural areas. These taxes go back into the municipal budget to help pay for road repairs, maintenance, and even constructing new ones. However, most of the people driving in the city are not Halifax natives, but commuters from outside the city, where they pay lower taxes. Most Haligonians hop on a bus or walk.
We certainly do, and it friggin’ sucks too! Only when you have to take public transit do you understand just how much a car would mean to you. Getting to work on time each day, getting anywhere on time, everyday. Stupid Metro Transit. But I do know that it is not this bad everywhere in the world. Only Halifax.
I think cutting back on gas taxes is a great idea for the people actually paying for gas, but if it’s only a short term thing, that will result in less money for the government to take care of other road repairs, then toss the idea in the garbage. Prices on everything is rising, so why not gas as well? You need gas, pay the price. What really needs to happen here isn’t a dropin gas prices (as nice as that would be) but a rise in salaries. That would solve everybody’s problems!
Owen: Well, it does seem to suck that a Halifax resident would pay more and not reap the benefits, but I would argue that pedestrian Haligonians need nicer roads more than those in vehicles. Crosswalks and sidewalks would be included in road maintenance, right?
Little Miss: A rise in salary would just increase inflation. So, the prices of commodities would just elevate to meet the rise in salary.
I would imagine that sidewalk care would be inluded in our taxes. It better be! And they really need to do something about the sidealks in Bayer’s Lake. Not pedestrian friendly at all!
If only there was some way of not increasing inflation…. humm… anyone have a good taking-over-the-world plan?? Or do we need to bring in Pinky and the Brain? That can be the only solution to this dilemma!