I'm intrigued by Charles Krauthammer's
proposal for a "net-zero gas tax" in the latest Weekly
Standard. Basically, he proposes an increase in the gas tax
now, while energy prices are low, to decrease U.S. consumption.
But to avoid hitting cash-strapped drivers in the midst of a
recession, he'd directly offset the gas-tax hike with a reduction
in payroll taxes. Krauthammer argues it would promote energy
independence without overtaxing or fattening the government's
revenue take.
It sounds more politically feasible than, say,
imposing carbon taxes on energy consumers to pay for low
taxes on investment. But I have a few questions. While U.S.
consumption obviously has a major impact on world oil prices, we
don't in fact get most of our oil from our "geopolitical
adversaries" -- many of our allies do. To what extent will this
really promote our energy independence and our geopolitical
goals? Second, when President Bush proposed carving personal
accounts out of Social Security he was accused of diverting
much-needed revenue from the retirement program. The revenues at
stake here are much smaller and the Social Security trust fund is
an accounting fiction in any event, but at least Bush was
offsetting the diverted revenue with personal accounts and
progressive benefit reductions. Won't there be an objection along
these lines to Krauthammer's plan?
