Untruths About a Gas Tax

In debunking five common myths, Gordon and Tsay expose the truths for policy makers, and voters to consider:

1. "Only two countries-Kuwait and Saudi Arabia-charge lower gas taxes than the U.S. By under-taxing gasoline -- and thus under-pricing gasoline -- the United States encourages over-dependency (on oil).

2. America's transportation system is going broke. Revenue for the Highway Trust Fund is derived almost entirely from federal gas taxes." To make up the shortfall and continue current project, "(f)rom 2008 to 2010, Congress transferred $34.5 billion from general fund revenues."

3. The shortfall will increase as a consequence of the administration's new fuel efficiency standards as they translate into lower gas tax expenditures by higher-mpg cars."

Their solution to bridge the funding shortfall? A dual approach - taxing both oil producers and consumers that has the additional benefit of stabilizing volatile gas prices.

"Structuring an oil fee assessed on producers and a variable gas tax paid by consumers can further stabilize the price at the pump. When oil prices go up, the retail gas tax can be abated. The oil security fee will make up for the revenue gap. When oil prices go down, the gas tax can be slowly reinstated... The gas tax is a good way to invest in America."

Thanks to John Holtzclaw