The gas tax is inefficient

[drz-400]

Never said trade is a zero sum game, but neither is accounting.

You spend more then you make, you will pay a price eventually. This goes for individuals, companies and countries. You may in the short term benifit from cheaper goods allowing you to buy more then you otherwise would have, but eventually the amount of money leaving the economy, will exact a toll on it. This will lower incomes in the future, either directly as investment income leaves the country, or it will lower wealth as capital assets are bought by foreigners, allowing them to make the capital gains

A large current account deficiet that is persistant would not be possible under a "gold standard", and is only possible with the fiat currency system we have now. Under the gold standard, a country would not have the ability to fund a large persistant current account deficit as their gold inventory would be reduced over time (as people demanded gold for their "dollars") This is the accounting side of the issue. With the fiat currency system, what will typically occur is inflation

Actually I think it could be entirely possible. When we run current account deficits, the flip side is we run capital account surpluses of equal size in order to maintain a balance of payments. So under a gold standard we would be subject to large capital inflows if we had a large current account deficit. The effect would be a driving down of interest rates (or maybe the price of gold) in the US until it would be no longer more profitable to loan money to the US.

 

[Kushinator]

Never said trade is a zero sum game, but neither is accounting.
You spend more then you make, you will pay a price eventually.

A current account deficit does not mean "we spend more than we make", only that we import more than we export.

This goes for individuals, companies and countries. You may in the short term benifit from cheaper goods allowing you to buy more then you otherwise would have, but eventually the amount of money leaving the economy, will exact a toll on it.

If and only if real output and productivity remain constant (or to a specific point, is stagnant). This is the basis behind my previous response; specialization allows for "gains from trade" in which societal cost < societal benefit (relative to the autarkic alternative).

This will lower incomes in the future, either directly as investment income leaves the country, or it will lower wealth as capital assets are bought by foreigners, allowing them to make the capital gains

The bold requires highly diminished/zero trade (current account + capital account = 0; other nations are forced to hold/sell/trade dollars as a result). In order for investment income to, as you put it "leave the country", trade partners either have to stop accepting dollars, or stop trading.

A large current account deficiet that is persistant would not be possible under a "gold standard", and is only possible with the fiat currency system we have now. Under the gold standard, a country would not have the ability to fund a large persistant current account deficit as their gold inventory would be reduced over time (as people demanded gold for their "dollars") This is the accounting side of the issue. With the fiat currency system, what will typically occur is inflation

Agreed, which is why mercantilism is essentially dead. However, balance of payment crisis were typical during these periods.

 

[Kushinator]

Goldenboy, what is your position on a cap and trade type of tax. It would not affect rural consumers of gasoline (unless they emit huge amounts of CO2). It would allow the company that needs the energy the most to buy it while those who don't can sell their shares. Free riding and the black market would be negligible in my opinion due to the size of those involved with the program (its not like they could be discrete about where their factory gets its energy). It would essentially subsidize lower carbon intensive fuels because they will then not have to buy as many carbon shares. I know it is different than what you have been talking about, but I think it addresses your concerns about a straight up increase in the gasoline tax, while still achieving some of the desired results.

Cap and trade is touchy because (IMHO) two factors. The first being that it can have a negative impact on smaller to mid sized firms dependent on fossil fuels. The second is risk of faulty regulation (see the Deep Horizon oil spill )

But in comparison to pigouvian taxation (as PeteEU and Phattonez (although he is probably unaware of it) prefer), I'd pick cap and trade any day of the week. Especially if we can eliminate the majority of petro excise.

 

[Kushinator]

So you make policy based on a few rural peoples? This the typical "the US is big" excuse, and it always lame.

The idea of gas tax has always in large part been to get polluting cars off the road and force people to invest in non gas guzzlers. The free market can not do this, because the free market will always go for the cheapest solution and that is always the most polluting. Hence incentives are needed.

And so what if the rural people need their cars to drive around. So do rural people in Europe.. far from all live in towns and cities you know...

Compare population density along with the density of manufacturing centers, then get back to me

 

[jallman]

London England has done it


They charge a rather large fee for entering a certain section of the city in a private vehicle during peak hours.


I dont particularly like the idea, but it does seem to have cut down on traffic in that section of London


Overall I think just the traffic alone will cause people to seek alternatives depending on how bad it is and how much they value their time

Well it could have the unintended effect of limiting traffic through that area, causing businesses to pull out in favor of a higher traffic area. Once businesses start pulling out, so too go the residency that was there to work at those businesses. Basically, it could end up creating a slum.

 

[imagep]

Sorry, but what I'm proposing is the furthest from social engineering. Look at the most libertarian model, a free market for roads. Roads would be tolled. During rush hour, tolls would go up because of increased demand. Any entrepreneur would want to tap that potential. Why does that potential exist? Because driving creates a negative externality of traffic on other drivers, but toll roads take care of that externality.

You would deal with rush hour traffic, you would get enough money to build more capacity. With the gas tax, you get the same price no matter which road you use and no matter what time you drive at. That would be totally unrealistic in the libertarian model. What we have now is closer to social engineering because it basically makes the libertarian model solution illegal.

OK, that explains some stuff. I think that I understand why you are suggesting what you are suggesting better now.
So you are suggesting that government should operate exactly how private enterprise should operate?

If government should replicate private enterprise, then I have to admit that you have a great point. I am just not convienced that government should operate the same way, thats why its government. Maybe, maybe not. Convience me.

 

[phattonez]

Well it could have the unintended effect of limiting traffic through that area, causing businesses to pull out in favor of a higher traffic area. Once businesses start pulling out, so too go the residency that was there to work at those businesses. Basically, it could end up creating a slum.

I've never liked that idea. I do like the idea of having on-street parking reflect market rates or just getting rid of it completely. With the latter, you get more traffic capacity in that part of the city and you encourage private businesses to take care of parking.

 

[phattonez]

OK, that explains some stuff. I think that I understand why you are suggesting what you are suggesting better now.
So you are suggesting that government should operate exactly how private enterprise should operate?

If government should replicate private enterprise, then I have to admit that you have a great point. I am just not convienced that government should operate the same way, thats why its government. Maybe, maybe not. Convience me.

I can't convince you unless I know the qualms that you still have. Actually, my more radical idea (though I doubt it would ever happen) would be to sell the roads to private companies and let them run it. They have more of an incentive to not let their roads go to crap. But like I said in the first post, roads are kind of a sacred cow in politics and so even my original suggestion would seem very radical to most Americans.

So anyway, what doubts are still nagging for you? I think I've already shown how much more efficient this system would be, so what else would you want?

 

[Scarecrow Akhbar]

Seriously, it does nothing to address peak usage or demand vs. supply.

Seriously, it's not supposed to.

Those matters are best dealt with by private industry and the free market.

The purpose of the gasoline tax should be, should only be, FEDERAL road construction and maintenance.

Period.

That's it.

No social engineers wanted or needs at DOT.

 

[Scarecrow Akhbar]

Do you believe that sending wealth outside a country for a consumable good is a good thing for a country or an economy? At a rate then wealth is put into an economy.

No, so the Messiah should immediately withdraw his irrational limits on off-shore drilling and otherwise remove government impediments to US energy independence.

 

[Scarecrow Akhbar]

Anything is an option. One could sell their house and buy another one, or rent out their house and move closer to work, or take mass transit, or simply work closer to home.

Yeah, be for real.

In Los Angeles County the jobs some work at are up to 40 miles from home, in areas where houses cost twice what the commuters are paying for. "Selling the house and buying one closer to work" isn't an option when the houses closer to work cost more than you can afford to pay. Especially in the post-melt-down era when banks are actually expecting you to pay the loan back.

 

[Scarecrow Akhbar]

I guess that things would change if we had an emissions fee, but we just don't expect cars to pay for the pollution that they create. It's crazy.

Car owners DO pay for the emissions they create.

People with vehicles that burn more gas per mile buy more gas per mile and thus pay more gas taxes per mile.

 

[Scarecrow Akhbar]

How a person would address the problem of a previously "free" road now being tolled (in order from what I see as most desirable to least desirable).
1. Pay the toll.
2. Use the road when the toll is cheaper.
3. Use roads that do not have a toll (this is low because presumably these would have really terrible average speeds).
4. Use alternate transportation (just based on trends of how Americans really value their cars).
5. Move closer to work.
6. Find another job.

SEVEN: Elect new politicians.

 

[imagep]

I can't convince you unless I know the qualms that you still have. Actually, my more radical idea (though I doubt it would ever happen) would be to sell the roads to private companies and let them run it. They have more of an incentive to not let their roads go to crap. But like I said in the first post, roads are kind of a sacred cow in politics and so even my original suggestion would seem very radical to most Americans.

So anyway, what doubts are still nagging for you? I think I've already shown how much more efficient this system would be, so what else would you want?

I cant give a specific, honestly it is something that I have not given a lot of thought to.

One of the first thoughts that I have though is that public services are public for a reason and private services are private for a reason. Road construction often requires obtaining property and planning for the entire public, if we were to hand that over to private companies, the private companies may not act in the publics best interest. Like if we sold a major highway to a private company, then that private company would have a monopoly on that particular route and may tend to gouge the consumer due to the lack of competition. Sure, another company may decide to build a competing highway, but they would have to have the power to sieze public property. If the government acted on the behalf of a private company to sieze private property then the distiction between the private sector and government would be seriously blurred and corruption on a massive scale would likely occur. I don't know that multiple competing roads would be in the best interest of the public. Ultimately the road companies would have to be seriously regulated by the governement, and that is not neccesarally in the best interest of the road company. Maximum tolls would have to be established, and many regulations controlling the private companies. At that point, the private companies would be essentially operated by the government which totally defeats the purpose of privatization. This leads us back to the government keeping the roads and just charging tolls. But what would be the advantage of tolls over simply paying a gas tax?

Is relieving congestion the only problem here?

 

[Lord Tammerlain]

Actually I think it could be entirely possible. When we run current account deficits, the flip side is we run capital account surpluses of equal size in order to maintain a balance of payments. So under a gold standard we would be subject to large capital inflows if we had a large current account deficit. The effect would be a driving down of interest rates (or maybe the price of gold) in the US until it would be no longer more profitable to loan money to the US.

The price of gold in a gold standard is a set number. In the US it was $35 USD per ounce of gold. The gold standard in the US was abandoned in the early 70s because of its large current account deficiet, which was draining the amount of gold the US held ( France being a specific requester of gold in exchange for US dollars). Countries were no longer willing to hold USD as there was to much of them, so they wanted US gold instead. The US would not have been able to purchase gold at $35 USD on the open market at the time and as such abandoned the gold standard

 

[phattonez]

Yeah, be for real.

In Los Angeles County the jobs some work at are up to 40 miles from home, in areas where houses cost twice what the commuters are paying for. "Selling the house and buying one closer to work" isn't an option when the houses closer to work cost more than you can afford to pay. Especially in the post-melt-down era when banks are actually expecting you to pay the loan back.

Housing is only expensive in LA because half of the city is classified as historic and because zoning is so restrictive.

 

[phattonez]

Seriously, it's not supposed to.

I never disagreed.

Those matters are best dealt with by private industry and the free market.

I agree.

The purpose of the gasoline tax should be, should only be, FEDERAL road construction and maintenance.

Who's saying otherwise?

No social engineers wanted or needs at DOT.

I'm not proposing social engineering, I just want something that more closely resembles are more free market road system.

 

[Lord Tammerlain]

Housing is only expensive in LA because half of the city is classified as historic and because zoning is so restrictive.

Housing is expensive in LA because alot of people want to live there. Housing is cheap in Montana because very few people want to live there.

Given the amount of suburban sprawl in LA, I doubt zoning is very restrictive regarding new subdivisions, perhaps in the building of multifamily dewellings though

 

[jallman]

Housing is expensive in LA because alot of people want to live there. Housing is cheap in Montana because very few people want to live there.

Given the amount of suburban sprawl in LA, I doubt zoning is very restrictive regarding new subdivisions, perhaps in the building of multifamily dewellings though

Actually, phattonez is correct. The housing market in LA is jacked up because huge swaths of the city are classified as historic and this bars development of more modern housing structures such as subdivisions, etc. Also, almost all the historic districts fall under rent control and landlords jack rents up for new tenants in advance of not being able to raise the rents to keep with moves market values year to year.

 

[phattonez]

Car owners DO pay for the emissions they create.

People with vehicles that burn more gas per mile buy more gas per mile and thus pay more gas taxes per mile.

Doesn't mean that they're paying enough. It's like saying that when the government makes people pay $5 per square foot that the pollution for home construction is taken care of. There's no guarantee of that.

 

[jallman]

Doesn't mean that they're paying enough. It's like saying that when the government makes people pay $5 per square foot that the pollution for home construction is taken care of. There's no guarantee of that.

Wait...what? Why should they pay more per gallon on top of paying more because they are using extra gallons again?

 

[Lord Tammerlain]

Actually, phattonez is correct. The housing market in LA is jacked up because huge swaths of the city are classified as historic and this bars development of more modern housing structures such as subdivisions, etc. Also, almost all the historic districts fall under rent control and landlords jack rents up for new tenants in advance of not being able to raise the rents to keep with moves market values year to year.

To my knowledge most of the various cities in the LA area have high housing prices relative to most of the rest of the US, Do those cities (Fresno for instance) have the restictive zoning issues you mention or just the LA proper. I dont think the metro LA area has much in the restriction of subdivisions, given the amount of suburban sprawl that is metro LA


Either way, the only way housing prices in LA would be as high as they are is because people want to live in LA and are willing to pay high housing prices for it (ie demand)

 

[phattonez]

I cant give a specific, honestly it is something that I have not given a lot of thought to.

One of the first thoughts that I have though is that public services are public for a reason and private services are private for a reason. Road construction often requires obtaining property and planning for the entire public, if we were to hand that over to private companies, the private companies may not act in the publics best interest. Like if we sold a major highway to a private company, then that private company would have a monopoly on that particular route and may tend to gouge the consumer due to the lack of competition. Sure, another company may decide to build a competing highway, but they would have to have the power to sieze public property. If the government acted on the behalf of a private company to sieze private property then the distiction between the private sector and government would be seriously blurred and corruption on a massive scale would likely occur. I don't know that multiple competing roads would be in the best interest of the public. Ultimately the road companies would have to be seriously regulated by the governement, and that is not neccesarally in the best interest of the road company. Maximum tolls would have to be established, and many regulations controlling the private companies. At that point, the private companies would be essentially operated by the government which totally defeats the purpose of privatization. This leads us back to the government keeping the roads and just charging tolls. But what would be the advantage of tolls over simply paying a gas tax?

Is relieving congestion the only problem here?

I don't want private companies to have the power to seize property. I don't think anyone wants private companies to have that right. Anything else?

 

[jallman]

To my knowledge most of the various cities in the LA area have high housing prices relative to most of the rest of the US, Do those cities (Fresno for instance) have the restictive zoning issues you mention or just the LA proper. I dont think the metro LA area has much in the restriction of subdivisions, given the amount of suburban sprawl that is metro LA


Either way, the only way housing prices in LA would be as high as they are is because people want to live in LA and are willing to pay high housing prices for it (ie demand)

I agree with some of that. And actually, people here try to avoid living in LA proper and try their best to live in the suburbs for just the reasons you specified: development in LA itself is very restricted, creating a situation where you have housing availability similar to that in the 60's with a modern population and continued growth. Now some alleviation of this problem comes in the form of rennovating already existing buildings (usually into lofts or now the "micro" loft) but as far as development of subdivisions and such, it's a no go for most of the city.

(And yeah, we are talking about LA proper).

 

[phattonez]

Wait...what? Why should they pay more per gallon on top of paying more because they are using extra gallons again?

I'm saying that the gas tax does not address the pollution that cars create. Cars need roads and create pollution. The gas tax is meant for road construction but does not address the cost of pollution.