Return of the gas tax

John McCain is pitching the idea of a gas tax holiday to voters again, despite experts' derision of the idea.


Alex Koppelman
June 9, 2008 11:02PM (UTC)

Sure, economists are just about unanimous in their belief that a summer gas tax "holiday" wouldn't really mean much difference to consumers, but with gas prices climbing ever higher, you can rest assured that the idea won't die just yet. In fact, CNN reports, John McCain's planning to bring it back to his stump speech on Monday.

A post at CNN's Political Ticker blog says an unnamed McCain aide said "that the Arizona senator planned to plug the gas tax holiday in public statements throughout the day as a message to voters that he understands the plight of working families in a tough economy."

Advertisement:

Under McCain's proposal, a variation of which was also supported by Hillary Clinton, the 18.4-cent federal gas tax and the 24.4-cent federal diesel tax would both be suspended during the peak summer driving months. The chance of this actually happening is slim. First of all, McCain had called for this suspension to begin Memorial Day, which has obviously already passed, and if Congress were to begin action now, it might still take some time before the holiday began. Second, House Speaker Nancy Pelosi opposes the idea and could stall or kill any attempts to bring it up for a vote in the House.

McCain does admit the idea is not a cure-all. "I don't pretend that it's an answer to our energy problems," he said in remarks before a fundraiser on Monday. But he says it would make a difference for low-income families; CNN says "McCain argued [that] low-income families could save some extra cash to pay for their children's school supplies this fall, or perhaps treat themselves to a nice dinner."

That's debatable, at best. The tax is not collected directly from the consumer at the pump, but at the point of production; thus, there's no guarantee prices will go down as the tax does. In a blog post, economist and New York Times columnist Paul Krugman explained:

It's Econ 101 tax incidence theory: if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. Cut taxes, and all that happens is that the pretax price rises by the same amount. The McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers.

Alex Koppelman

Alex Koppelman is a staff writer for Salon.

MORE FROM Alex Koppelman

Related Topics ------------------------------------------

2008 Elections John Mccain, R-ariz. War Room

BROWSE SALON.COM
COMPLETELY AD FREE,
FOR THE NEXT HOUR

Read Now, Pay Later - no upfront
registration for 1-Hour Access

Click Here
7-Day Access and Monthly
Subscriptions also available
No tracking or personal data collection
beyond name and email address

•••


Fearless journalism
in your inbox every day

Sign up for our free newsletter

• • •