Saturday, May 22, 2004

Tax (and Drill)

Charles Krauthammer argues for taxing gas and (more mildly) for drilling for more oil to solve the problem of OPEC having us, well, over a barrel.

Krauthammer argues for taxing gas so that the rational response we had to the crisis in the '80s -- building smaller cars -- doesn't reverse itself when gas becomes cheap. A tax on gas after the crisis of the '70s would have kept it expensive, thereby reducing the desire to shop for groceries in vehicles "built for hunting elephants."

Additionally, Krauthammer briefly makes a softer case for drilling. With demand up (thanks to China) and supply down, this is a way to decrease potentially our dependence on OPEC, though it conflicts with our "eco-sensitivity."

Krauthammer's proposal entails establishing some "floor" for the price of gas -- say, $3 per gallon. If oil gets more expensive, the tax is off. If oil gets cheaper, the tax kicks in to make the price $3. The income or payroll taxes will be reduced accordingly.


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