Tyler Cowen wonders if the Cato Institute is being serious in their Critique of Gasoline taxes. I myself read the Executive Summary to the Paper which Cato released. Cato bases the Call for Gas tax abolition on the fact that long-term Tailpipe Emissions will not be reduced significantly. Is their hatred of the Tax Gods so great that they cannot see the Sunlight for the heat upon their Skin?
The Gasoline Tax assures that Fuel Efficiency will be much greater, and the larger the Tax–the greater the efficiency. The fact insists that more People will have traveled further about their business for the same Fuel Cost. Why the Cato Institute would publish a Paper which patently ignores Interim values in the Cost Accounting of a Tax amazes this Author. Front-End Costs generate innovation, Middle Costs reduce extravagant use of the Product, and Long-term Costs insist on more efficient use of Product. The Tax revenues raised can be utilized for payment of Government Services already on the books. There exists an articulate Group who insist that Carbon Taxes must be Revenue-Neutral, but I have trouble with even this Proposition; effective impact on Consumer Purchase patterns cannot be realized with Revenue-Neutrality.
The Cato Paper, though, holds some real kernels of Truth, best visualized by reading the Sidebars followed by the Conclusion. It also shows the fallacy of the Paper. The Overcharge/Undercharge allegations are a non sequitur–granting the largesse of the variation. The fear of internalizing motor vehicle externalities by venue of Gas Taxes is somewhat baseless, as economic efficiencies established on acceptance of major Externalities lacks real efficiency, and increased mass transit use actually increases the efficiency of mass transit practice; a prime desire as political motivations resist elimination of mass transit systems, Routes, and Schedules. The worst excess of the Paper resides in ignoring the ability of Interim Costs to alter Consumer Desire to travel in the first place. lgl
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