Thoughts on Gas Taxes

Reading through the Atlantic Monthly on my recent journey, I came across this letter to the editor (from Ron Zimmerman) in response to Clive Crooks' article "Does Oil Have a Future" (from the October edition) that posed an interesting alternative to a gasoline tax:

A gas tax is the wrong thing at the wrong time. First, a tax on gasoline at the pump is a regressive measure that I reject on moral grounds alone. It is a flat tax (always immoral), which requires poor people--who must have gas for survival--to pay at the same rate as the wealthy do for their RVs, SUVs, Hummers, and other wasteful playthings. Second, it is ineffective; the poor, the rich, and the upper middle class will not change their consumption. Only the lower middle class will feel the pinch. Third, it will increase crime in the form of drive-always, siphoning, and even a black market.

I propose just the opposite of Crook's solution: We should ban all taxes on gas at the pump and restore the lost revenue by taxing vehicles. Excluding only heavy commercial trucks, construction and farm equipment, and commercial buses (all of which require special attention), we must impose a surcharge or bonus (not to exceed purchase price) on vehicles based on their EPA mileage figures, as follows:

• 10 mpg ...... $30,000 surcharge
• 10-19 mpg ...... $20,000 surcharge
  
• 20-29 mpg ...... $10,000 surcharge
  
• 30-34 mpg ...... $5,000 surcharge
  
• 35-39 mpg ...... $5,000 bonus
  
• 40-49 mpg ...... $10,000 bonus
  
• 50-59 mpg ...... $20,000
  
• 59 mpg ...... $30,000

Bonuses would be paid only when a new vehicle is purchased; surcharges would be paid at every resale as well. Moreover, all vehicles subject to a surcharge would require a $1,000 to $5,000 annual license-and-registration fee, while vehicles subject to a bonus would have these fees waived, would be exempt from sales taxes, and would get reduced insurance rates.

Perhaps the surcharge/bonus rates might be a bit high, but I like this philosophy.