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Gas tax?

Stephen Karlson at Cold Spring Shops links to discussion of a gas tax, notably this from Andrew Sullivan:

We're at war. So far, the Bush Administration has refused to ask for a general sacrifice to pay for this effort. But that leads to a sense that we're not all involved, that we do not all owe the troops our support. More important, the war is about the Middle East. A long-term strategy to protect us from constant involvement in that region would include greater energy independence. A gas tax helps pay for our current struggle and helps us avoid future ones. Why not therefore a wartime gas tax of a dollar a gallon?

A "wartime tax" is not the way to go. Wars are typically financed via deficits. This makes perfect sense, since wars are temporary, and temporary taxes distort decisions in inefficient ways. Bond finance minimizes the distortionary effects of financing temporary expenditures.

But a gas tax itself is not a silly idea. Fellow economist and good friend Ron Johnson proposed to me over spring break that we should impose a permanent $1 tax on gasoline. Why? To avoid the costs of intermittent, but essentially permanent, military interventions in the Middle East. Perhaps these costs should be counted when considering how much we spend on oil. I told Ron I'd go for his proposal if it were accompanied by a revenue-equivalent reduction in income taxes. (I'd rather avoid a tax on gas than a tax on income, wouldn't you?) Before he went to DC, CEA Chair Greg Mankiw said much the same thing. He's quoted in Sullivan's piece, which is worth reading.