How much of a tax shift?
This entry was posted on 5/5/2007 10:42 PM and is filed under uncategorized.
A gallon of gas would increase $.10/year for 10 years - a total of $1.00 after 10 years. This additional energy tax would be "tax-neutral" for individuals and families because federal income taxes would be reduced by an equivalent amount.
Where did this number come from? -- the Intergovernmental Panel on Climate Change (IPCC), an international scientific panel. As reported in the Washington Post today, the IPCC estimated the that "to avoid the worst effects of global warming" we may need to raise "the cost of gasoline by up to one dollar a gallon over the next several decades." This is an incredibly LOW price to pay to solve our global warming crisis!
Now, they are saying "decades" and I'm saying "decade." Why? The IPCC is focusing on the incremental cost of reducing greenhouse gas emissions. I'm suggesting raising taxes on non-renewable energy for energy conservation and to stimulate renewable energy industries. It will likely take a somewhat larger investment to achieve the emission reductions indirectly (via energy price increases) as compared to direct action to reduce emissions.
But.... if we only target greenhouse gas emissions, we'll have much less of an effect on reducing U.S. dependence on foreign energy, the U.S. trade deficit, and pollution while also missing the opportunity to develop the U.S. alternative energy industry.
The average price of a gallon of gasoline in the U.S. on April 30, 2007 was $2.97. Adding a $.10 tax today would be a 3.4% increase. Each subsequent annual increase of $.10/gallon would likely be a smaller percentage since gasoline prices will likely increase over time. But, from the Chicago Tribune, "A report by AAA finds that it costs drivers 53 to 84 cents for every mile traveled." (Note: I increased these numbers based on the current national average of $2.97 for a gallon of gasoline.)
In additon to gas costs, these figures include items such as tires, maintenance, insurance, financing and depreciation. From a cost per mile perspective, a $.10/gallon tax increase translates into less than a 1% increase per mile driven.
Note that with the btu tax proposed in this blog, taxes on all non-renewable energy would increase based on each fuel's energy content. A typical gallon of gasoline has 114,000 btu.
