Don’t Fall for Carl DeMaio’s Repeal the Gas Tax Scam
Perhaps the best description of the latest cause being promoted by KUSI and the Chairman of Reform California came via Twitter.
It’s so good I wish I’d written it myself: “A new petition by Carl DeMaio seeks to ensure a stream of revenue for Carl DeMaio.”
This week’s pitch from DeMaio demands that Gov. Newsom and the state legislature suspend all taxes on gasoline until such time as the Ukraine/Russia war is over. It’s echoing what Republicans in 22 states are saying, namely that reduced gas taxes will help consumers during an inflationary period.
This is an example of a simple sounding idea --who doesn’t want to pay less for fill ups at the pump?-- on a not-so-simple topic. And, like all Republican ideas these days, it finds a way to line the pockets of America’s finest plutocrats.
While reducing/eliminating gas taxes would make pump prices fall, some of the money goes to the producers (gas stations, oil companies) because the retail price doesn’t fall as fast as the tax does. I saw one estimate saying producers would benefit from about one-third of the money involved.
Then there are the bigger questions connected to our reliance on internal combustion powered vehicles. Prices falling will increase driving and demand at the pump, which will increase pollution locally (carbon monoxide, nitrogen oxides, particulates) and contribute to global warming (through greenhouse gasses).
Gasoline in the United States is already cheaper than it is in most of the industrial world. Figuring out the true cost of gas is a road I won’t go very far down in the interest of readability, but I’ve got a few pointers..
External costs (the kind corporations like for us taxpayers to pay) like damage from pollution, wear and tear on infrastructure, and public health costs could realistically be included in gasoline prices. That’s not the way things work, of course. Calculating all those costs is tricky, and the answers depend on variables that are easily manipulated.
Suffice it to say our subsidized cost of gas per capita is over $2000 annually, according to a report from the International Monetary Fund. (That’s roughly what we spend on defense per capita annually.)
Suspending the gas tax would mean taking more (taxes don’t really cover those costs) money out of the general fund for road repair, and I’m sure Carl DeMaio has a handy dandy list of things he’d like to see defunded to make up the difference.
Peter Coy’s op ed at the New York Times is full of insight on not eliminating gas taxes. Here’s a snip:
I spoke with Severin Borenstein, an energy economist at the Haas School of Business at the University of California, Berkeley. He calculates that even in California, which has some of the highest taxes and fees on gasoline in the nation, those charges still aren’t enough to cover all the damage that gas-powered cars do. He says, bravely, that gas taxes should be higher, not lower. (Electric vehicles, which don’t incur gas taxes, are another story. They cause less pollution but similar amounts of congestion and accidents.)
One drawback of gas taxes is that they hit the lower middle class hard. Working people who need to drive a lot and can’t afford an electric vehicle pay a bigger share of their incomes on gas taxes and fees than the rich, especially if the rich own Teslas. So cutting gas taxes looks at first like striking a blow for equality.
On the other hand, the very poorest Americans actually don’t spend a lot of money on gasoline because they don’t tend to have cars. And if striking a blow for equality is what you want, a check from the general fund is a great way to do it.
Writing checks to California taxpayers appears to be the consensus point of view in Sacramento sausageland. Going into the weekend, a $400 number was being bandied about.
Senate President Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon have different ideas, namely sending $200 per person to Californians with an income cap at $250,000 per household, according to Politico’s California Playbook.
So, in sum, a gas tax “holiday” or similar proposal sounds sexy, but it’s not likely to happen.
What DeMaio’s petition is really about is getting names on a mailing list. It’s not addressed to any state official or member of the legislature. And, even if it was addressed to the governor, I suspect he’d consider the source, which just happens to be the guy who tried and failed to recall him.
HIs other recent failures include an aborted attempt to get a Texas-style voter ID law on the 2022 ballot, and 2018’s Proposition 6, aimed at rolling back gas taxes and requiring that future increases be subjected to voter approval.
As I indicated at the start of this post, Carl DeMaio is all about “me, me, me.”
Voice of San Diego’s 2021 analysis of DeMaio’s Reform California quoted several people from the Right side of the tracks who would agree with that sentiment:
One of DeMaio’s old colleagues in San Diego – the former strategist for his failed 2012 mayoral campaign – said there’s nothing surprising or new about how Reform California has handled the recall.
“It’s a promote-Carl organization,” said Jason Roe, who this year left California to run the Michigan Republican Party. “It doesn’t go to donors priorities. It goes to Carl’s priorities, or things that promote Carl. It’s hard to say what donors to Reform California outside of San Diego think. The educated donor class in San Diego sees this for what it is: to promote Carl’s priorities, not what’s good for Californians, or what’s good for conservatives.”
***
While I’m talking about things that politicians say, let me take a swipe at President Biden, who has absolutely no control over what consumers pay for gas. He undoubtedly knows this, but since the explanation won’t fit into a thirty second CNN soundbite, he’s making noise about profiteering by Big Oil.
Thinking that companies are screwing consumers when prices go higher is, I suppose, a natural response. But the reality is that they’re screwing us no matter what the price is.
Yes, X, Y, & Z oil companies had record profits last year…and those profits largely came from a period where prices at the pump were depressed (lower!) thanks to the pandemic. Will they make a lot of money this year? You betcha!
As long as we’re junkies for fossil fuel and are willing to pay all their external costs, we’re gonna get screwed. Reshaping our economy toward sustainable energy gets us off that merry-go-round and reduces many of the external costs we’re currently subsidizing.
There’s a whole lot of other thinking about how things get done that needs to go on, and other countries around the world are beating us to the punch.
Read about how Paris has transformed itself to the point where most automobile traffic will be banned by 2024…and guess what? Small businesses are big beneficiaries. It can be done.
Email me at WritetoDougPorter@Gmail.com