The “Net Zero” gas tax
Thirty years ago, conservative columnist Charles Krauthammer proposed a revenue neutral gasoline tax to reduce consumption. To keep revenue neutral, he tied his proposed gas tax increases to a dramatic reduction in the payroll tax equal to the average tax paid nationwide.
For example, if the average American contributes $4000 annually toward’s Krauthammer’s dramatically high gas tax (on the order of dollars per gallon), then every American gets a $4000 tax rebate.
The whole idea is to reward those who drive less and to disadvantage those who drive more. Indeed, inequities of this sort are always introduced when, for overarching national reasons, government creates incentives and disincentives for certain behaviors. A tax credit for college tuition essentially takes money out of the non-college going population to subsidize those who do go–and will likely be wealthier in the end than their non-college contributors. Not very fair. Nonetheless, we support such incentives because college education is a national good that we wish to encourage. Decreased oil consumption is a similarly desirable national good.
Krauthammer, a critic of environmental regulation and global warming theory, believes his “net zero” gas tax would have several benefits. He points out people will naturally be encouraged to drive less and to either buy higher mileage cars or even to use alternate forms of transportation. Profits that now flow to multinational oil corporations stay in the local economy. Krauthammer believes his net-zero consumption tax will do more for transit ridership and clean air than decades of environmental regulations and CAFE standards have accomplished.