PUBLIC POLICY AND GAS PRICES
At this point, Gregg asks the reader, "Don't all those things sound pretty good?" Quite frankly, Gregg, you sound like a jerk. But let's move on. He tries to pass this one off on the reader: "Ideally, proceeds from a revenue-neutral gasoline tax could be used to reduce income taxes and payroll taxes of the poor and lower middle class."
What does revenue-neutral mean? And what's so great about creating a tax on a consumption good, which means regressive taxation on the less fortunate members of society? Problem three: bad economic reasoning used to justify a public policy idea. We've tackled the economics of a general gas sales tax here before. In short, a sales tax does not simply mean the consumer pays 50 cents on top of the market price of gas at the pump. We trace out a summary of what is not seen in that previous post. There is nothing "neutral" about the tax. Ultimately, the tax is "paid" through the income of gasoline producers.
His last resort: telling us Greg Mankiw supported the policy. Who cares?
UPDATE: See also this previous post on Easterbrook.Calling Cards