McCain Gas Tax Reprieve No Real Break

When he outlined his economic policy a speech yesterday, Republican presidential nominee John McCain came out in favor of a three month suspension of the gas tax from Memorial Day to Labor Day. McCain's policy will certainly generate some support from businesses being hurt by the high cost of fuel — and the average Joe might rethink cancelling a family road trip — but that does not make it a good idea.

In fact, suspending the gas tax right now makes very little sense. The U.S. already has one of the most insubstantial gas taxes in the world among industrialized countries. If you go over to Europe right now, you'll be lucky to pay less than $8 American for a gallon of gas. Across Europe, 60% of what drivers pay on gas goes to taxes.

Under the McCain plan, the average American commuter would save — approximately — 18 cents per gallon (or about 5% of each gallon). According to the American Association of State Highway and Transportation Officials, the average American commuter would save $28 over the course of the summer. We did the math ourselves and came up with $27 (3,000 miles driven over three months with an average fuel economy of 20 mpg equals 150 gallons of gas times 18 cents equals $27).

And what do we all get in exchange for our saved $27 or $28? Money from the gas tax goes to the federal Highway Trust Fund, and the American Society of Civil Engineers estimates that every dollar invested in our highways creates $5.40 in economic benefits, not to mention each billion spent creates roughly 35,000 jobs. The trust fund is already $3.4 billion dollars short and cannot afford the cuts. McCain's suggestion is that we simply tack the whole cut onto the deficit.

The total cost of the McCain plan: Up to $9 billion and 300,000 highway jobs.

According to a report in The New York Times, it makes much more sense to offer low-income Americans rebates for gas, because it will be cheaper and target the people who really need it. Even if gas prices fall 18 cents over the summer, the fuel-related problems facing the U.S. is not about to change, and will likely only get worse each year. For once, American drivers need to start thinking seriously about the future rather than simply kicking the can down the road.

McCain's Gas Tax Holiday: Smart Politics, Stupid Policy (Autopia)

Editor’s Note: We’re not a political blog, but we will point out when any of the three remaining presidential candidates promise energy policy that directly affects car owners.

Comments

[LM]

Just a right-wing pander to give those "bitter" folks a reason to think Republicans have their interests at heart. It's a wonder people are bitter and Republicans have to run on wedge issues such as guns and religion, they offer no real solutions to our problems.

[Tony]

I don't want to go into Democrat-republican issue but this proposal is total bull.
short gov on money and give bunch of folks reason to drive, which will increase demand and drive price up. Who wins at the end of the day? - right! Oil companies!!!
I say, increase price of the gasoline to $6 per gallon and tax manufacturers in geometrical progression for each large SUV they make.

[Eric]

The bottom line is this:

If a person was planning on making a trip on labor day weekend, the $16 total they save on gas if the tax is suspended isn't going to be a make or break deal. Whether gas is 3.32 a gallon or 3.50, its still expensive, and if people weren't planning on traveling because of it, the extra few dollars won't change their mind.

Not to mention, giving people MORE incentive to drive around unnecessarily will just exacerbate the fuel price problems as mentioned above.

[Juan Carlos]

i hate taxes, but would rather keep the taxes on. it isn't much to speak of. make it a dollor a per gallon and now we are talking.

[LM]

making a dollar per gallon would allow us to really our crumbling infrastructure. Americans must like driving on unsafe bridges and having rough pavement. Keeps the Preparation-H business going strong!

[Juan Carlos]

i hear you, but if we are going to do anything with the tax so people can save and really see a difference, let it be a dollar. otherwise, keep the money and use it wisely.

[Jenki]

LM, are you really that naive to believe that either party will solve our problems? You must have not been paying attention....

[LM]

Social security, medicare, veterans health administration, the interstate system. The Federal Government can work if allowed to. By stripping cash from agencies left to run on scraps, all they can hire are unqualified people and the really big projects can't get done and you end up with a boondoggle.

It's called starving the beast, but a healthy beast can actually do good things. I'd rather have someone running government who believes in it rather than someone who doesn't believe in it make it worse.

[Kyle H.]

The Dems are the ones that put us in this place to begin with. They couldn't beat GW Bush. They fight additional drilling. They block the building of nuclear reactors.

And typical to the heart of a Dem they turn around and complain about it. I hope gas goes to $8 a gallon as it'll have little effect with my income. Enjoy the ride!

[Infosaur]

Wow what a buncha socialists!

You think the Oil companies make "outrageous profits" but Washington takes almost HALF my income for what exactly? Prostitues for the NY Governor? Public Education for the mispronuciator in chief?

Hell yeah he should cut taxes, at least for a year while this credit situation sorts itself out. And instead of a "phase in" where you get 10% of a proposed tax the first year, 5% the next year and then the next congress cancels the program. How about an instant drop of 50 cents a gallon and slowly allow it to go up over the next 5 years?

As for the highway departments, between political patronage, overtime, sub-contracting (so the contractor bills at $15/hr and the guy at bottom is doing the job for $5.50) a tighter budget MIGHT encorage some fiscal responsiblity. After all if I'VE got to adjust my personal budget to $4/gal gasoline. Shouldn't civil servents be able to think in terms other than "Raise Taxes" and "float Bonds"