Unfortunately, instead of hiking the price ourselves by means of a gasoline tax that could be instantly refunded to the American people in the form of lower payroll taxes, we let the Saudis, Venezuelans, Russians and Iranians do the taxing for us \u201d\u201d and pocket the money that the tax would have recycled back to the American worker.<\/p>\n
This is insanity. For 25 years and with utter futility (starting with \u201cThe Oil-Bust Panic,\u201d\u009d The New Republic, February 1983), I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home. In this space in May 2004 (and again in November 2005), I called for \u201cthe government \u201d\u201d through a tax \u201d\u201d to establish a new floor for gasoline,\u201d\u009d by fully taxing any drop in price below a certain benchmark. The point was to suppress demand and to keep the savings (from any subsequent world price drop) at home in the U.S. Treasury rather than going abroad. At the time, oil was $41 a barrel. It is now $123.<\/p>\n
But instead of doing the obvious \u201d\u201d tax the damn thing \u201d\u201d we go through spasms of destructive alternatives, such as efficiency standards, ethanol mandates, and now a crazy carbon cap-and-trade system the Senate debated last week. These are infinitely complex mandates for inefficiency and invitations to corruption. But they have a singular virtue: They hide the cost to the American consumer.<\/p>\n
Want to wean us off oil? Be open and honest. The British are paying $8 a gallon for petrol. Goldman Sachs is predicting we will be paying $6 by next year. Why have the extra $2 (above the current $4) go abroad? Have it go to the U.S. Treasury as a gasoline tax and be recycled back into lower payroll taxes.<\/p>\n