Current Events — HabitableZone

Current Events » in reply to Well, for sure somebody's lost.

And one more thing.

Gasoline is taxed by the gallon, but is sold by the dollar. I.E., if the price of gas doubles, the government revenue remains the same, providing consumption remains the same.

As gas prices rise, the fraction that goes to taxes actually drops per dollar of sales, making it a relative bargain. Since a rise in prices generally means a drop in consumption as consumers ease off on their driving, the tax revenue will fall even if the cost, or even the profit, per gallon goes up.

For taxes to really play an effective role in discouraging fuel consumption, perhaps we should tax the price, so many cents per dollar, instead of so many cents per gallon. That's how most taxes are calculated.

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