More Hawkish than Mankiw
By Arnold Kling
A new economics blogger is really keen to hike the gas tax.
You may criticize the high-tax ways of Europe, but here the latter is dead right: with taxes at $5-6 a gallon, they are about right in pricing the externalities. In the US, externalities may be lower, as there is less density and thus congestion, and more land to absorb pollution. A $3 tax per gallon should entirely reasonable. It can be introduced gradually, say 5 cents a month over a five year period. And do not tell me the voters are against such tax increases, they actually favor it (pdf), as long as the revenue displaces some other tax like the income tax. This makes perfect sense, as a gas tax discourages a bad, while income tax discourages a good.
I would favor this sort of gas tax if we could also
–abolish the department of energy
–get rid of all subsidies for ethanol and other alternative energy sources
–get rid of CAFE
–never hear the utterly demagogic phrase “energy independence” again