Obama said that suspending the gas tax would result in same prices. I agree. So why not raise the gas tax?

Question

Since the gas tax appears to have no bearing on the actual price of gas (supply and demand controls it), why don't we raise the gas tax?

That way, demand will decrease, forcing the oil companies to lower their prices to reach equilibrium with the market. Instead of the oil companies getting profits, it is channeled to taxes, fixing our roads and infrastructure.

Answer 1

The answer is very simple, the people in the Bush administration are very friendly with the oil companies. They are directly benefiting from oil company profits. So, obviously they don't want to cut into their own profit margin. Sad, but true, that's why I'm voting for Obama

Answer 2

Why not another CO2 tax?

For every breathe we exhale we pay $0.01

If we want to save money we hold our breath.

If we hold it too long we save the world.

Answer 3

We should do exactly that. It would cause people to cut back on their driving and it would also create huge revenue to be used for other projects. In addition, more people would walk and take bikes to get around and people would become healthier as a result.

However, it would be political suicide for any politician to suggest this, let alone someone running for president.

Answer 4

i dnt think ppl would buy the gas

Answer 5

Well according to all of the economics textbooks I had to read, an wikipedia ( http://en.wikipedia.org/wiki/Effect_of_t... ), taxes do have an affect on price though indirectly via their affect on S&D itself and the taxes are just passed onto the consumer. If the oil companies are going to reduce anything, it

s the quantity of oil they supply.

You should read that answer that's one or two above mine and read it twice. Now personally I could care less if the government taxed drivers more because I don't use gasoline and people aren't going to save their money either way- we've been at a -6% national savings rate BEFORE $3.50 a gallon! (I wouldn't want it imposed on business though, that would be passed on to ll of us, guzzlers or not)

Besides, people don't realize how innelastic they really are. This is all just one psychological fruit cake. My uncle's paying $9 a gallon in Europe right now.

Answer 6

?

Answer 7

If there is anything that should be taxed more, it is driving. We have unlimited demand for using the roads, yet a limited supply of them. As a result, we have traffic jams in every major metropolitan area. If driving were more heavily taxed, since it does have a lot of negative externalities, I think we would see less traffic, less pollution, less wasted time, gas, and money because of traffic jams, and so on.

Economically speaking, doesn't that situation puzzle anyone else?

Answer 8

name one Senator who'll increase our gas prices!

Answer 9

First off, price does not determine demand.  You need to understand the demand is simply the relationship between price and quantity demanded and that price determines the quantity demanded and not demand.  

We don't produce the gasoline that we are consuming.  So if we would raise the gas tax, we would raise the price the we pay for gasoline.

It's not a good idea.  Taxes for roads and the such are already paid.   Obama is off here.