Friday, May 2, 2008

windfall gas tax

This is grade school economics and yet we have senators who are dumb enough to draw votes with those!

Right now what happened to Gas prices is:
1. Supply and demand
2. Falling dollar.

By enacting a windfall gas tax, it will not solve either of the above, and in turn, has the following disadvantages:
1. Leave the oil companies less incentive to explore for new gas.
2. Make it harder for new companies to enter oil market (less profit)
3. Make gas prices even higher (the tax will be transfered on to consumers)
4. Increase government waste (as to any other, more resource, more waste).

And if you try to give that tax to people with lower income, you have the following added disadvantage:
1. Some may not need it (people who live near their work, who are on welfare and don't work)
2. Increase fraud (I know people who cheat on welfare, and people will cheat on this too)
3. The tax might be there to stay and harm the next generation. We all know how government loves to keep taxes. The telephone tax from 1900s are still around. The current income tax is only meant for extremely rich people, and now it is affecting all of us.

Since I love the environment, I do think this high gas price is a God given to fix our environment problems. People are going away from SUVs, newer energy sources are been developed. I do prefer finding the new energy sources via free market, instead of government incentives, because you just don't know if the incentives are done to the right thing. Right now bio fuel is hot, but it causes food crises and I heard reports about 1gallon of bio fuel need about 1 gallon of gas to produce ....

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