Charles Krauthammer has written a column declaring that we should increase the gas tax by a dollar a gallon (!) and then make the increase revenue neutral by cutting the payroll taxes by an equivalent amount. In this way, he reasons, we can reduce the incentive to use gasoline at the same time we reduce the disincentive to work created by payroll taxes.
I absolutely hate this kind of clever public policy planning. Why? Because it is nothing more than social engineering. The idea is that public policy professionals should have their hands on the levers of human behavior tweaking incentives here and there to produce the optimum outcomes. The whole thing reminds me of scientists in white coats manipulating rats. “If we alter the maze in this way, then the rats find the cheese 2.5 seconds faster.”
Instead, I propose that we think much more simply and less ambitiously about government. What are the essential tasks of government? What are the least intrusive and least expensive ways to accomplish those tasks? Full stop.
In any case, Krauthammer’s plan disconnects us from the healthy dynamics of supply and demand in such a way as to increase a tendency to look to the government as the provider and sustainer. We have a beneficial situation in which gas prices have gone down thanks to a higher supply. The benefit accrues to consumers. They don’t need some kind of tax increase designed to produce a tax cut. They can simply enjoy an unexpected surplus by paying less at the pump and paying less for groceries such as milk and bread.