For this taxpayer, Gas Tax Holiday just doesn’t add up

Curious as to what all the talk of a “Gas Tax Holiday” would mean for our family’s bottom line, I decided to do the math to see what I would save if it were instituted.

A Gas Tax Holiday would suspend the federal government’s 18¢ tax on gas from Memorial Day until Labor Day. By my calculations that’s a period of about 14 weeks.

Our 1998 Honda Civic has a ten-gallon gas tank, which I need to fill about once every week and a half. (I know our fuel consumption is way less than most families. It is also intentionally so.) This means that, based on current consumption levels, we would go through approximately 9.3 tanks of fuel during the Gas Tax Holiday period.

Now let’s crunch some numbers:

10 gallon tank x 9.3 fill ups = 93 gallons
93 gallons x 18¢/gal. Tax Holiday savings = $16.74

It has been estimated that a Gas Tax Holiday would cost the federal government $10 billion in lost revenue. Money from the gas tax is currently deposited into a trust fund which is used exclusively to repair our nation’s roads and bridges (aka, our infrastructure). Only two possibilities exist if that money is not available for deposit into the fund; necessary work on our nation’s roads and bridges will not be completed, or, the money will have to come from somewhere else.

John McCain’s version of the Gas Tax Holiday has been criticized for being unable account for the $10 billion shortfall. The money simply wouldn’t be there. Critics say this would potentially leave vast amounts of needed repairs undone, further hurting our already deteriorating infrastructure, and could also mean job cuts for highway workers.

Hillary Clinton is for the Gas Tax Holiday, despite having voted against a similar plan in 2000. Her plan would account for the $10 billion deficit by levying a “windfall tax” against oil companies. Critics of her plan point out that, if such a “tax” were instituted, there’s no telling what would keep oil companies from simply raising prices further to make up for the dent in their profit margins.

Barack Obama claims that this is all just an election year stunt to buy up votes from struggling families at about $25 a pop (or in our case $16.74). He argues that this “gimmick” does nothing by way of offering real solutions to the gas crisis and would likely make matters worse in the long run, regardless of whether we went with McCain’s or Clinton’s plan. Obama’s critics like to point out that the Illinois senator voted in support of a Gas Tax Holiday in 2000, when he was a state senator.

I’m inclined to agree with Obama. While I don’t know why he voted in support of a similar plan in 2000, and I’m willing to admit it has me wondering if he’s flip-flopping on this issue, what he’s saying about it today rings the most true to my ears.

When I first heard McCain’s proposal the first thought that entered my head was “it’s a gimmick.” I still think it is, and an ill-conceived gimmick at that.

I don’t like McCain’s plan to just kiss $10 billion good-bye, that doesn’t seem wise to me. But I also don’t like Hillary’s plan to penalize businesses for being profitable. If there was an investigation into price gouging by the oil companies that showed they were indeed jacking up prices – I would favor stiff penalties (to be paid directly to taxpayers). But until then, I’m going to assume that their record profits have everything to do with our record consumption.

In the end, it just doesn’t add up. You can’t simply pull $10 billion in revenue out of the federal treasury and think it won’t have a reverberating effect elsewhere. You also can’t just simply rob Peter to pay Paul and call it a solution – no matter how rich Peter is or how little your paying Paul.

So let’s just call a spade a spade here. This is just an election year gimmick – plain and simple.


26 thoughts on “For this taxpayer, Gas Tax Holiday just doesn’t add up

  1. This one I’m with Barak on. It economically wouldn’t make sense. They say gas prices are going up anyway…so, in the end…things won’t change much with a Gas Holiday. They say also even if it did effect the price at the pump…demand would go up…and so would prices.

  2. jim and i have agreed that the only way that gas prices are going to stop going up is if people actually stop consuming so much. no one i know has really slowed down their gas consumption that much. everyone is complaning, but no one has really slowed down their driving all that much. or if people start revolting against the big oil companies. pretty sure in parts of the world we were in recently they would just start burning down bp buildings? it might work?

  3. no one i know has really slowed down their gas consumption that much. everyone is complaning, but no one has really slowed down their driving all that much.

    That’s not true Jess, you know us!

    A significant factor in my decision to change jobs six months ago was concern over rising gas prices. With my last job, I was burning through more than a tank of gas per week. We were spending between $140-$160 a month on gas alone. Sometimes we’d have to put gas on the credit card to make ends meet until payday.

    When I started seeing what other jobs might be out there I kept my search within a 5 mile radius of my house because I wanted to try to cut down my commute, or possibly have the option of walking or taking the bus to work.

    We’ve since cut our fuel expenses by more than half.

    (Of course, living in the city has also made us much more “locally” minded – shopping, working, entertainment, etc. But that’s a conversation for another day.)

  4. something that has dramatically increased my gas mileage was pumping up the air pressure in my tires (they were all about 10psi under) and taking the most direct route to work…i know that sounds like common sense, but what i used to do was leave later and take the less busy scenic route with more stops but less traffic. so now i leave earlier, drive slower, and with less lights, stop signs, etc i’ve seen probably a 25-30% mpg increase as far as i can tell.
    if i wasn’t the only person at my company coming from my direction i would totally carpool. i’m still looking in to it.

  5. actually, from what i’ve read of national averages…most folks would save $28.00 per WEEK.

    of course, i live in a state that has lots of hills, curves in the road and F-150’s getting 15 miles to the gallon. we’re probably single-handidly skewing the national average.

  6. thanks for rockin’ this post. my first response to this coming from McCain was about ozone creation (i mean, summertime in texas is not a good time to be driving or breathing)… but these numbers needed a folo, too… with (i’m sure) a mutual faith in the reasonableness and intelligence of voters, i’m sure such gimmickry won’t blow up in convictioneer Obama’s pretty face.

  7. I disagree with…well everybody. Supply and demand at the pump does not justify the current price of oil. What I think is happening is that the price increase is the result of wall street folks selling dollars and jacking up the price of oil in the commodities market.
    The falling dollar is caused by the FED lowering interest rates in response to the decrease in the liquidity of our economy. Our gas pump woes are due in large part to the credit crunch and sub prime mortgages. (In my opinion)
    All the plans I have heard so far address symptoms and not the root cause.
    Bushes plan: Yeah, drilling in Alaska today might make a difference in 2012! geesh
    Mccain’s plan: There was a time when a dollar cut in taxes needed a dollar cut in spending…I feel like I am listening to a scene from idiocracy whenever I hear anything from the GOP! Whatever happened to the Contract with America?

    Clinon’s plan: transfering money from oil companies to the government coffers…sure it will go right back to the taxpayer…just like cigarette taxes go directly into anti-smoking campaigns…right (sarcasm)

    Boxer’s plan:tap into the strategic reserve…with 2 wars going on the middle east and a potential third in Iran…nah we won’t need the reserve more later.

  8. @Stem: I think you’re math is a little fuzzy there Stem. The tax is .18 per gallon. It would take 150 gallons of gas to “save” $27.

    If people in West Virginia are burning through 150 gallons of gas a week, I think we just solved the gas crisis.

  9. Two great points, Shane.
    By moving closer to your job, or getting a job closer to where you live, you save time, money, gas, frustration with traffic, et cetera.
    Second point, a Craigslist carpooling section. Awesome idea.

  10. THE CEO OF EXXON MOBIL IS MUCH MORE IMPORTANT THAN THE PRESIDENT!!! this being may day – international workers day – should be a reminder to all of us wage slaves that we are being screwed and the reason is we let it happen. the reason gas is $4 a gallon is not china & india, it’s not supply & demand, it’s not the war, it’s b/c we pay what they tell us to. WAKE UP!

  11. you’re right…it’s 28 per month…my bad.
    still, WV burns it up.

    we have oil in South Dakota and the gulf of mexico…we need to go get it. and 2012 could have been 2007 if we would have started drilling Alaska in 02 or 03…(which WAS suggested.)

  12. Regarding Ron Paul- That hurts Shane 🙂

    Regarding Exxon- Exxon controls a whopping .62% of the worldwide oil reserves compared with Saidi Arabian CO. with 19%. As much fun as it is to complain about big business, they are really not the problem…and they cannot control the oil market to the extent everyone like to yell about.

    Further… 70% of “Big Oil” stock is held by IRAs, Mutual Funds and Pension funds and another 23% by individual investors…so when we “punish” big oil for being profitable, who do we really hurt?

  13. Regarding Ron Paul- That hurts Shane 🙂

    For the sake of translation and answering Jim’s question, that would be a “no.”

    you’re right…it’s 28 per month…my bad.

    Still, you guys are burning through 37.5 gallons a week? That’s $540 a month in gas! That’s still three times what I was consuming when I had a 24 mile round trip commute!

    You guys do know you don’t need a Ford F-350 to take the kids to soccer practice right? 😆

  14. yes shane, peak oil. but why do we not have electric cars? we’ve had the technology and the capability for everyone to be driving affordable and environmentally friendly vehicles for years but the CEO’s of these oil corporations – who control our govt, make no mistake (our obsession on the middle east is based on?…) – will not allow us to have access to these things b/c they will be out of business. being a billionaire is not enough for these robber barons. they need every single penny more that they can get b/c they are the epitome of greed made manifest. and they should get the same spot in hell as the pedophiles and rapists. the CEO of any big oil corporation should be right next to omar al-bashir in eternal damnation!!!

    p.s. jim made a good point. put air in your tires 🙂

  15. We can agree on the value of the electric car. I have a 4.5 mile commute (1 way) to work and am within 5 miles of the mall and grocery store. 95% of all my driving could be done via an electric vehicle. It kills me every time I have to fill my car up with gas. Ideally, I would like to be a 2 car family, 1 gas and 1 electric.

  16. If we really think that money is going to some “trust fund” – it probably is going the same place that other government trust fund money goes – right out the window.

    Can we agree on two things?

    1.) The government is generally a bad way to solve problems.

    2.) Chevron made 5.17 billion last quarter. That’s just ridiculous.

    Whatever “lost revenue” the government would experience, it would certainly be prudent to ask: “Where’s that 10 billion on our highways?”

    All the candidates (to various degrees) talk about infrastructure.

    Again, I’m just not convinced that the government should be entrusted with more than absolutely necessary.

  17. This is hardly a proposed solution to anything Shane so calling it one is going just a bit far indeed.
    Now I wish I lived in a world where it would only save me 16 bucks but I live in one where it would save me a lot more.
    With that being said I hope John’s electic car that was never made because of robber barons is not plugged in the night before he goes to the mall and he is stuck in the rain.

    Its a dumb idea which offers little relief even to people who have to drive a lot like myself.

    I was impressed to Shane I didnt even have to add the Martin Obama used to support this comment since you included it!

    I am curious to hear what my new candidate Rev Wright has to say about this.

  18. Whatever “lost revenue” the government would experience, it would certainly be prudent to ask: “Where’s that 10 billion on our highways?”

    Any roadwork going on in your town, city, or state? That’s where that money is.

    The Federal Highway Administration oversees construction and repair of the country’s interstates and bridges. The money is divided amongst the states at the federal level. You can look at their FY 2009 budget on their website and figure out what’s going where in terms of spending.

    With all the construction we’ve got going on, I think half that money is being spent in Rochester. 😆

    An argument can be made about whether that money should be handled by Washington, or given directly to the states. But that’s another conversation altogether.

    I was impressed to Shane I didnt even have to add the Martin Obama used to support this comment since you included it!

    I am biased. But I am also fair.

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