Charles Krauthammer quixotically makes the case for a revenue-neutral gas tax:
The average American buys about twelve gallons of gas a week. Washington would be soaking him for $12 in extra taxes. Washington should therefore simultaneously reduce everyone’s FICA tax by $12 a week. Thus the average driver is left harmless. He receives a $12 per week FICA bonus that he can spend on gasoline if he wants — or anything else. If he chooses to drive less, it puts money in his pocket. (The unemployed would have the $12 added to their unemployment insurance; the elderly, added to their Social Security check.)
The point of the $1 gas-tax increase is not to feed the maw of a government raking in $3 trillion a year. The point is exclusively to alter incentives — to reduce the disincentive for work (the Social Security tax) and to increase the disincentive to consume gasoline.
Right. You ought to tax bad things to make people do them less (whether they are bad for other people — negative externalities — or just bad for the person doing them), and you ought not to tax good things, and you especially ought not to tax things with positive externalities. Taxing incomes and not CO2 is crazy — of course it should be the other way round.
(By the way, if releasing CO2 is bad, then the solution is just to slap a tax on it, instead of wasting time telling people to fly less or whatever.)
These policies are obvious, so why haven’t they been implemented? Politics is not about policy.
Bruce Charlton’s Law: Things must always get worse before they can get better; Because otherwise they already would be better.
I have a variant which I call Charlton’s Law of Politics: In a democracy, you’ll be left with a bunch of policies which you can’t implement, because they’ll have short-term costs but long-term gains.
Social Security and Medicare have a serious funding problem. Reducing FICA contributions by $624 per capita each year would only make that problem worse.
Social Security and Medicare expenses are only tenuously linked to FICA revenue, as I understand things.