Less Government Regulation Series: The Terrorist Tax Again (August 3, 2009)

July, 2008:   Gas:   over $4 a gallon   Toyota Prius Hybrid Car:  $3000 over MSRP (Manufacturer’s Suggested Retail Price) and a line of buyers occupying the showroom.

July, 2009:   Gas:   under $3 a gallon   Toyota Prius Hybrid Car:  $3000 under MSRP and a flotilla of the cars littering the car lot.

The Volkswagen tdi (turbo diesel injected) cars followed the same price arc in response to the price of diesel.

The market should maintain its central role in American society.  Embrace it.  Taxing gasoline/diesel at a “quarter a quarter” per gallon contemplates a twenty-five cent ($.25) increase in the tax on fuel each financial quarter (90 days).  [See the “e-ssay” dated December 18, 2006 entitled “Pass The ‘Terrorist Tax’”]  As a compromise, raise the tax twenty-five cents a year every year.  Any tax by its nature contracts the economy which in this situation is akin to the body politic sucking in its stomach a little.

Implementing the tax while the market price of fuel is low is timely and crucial.  The market is ready.  More Prius cars will be built without the government passing legislation requiring more Prius cars.  More resources will be invested creating a more improved hybrid car or a new more efficient car without further government directives to create improved and new vehicles.  Although not fundamentally a revenue-generating measure, the tax funds can fill the fisc and reduce the country’s dependence on Chinese money.  So many other positive economic changes will result without any further government action.

O’Bama must deliver a speech on the proposal as compelling as his speeches in Philadelphia and Cairo.  He can sell it.  Writing the speech would be fun.

The Cars Allowance Rebate System (CARS), the “Cash for Clunkers” Program, is a short-sighted, expensive and misdirected use of government resources and misuse of public resources.  Too much government money is being spent to spew vehicles on the road that require substantial resources to produce and consume substantial resources to use.

Bumper stickers of the week:

25 cents a quarter

Stop funding terrorists

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