Obama is wrong about the gas tax

[BlackVelvet04]

Obama is wrong about the gas tax

Think Clinton's plan to suspend the gas tax temporarily is a bad idea? A similar measure in Illinois -- which Obama backed -- seems to have helped consumers.

By George Frost



"I voted for it, and then six months later we took a look, and consumers had not benefited at all," Obama said. Having learned this hard economics lesson from his Illinois "mistake," Obama now argues that a federal tax holiday also will fail for the same reason -- the oil companies will take it all.

But Obama is wrong. He did not learn this lesson. In fact, the only scientific study done on the pass-through of the tax holiday savings to Illinois consumers (and those in Indiana, as well, whose citizens enjoyed a similar holiday) found that it actually worked to a large extent.

The study is titled "$2.00 Gas! Studying the Effects of a Gas Tax Moratorium," by Joseph J. Doyle Jr. and Krislert Samphantharak. Download the PDF http://www.nber.org/tmp/65433-w12266.pdf. The authors concluded that "the suspension of the 5% sales tax led to decreases in retail prices of 3% compared to neighboring states. And when the tax was reinstated, retail prices rose by roughly 4%."

This suggests that the tax holiday delivered at least 60 percent of the tax savings to motorists.
http://www.salon.com/opinion/feature/2008/05/06/gas_tax/index.html?source=rss&aim=/opinion/feature