Look, all taxes suck. None of us like paying them (no, not even liberals - though they don't mind at all that other people pay them) and there really are no "fair" ways to extract taxes. You're either going to tax income (which, without a doubt. punishes those who work harder) or consumption (which, as I will point out presently, has unintended consequences as well) - it's only a matter of which method you use sucking less than that other.
We clear so far? Good. Read on...
OK, so the problem is that while as a matter of principle I generally tend to favor consumption taxes over income taxes I think it's fair to say that our recent experiences vis-a-vis gas prices provides plenty of evidence to argue why they are supremely el-sucko.
If you like, consider this as Exhibit A.
Americans drove 1.4 billion fewer highway miles in April than they did in April 2007, the Department of Transportation said Wednesday.
Well yippee! Right? I mean, people are conserving - exactly like the great green unwashed want - and Gaia (or whatever is the name the dirt-worshipers have given to Earth) should be pleased that so many are doing their part to save ploar bears or some such.
Heck, even us capitalists should see the benefit - whereby the drop in demand (even if small) should ease-up some of the pressures on the more-or-less static supply chain and, like night-follows-day-follows-night, prices should come down.
But, as Purple Avenger notes correctly, herein lies the "dirty little secret" conservation keeps when there's anything taxable or sold by government agencies involved. From the above linked CNN piece..
Peters expressed concern that the cutbacks have resulted in the collection of fewer taxes on gasoline. Such taxes are funneled to the federal Highway Trust Fund, which gets 18.4 cents per gallon from gasoline and 24.4 cents per gallon from diesel fuel."History shows that we're going to continue to see congested roads while gas tax revenues decline even further," she said.
And there it is, in a nutshell, why consumption taxes suck. Conservation of resources, or at least the minimization of that being consumed - a nearly universally stated goal of consumption taxes - does not lead to any benefit to the consumer other than perhaps a warm fuzzy felling about saving something or other that may or may not increase polar ice in 100-years, or whatever.
And so the bottom line is that the beast of government is going to get fed anyway - so anyone thinking that they're going to see the costs at the pump come down simply because they are using less gasoline, or driving less, or buying smaller cars, or whatever, is in for one heck of a surprise. Because it ain't gonna happen - just ask the folks in Atlanta, who did such a great job conserving water during a drought this past winter that the same people who begged water "customers" to conserve water then had to jack-up their rates because, well, they used less water.
It would be funny, really, were it not so mind-blowingly sad.
...not with what you said but using one tax revenue source to make this point (acurate as it may be) is a bit disingenuous.
using this model to show the ineffectiveness of a consumption tax forces one to conclude that people would somehow cut back on spending habits so as to not pay taxes - that I just don't believe will happen and the two major benefits that weren't discussed are 1) the influx of money from the underground economy and other who don't pay into the current tax system would be forced to with a consumption tax and 2) non-citizens would also pay into our tax system. these offsets along with the lessening of built in taxes on goods and services due to out current tax rates make the consumption tax more than an attractive proposition - it makes more sense! IMHO