Economists: Repealing Gas Tax Helps Big Oil

Economists say that the McCain/Clinton gas tax suspension plan is without merit, primarily serving to whip up populist angst over gas prices and taxes.  The national gas tax, an 18.4 cent per gallon excise that goes to the Highway Trust Fund, finances highway construction and mass transit.

While gas costs have skyrocketed, the reason is due to constricting global supply and big-oil pricing fixing, not increasing taxes. Economists explained that if the gas tax is repealed it will only help Big Oil, who will likely still raise prices, tax or no tax. Where McCain and Clinton frame suspending the gas tax as taking money away from Big Oil, economists say all it does is take money away from federal mass transit programs, not oil companies. New York mayor Michael Bloomberg has been quoted as stating that suspending the gas tax is “about the dumbest thing I've heard in a long time from an economic point of view.''

Obama differs critically from Clinton and McCain. Instead, he advocates levying a tax directly on oil companies for every barrel of oil they sell over eighty dollars a gallon, predicted to cost Big Oil fifteen billion dollars a year. Obama’s plan concerns big-oil’s record setting profits, which have risen tremendously even while gas prices drive Americans into a recession.

Read more at Bloomberg.com