Lower Taxes on Diesel Fuel

By Dean

n the USA, the price of fuel is a political entity, because taxes are minimized on fuels that affect consumers directly, such as gasoline, but are maximized for diesel, which the consumer does not pay for directly.  This political con was legalized so that the consumers would "feel good" toward those politicians that supported lowering gasoline taxes in the past. 

In reality however, it makes much more economic sense to lower taxes on diesel fuel, which in the USA is used primarily for trucking and other commercial uses, because it is an element of the cost component of all goods and services.  If one taxes a cost component, across the entire supply chain, the net effect is a cost multiplier that is passed along to all consumers, in the form of higher prices.

This is also a form of regressive taxation, since those consumers with the gas guzzling SUV\'s and luxury automobiles are subsidized at the expense of the poor, who have no access to private automobiles. but who must buy groceries like everyone else. 

 It makes much more economic sense to lower the tax on diesel fuel, and raise it on gasoline, as they do in the rest of the world.  Taxation for political spin is dumb economic policy, it serves only to con consumers into complacent despair.

Atlanta, GA
Apr 1, 2008

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