Tangle - A gas tax holiday.

Episode Date: March 21, 2022

With the average price of gasoline at $4.25 per gallon, politicians are discussing ways to drive the price down. As we covered in Friday's subscribers-only edition on what really drives gas prices, one component of pricing is taxes.You can read today's podcast hereYou can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here.Our podcast is written by Isaac Saul and produced by Trevor Eichhorn. Music for the podcast was produced by Diet 75.Our newsletter is edited by Bailey Saul, Sean Brady, Ari Weitzman, and produced in conjunction with Tangle’s social media manager Magdalena Bokowa, who also created our logo.--- Send in a voice message: https://podcasters.spotify.com/pod/show/tanglenews/message Hosted on Acast. See acast.com/privacy for more information.

The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages 6 months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100% protection is not guaranteed. Learn more at flucellvax.ca. From executive producer Isaac Saul, this is Tangle.

Good morning, good afternoon, and good evening, and welcome to the Tangle Podcast, the place where you get views from across the political spectrum, some independent thinking, without all that hysterical nonsense you find everywhere else. I am your host, Isaac Saul, and on today's episode, we are going to be talking about Democrats' plan for a gas tax holiday. It's causing quite a bit of controversy, but before we jump in, as always, we'll start with some quick hits. First up, the Senate hearings for Supreme Court nominee Ketanji Brown Jackson will begin today.

Questioning of Jackson will begin on Tuesday. Separately, Justice Clarence Thomas was hospitalized over the weekend with a non-COVID infection. Number two, Representative Don Young, the Republican from Alaska, died on Friday. At 88, Young was the oldest current member of Congress. He was the longest-serving Republican in the history of the House of Representatives. Number three, Ukraine rejected a demand to surrender the city of Mariupol, where hundreds of thousands of citizens have been under siege for weeks. The United Nations says 10 million Ukrainians have now fled their homes. Number four, former Vice President Mike Pence continues to distance himself from Donald Trump as he eyes a 2024 campaign for president. Number five, Texas Governor Greg Abbott issued

an emergency order as wildfires burn in 11 counties across the state. As gas prices surge to record highs, drivers in Connecticut could soon see some relief. Governor Lamont says legislative leaders are close to an agreement on cutting the state gas tax. A closer look at gas tax holidays, and if they are a gimmick or good policy, let's bring in Jared Walzak. He's the Tax Foundation's vice president of state projects. Happening today, some good news for all of you Maryland drivers. Absolutely. The governor is going to sign an emergency bill at two this afternoon to reduce the state's

gas tax. Now, this gas tax holiday bill passed unanimously in both chambers, with lawmakers agreeing to pause the 36 cents per gallon gas tax for a month. With the average price of gasoline at $4.25 per gallon in the United States, politicians are discussing ways to drive the price down. As we covered in Friday's Subscribers Only edition on what really drives gas prices, one component is pricing and taxes. Suspending the national gas tax could drive down the price 18 cents per gallon.

Some state gas taxes, like California's, are as high as 58 cents per gallon. Gas tax holidays have been proposed by elected officials in about 20 states, with proposed lengths ranging from one month to two years to save consumers money. On Friday, Maryland Governor Larry Hogan announced his state was pausing its national gas tax, which is 36.1 cents per gallon on gasoline and 36.85 cents per gallon on diesel, for 30 days. Georgia Governor Brian Kemp followed suit shortly after signing legislation to pause the state's $0.29 tax on gasoline and $0.326 tax on diesel until May 31st. Some state leaders, like California's Governor Gavin Newsom, have

suggested sending rebates to drivers to help them afford gas. Meanwhile, legislation to suspend the 18-cent federal tax on gasoline has stalled in Congress. But Senators Mark Kelly, the Democrat from Arizona, and Maggie Hassan, the Democrat from New Hampshire, have proposed a bill that would suspend the federal gas tax until January 1st, 2023. Republicans in Congress have spoken out against the gas tax holiday, with Senators like John Thune, the Republican from South Dakota, saying it was political cover. The benefits of a gas tax holiday are not as obvious as they may seem. At the federal level, the tax is levied at the refinery, meaning there's no guarantee the savings would be passed on to consumers.

Theoretically, it would free up distributors who set the prices at the pump to reduce them, but it's not a guarantee all of them would. If consumers saw the entire benefit of the tax break at 29 cents per gallon, which is George's rate, they would save about $4.35 on every 15 gallons of gas. At the same time, critics worry that the lost tax revenue from these taxes, often used for things like repairing roads, bridges, and other infrastructure needs, will need to be replaced. In a moment, we're going to take a look at some arguments from the right and the left for and against the tax holiday, and then my take. All right, first up, we're going to start with what the left is saying. So the left is actually split on this gas tax holiday, with some arguing that it is a horrible idea that will use up important tax revenue.

Others say it's worth driving the price down to help lower income drivers and reduce the chances of a Republican sweep in the midterms. And many point to issues besides taxes as the reason for the high prices. In Slate, Henry Gribar said it's not every day that you see so much political consensus around an idea this bad. Flushed with cash from COVID relief, Democrats and state government are trying to use their budget surpluses on a tax cut that undermines everything they claim to stand for, Gribar said. Lowering the gas tax would be a handout to the rich, harm the environment, and gut funding for public works. Even if the reprieve is meant to be temporary, it will be hard to undo, and it probably won't move the needle for Democrats in the midterms regardless. If Democrats are trying to give the working American a break,

the pump is the wrong place to do it. Rich people spend much more money on gas than poor people. According to the Bureau of Labor Statistics Consumer Expenditure Survey, the top 20% of Americans by income spent almost three times more on gas in 2020 than the bottom 20%. Expensive gas has some positive effects, too. It provides an incentive for American households, companies, and cities to make sustainable plans for the future. The gas tax is supposed to fund infrastructure. Drivers like to think they pay for roads when they fill up the tank. But in reality, declining gas tax revenue has forced the U.S. to transfer hundreds of billions of dollars of general fund revenue into the highway trust fund over the past decade. Catherine Rample said

these are bad ideas. For one thing, the gas tax is a relatively small part of the price consumers pay, Rample wrote. The federal gas tax is just 18.4 cents per gallon, and state gas taxes and fees average about 30 cents per gallon. Even if those taxes are zeroed out, consumers don't necessarily capture the full value of the savings. In previous state-level gas tax holidays in Indiana and Illinois, oil producers captured as much as 30% of the savings, and oil producers' share of the tax cut might be higher under pending proposals. Finally, even if consumers did capture all of the benefits of a gas tax holiday, there's the question of whether this is the most socially responsible way to provide relief to pinched households. Already, the price of gasoline doesn't reflect the fuel's full cost

to society from carbon emissions and other pollution. Further subsidizing gasoline with the biggest benefits going to people with the least fuel-efficient vehicles isn't helpful. In the long run, we want incentives that entice people to shift their behavior toward less greenhouse gas-intensive technologies, not an implicit government guarantee that gas will always stay cheap. In New York Magazine, Ross Barkin said it isn't great policy, but Democrats should do it anyway. A $5 gallon could wipe out wage gains and prolong inflation, Barkin wrote. Joe Biden and the Democrat-controlled Congress should not be blamed for any of this. Russia's invasion, a rising demand for gas, and a shale driller pullback are at the root of the

surge, but voters will be in a restive mood come November. Democrats inevitably will suffer, Barkin wrote. As antithetical as it may be to their values, progressives and environmentalists should back a gas tax holiday in New York and support a similar national effort. The reasoning is simple enough. Only one party cares about any policy priorities, and that party is endangered, Barkin added. If Republicans gain ground in New York while flipping the House and Senate, all plans to combat climate change are put on hold indefinitely. Mitch McConnell and Kevin McCarthy will roadblock Biden through 2024, hoping enough legislative defeats can pave the way for a second Trump term or Ron DeSantis or some other retrograde president.

The rest of 2020s would look quite grim. It may well be true that nothing Democrats do will save them from enormous losses in November. Such nihilism, though, shouldn't deter politicians and activists from fighting to do what they can to stave off defeat. All right, that brings us to what the right is saying. So conservatives are critical of any taxes on and regulation of fossil fuels and skeptical a gas tax holiday would help much at this moment. Many call out Democrats' hypocrisy for wanting a tax holiday now with election season coming. Some say Democrats are essentially raising taxes and then redistributing that money back to Americans to buy votes. In City Journal, Steve Melania criticized gas taxes, though he didn't call for a holiday. California accomplishes a petroleum

hat trick. It hits consumers with high taxes, expensive fuel standards, and regulatory barriers to energy infrastructure, he said. The Golden State has the nation's second highest gas tax at 53 cents per gallon, behind only Pennsylvania, which sneakily assesses its 58 cent per gallon tax on distributors who then pass it on to consumers. Filling out the top 10 highest taxed states are Washington, New Jersey, New York, Illinois, Ohio, Maryland, North Carolina, and Oregon. At the bottom are Virginia, Missouri, Mississippi, New Mexico, Arizona, Oklahoma, and Texas. The average tax among those states is just 18 cents per gallon. The difference in taxes alone between the lowest and highest taxed states can add more than $5 to the fill-up cost of a 14-gallon tank. Gas levies are known as dedicated or user taxes because in most places governments impose them for the express purpose of financing the infrastructure, roads, and bridges that

vehicles use. But as is so often the case, the payoff for increasingly higher taxes is minimal. Indeed, some places with the highest gas levies have among the worst roads, he wrote. One problem is that the higher the gas levy, the more likely some governments are to snatch the revenues away and use them for other purposes beyond roads. A 2020 Reason Foundation study found that 22 states divert funds away from expenses related to roads. The top five states in this category, led by New York and New Jersey, swipe about one-third of their gas tax money for other purposes. The Wall Street Journal editorial board said Democrats first raised gas taxes and now try to buy votes with gas tax rebates. While projecting a $46 billion surplus, Democrats in Sacramento have rejected a gas tax cut, the board said. They also refuse to relax climate regulations.

One thing we cannot do is repeat the mistakes of the past by embracing the polluters, Mr. Newsom says. Gentry climate change progressives favor high gas prices because they make electric cars more attractive. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your Thank you. province. Side effects and allergic reactions can occur and 100% protection is not guaranteed. Learn more at flucellvax.ca. But moderate Democratic legislators are feeling election year pressure to ease rising prices for low and middle class voters. Enter Mr. Newsom's proposal for a gas tax rebate. Unlike broad-based tax cuts, such direct payments let Democrats distribute money to select voter

groups. Maybe electric vehicle owners will get a check. Illinois Democratic Governor J.B. Pritzker is also promising to alleviate some of the pressure on Illinois working families after having doubled the state gas tax to $0.38 a gallon in 2019. His proposal, suspend this year's inflation-adjusted gas tax increase, two cents a gallon, and send $300 property tax credits to middle-income homeowners, the board wrote. That's about as much as inflation is costing the average household in a single month, and it doesn't come close to offsetting higher property taxes from increasing housing values and pension payments. The Democratic strategy is to raise taxes and then redistribute a small cut of the revenues to buy votes.

In the Daily Wire, Joseph Curl said a slew of factors has contributed to the increase in gas prices, including the 25 actions Biden has taken in office, which include limiting new oil exploration and regulating current production. Gas had already soared to $3.59 by February 24th, the day Russia invaded Ukraine, which has also contributed to the increase, he wrote. Calls to suspend gas taxes are also growing on Capitol Hill. Bills are pending in both the House and Senate to create a gas tax holiday, with each planning to offset lost revenue by using general fund money to fund state highway and public transit programs. Yet there's no guarantee that doing away with the gas taxes will actually help Americans.

According to ABC, on average, only about one-third of the value of previous gas tax cuts or tax increases were passed on to consumers, according to a 2020 report from the American Road and Transportation Builders Association that analyzed 113 state gas tax changes enacted over several years. That's because retail gas prices are influenced by complex factors, including the price of crude oil and supply and demand pressures. All right, that is it for the right and the left's take, which brings us to my take. it for the right and the left's take, which brings us to my take. So I kind of feel as if I'm in the twilight zone right now. If you had told me six months ago that Democrats in the White House were going to propose a tax cut for Americans, one that would create incentives for people to burn more fossil fuels, drive the price of gasoline down, and throw a wrench in some of Biden's plans for infrastructure repairs, all while many Republicans objected to it,

I would have thought you were out of your mind. And yet, here we are. It must be election season. On the whole, I think this gas tax holiday is just a bad idea. Yes, it might nudge the prices down a little, but it's sort of like taking ibuprofen for a headache when you haven't drunk any water in two days. You're just going to cover up the real causes of your symptoms,

and in the long term, it's not actually going to make the headache go away. Even if you're a Democrat terrified of big losses in the midterms, I still don't think it's a good idea. The thought that voters would give Democrats credit for shaving 15 or 20 cents off the price of gasoline at a time when prices are $1.40 higher than they were a year ago strains credulity. Democrats were barely noticed when they started sending hundreds of dollars a month to people through the child tax credit, a failure due in part to their own poor messaging. The belief that they can salvage this politically

doesn't make any sense. Even though I do think a gas tax holiday would help many poor Americans, given how much larger a chunk of their income is spent on gasoline than rich Americans, I'm not sure this minor pullback would provide much political help after a year of rising prices. It makes even less sense when you consider who a gas tax holiday would benefit the most. The states where gas spending is most important are almost all Republican-led. Or when you consider how badly it could blow up. It will rightly infuriate environmentalists, who will see the move as confirmation that Democrats will always preserve oil. On top of all that, it risks throwing Biden's

one major legislative victory to the wind. Remember, Republicans wanted to raise the gas tax to pay for the bipartisan infrastructure bill. It was Democrats who refused, knowing that such a move would be used against Biden as both a broken promise he wouldn't raise taxes on middle-class Americans and an increase on the price of gasoline. Cutting that tax, though, would almost certainly complicate the funding for infrastructure projects across the country at a time when our roads and bridges are in dire need of some love. Democrats are in a bad position, there's no doubt. Midterms are coming, gas prices are soaring, inflation is up, a new war is destabilizing Europe and the global economy, and all of it is enough inflation is up, a new war is destabilizing Europe and the global

economy, and all of it is enough for them to seek a quick win with something like a gas tax holiday. But it's not a good policy, and it almost certainly wouldn't achieve the results they want. All right, so that is it for the main story today, which brings us to your questions answered. Today's question is from Michael in main story today, which brings us to your questions answered. Today's question is from Michael in Elk Ridge, Maryland. He said, I was hoping that Tangle could tell its readers what an intern means to Tangle. I've seen interns at companies ranging from unpaid personal assistants that do grunt work and only gain a line on their resume to paid learners. I imagine Tangle's interns are somewhere in between those extremes,

and I'm hoping you'll tell us where do they fall. Are they paid? How many hours are they working? What value is Tangle providing them beyond pay, and what services are they giving to Tangle? So given how small the Tangle team is, our interns generally get lots of hands-on experience. Our last intern, Sydney, was responsible for drafting social media posts and interacting with our readers online. In her last week, she actually published her own piece on climate change. One of our interns before her, Seth Moskowitz, was responsible for researching and crafting our Friday editions. He is now an editor at Persuasion, the news outlet run by Yasha Monk. When we interview interns, I have them fill out an application form and tell me what kind of experience they want to gain. Then I try to get

them that specific experience. Audrey and Rachel are both starting their second weeks here, but Audrey has so far been a huge help in researching arguments related to the day's topic, and Rachel is going to be assisting Magdalena on social media. This is definitely not a get some coffee type of internship. We need extra hands everywhere, so anyone who comes near the newsletter, social media, or podcast is helping in a big way. We ask for a minimum of five to ten hours of work a week, and both our interns will receive a three month stipend of $1,500, which is about $12.50 to $25 an hour, depending on how many hours they log each week. In May, we have an intern coming on who's going to get paid and receive class credit,

which will actually be a first for us, and we're going to have to meet some different standards for him to get those class credits. So far, though, I think it's been a really successful program and we're still improving the workflow and communication side of things to ensure interns are getting what they want. Of course, once an intern completes their time here, the biggest value I can personally add is trying to help get them work elsewhere. Journalism is often a who-you-know and not what-you-know type of industry, and so I think we get a chance to add some value for folks who ultimately decide they want a career in this industry. In Seth's case, I'd like to think that a nice reference letter I wrote to Yasha and his team helped him land the job. As always,

it's your subscriptions and donations that allow us to offer these opportunities, so thank you. subscriptions and donations that allow us to offer these opportunities. So thank you. All right, next up is our story that matters for the day. This one is about California, which provides the U.S. with one quarter of its food. But three years in, the drought in the state is beginning to strangle the farming industry. In some regions that used to be bustling agriculture sectors, water is disappearing, and with it the farmers, families, and crops that used to dominate the region. After a rainy and snow-filled December, the state endured its driest start to a year in at least a century, the Washington Post reports. The end-of-year storms that raised the level of state reservoirs and brought a bounty of essential snow to the Sierra Nevada and Cascade Ranges are a distant memory. A survey this month found that the year's historically dry

start has resulted in a snowpack more than 60% below average. Not a single major reservoir is filled to its average for this time of year. The one that serves the water district in San Joaquin, the nation's largest by area, is less than half full as the state's wet season ends this month. All right, next up is our numbers section. So the average price for a gallon of gasoline in the United States today is $4.25. The average price a week ago was $4.32. That's $0.07 more. The average price a month ago was $3.53. The average price a year ago was $2.88. The average price of a gallon of gasoline in Kansas, which is the lowest of any U.S. state, is now $3.76.

The average price of a gallon of gasoline in California, the highest of any U.S. state, is $5.85. The average price of a gallon of gasoline in London, England is $5.79. And the average price of a gallon of gasoline in Amsterdam, Netherlands is $6.48. All right, last but not least, our have a nice day section. This one is about some people I actually kind of know. Mila Kunis and Ashton Kutcher announced that their GoFundMe for Ukraine has raised over $34 million. Kunis, who is Ukrainian, announced the fundraiser a few weeks ago, saying they would send the

money to Airbnb and Flexport in order to help house those in need and ship supplies directly to Ukraine. Yesterday, Ukrainian President Volodymyr Zelensky thanked them both on Twitter for their support. It was an especially cool moment for me given that Ashton is my former boss, I helped him build the positive news website A+, and I know from working with him he is an extremely caring guy who regularly uses his platform for good. CNN has a story about the fundraiser, and there's a link to it in today's newsletter. All right, everybody, that is it for today's podcast. As always, if you want to support our work, please go check out the episode description. You'll see some spots where you can subscribe to our newsletter, give us a five-star rating, donate a little bit of money, all sorts of good stuff to help keep this thing rolling. As always, we'll see you tomorrow. Peace.

Our newsletter is written by Isaac Saul, edited by Bailey Saul, Sean Brady, Ari Weitzman, and produced in conjunction with Tangle's social media manager, Magdalena Bokova, who also helped create our logo. The podcast is edited by Trevor Eichhorn, and music for the podcast was produced by Diet75. For more from Tangle, subscribe to our newsletter or check out our content archives at www.readtangle.com. The flu remains a serious disease.

Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100% protection is not guaranteed.

Learn more at flucellvax.ca.