[Salon.com]
Obama dismisses Clinton's proposal to suspend the 18.4 cent per gallon federal gas tax as: 1) a political gimmick that will not deliver any significant relief to consumers, while diverting us from the serious energy reforms we need to undertake; 2) an opportunity for oil companies to raise prices to capture the missing tax increment; 3) an inducement to drivers to drive more, thus leading to more consumption and higher prices down the road; and 4) a drain on highway trust funding, which is sorely needed to repair our crumbling infrastructure.
This is powerful criticism because it resonates with a long-standing talking point against Clinton -- that she is a political phony willing to do anything to get elected.
But guess what? Obama supported a similar measure in Illinois—and it worked.
Despite the "gimmick" slam on Clinton, could it be that Clinton is sincerely trying to help, albeit in a very modest, and politically self-serving way? The evidence suggests that Clinton's plan might work. It also raises the question of why Obama hasn't made a similar proposal. He was certainly proud to back a gas-tax moratorium eight years ago.
While an Illinois state senator, Obama supported a state tax holiday very much like Clinton's proposal, but without the saving mechanism of a windfall profits tax.
CBS News says Obama voted for the temporary lifting of the tax three times in the state Senate. The tax holiday was finally approved during a special session in June of 2000, when Illinois motorists were furious that gas prices had just topped $2 a gallon in Chicago. The moratorium lifted the state's 5 percent sales tax on gasoline through the end of 2000.
Obama told constituents that gasoline prices would drop: "Gas retailers must post on each pump a statement that indicates that the state tax has been suspended and that this temporary elimination of the tax should be reflected in the price per gallon of gas."
During one state Senate floor debate, Obama joked that he wanted signs on gas pumps in his district to say, "Senator Obama reduced your gasoline prices."
Now, running for president, Obama says the tax reduction was a complete failure, and that "the oil companies, the retailers" ended up benefiting most because they raised prices by the entire amount of the tax cut.
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 here. 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.
Read the entire Salon.com post here.
Obama dismisses Clinton's proposal to suspend the 18.4 cent per gallon federal gas tax as: 1) a political gimmick that will not deliver any significant relief to consumers, while diverting us from the serious energy reforms we need to undertake; 2) an opportunity for oil companies to raise prices to capture the missing tax increment; 3) an inducement to drivers to drive more, thus leading to more consumption and higher prices down the road; and 4) a drain on highway trust funding, which is sorely needed to repair our crumbling infrastructure.
This is powerful criticism because it resonates with a long-standing talking point against Clinton -- that she is a political phony willing to do anything to get elected.
But guess what? Obama supported a similar measure in Illinois—and it worked.
Despite the "gimmick" slam on Clinton, could it be that Clinton is sincerely trying to help, albeit in a very modest, and politically self-serving way? The evidence suggests that Clinton's plan might work. It also raises the question of why Obama hasn't made a similar proposal. He was certainly proud to back a gas-tax moratorium eight years ago.
While an Illinois state senator, Obama supported a state tax holiday very much like Clinton's proposal, but without the saving mechanism of a windfall profits tax.
CBS News says Obama voted for the temporary lifting of the tax three times in the state Senate. The tax holiday was finally approved during a special session in June of 2000, when Illinois motorists were furious that gas prices had just topped $2 a gallon in Chicago. The moratorium lifted the state's 5 percent sales tax on gasoline through the end of 2000.
Obama told constituents that gasoline prices would drop: "Gas retailers must post on each pump a statement that indicates that the state tax has been suspended and that this temporary elimination of the tax should be reflected in the price per gallon of gas."
During one state Senate floor debate, Obama joked that he wanted signs on gas pumps in his district to say, "Senator Obama reduced your gasoline prices."
Now, running for president, Obama says the tax reduction was a complete failure, and that "the oil companies, the retailers" ended up benefiting most because they raised prices by the entire amount of the tax cut.
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 here. 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.
Read the entire Salon.com post here.
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