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Sir Winston Churchill


Them Greedy Oil Companies

...but what about our greedy government?

Big Oil gets a lot of grief over high gas prices -- but what about Big Government?

Motor fuels taxes account for some 22 percent or so of the current per-gallon cost of gasoline in this country. This is arguably both regressive (because it hits people with low and moderate incomes harder than it does the well-heeled) as well as disproportionate -- since the amount of tax is very high relative to the actual cost of the item being taxed.

We don't, for example, stack a tax of 50 cents per quart onto the price tag of milk -- because milk is considered a necessity. But how is gasoline less of a necessity? Maybe we don't drink it -- but most people have little choice about using a car to get to work. Public transportation is a realistic option in only a relative handful of major urban areas. And even then, it's often necessary to drive to the train station (as in the case of the Metro system in Washington, D.C.).

Yet there's no end to the sticky fingers of the state when it comes to motor fuels taxes -- which are layered like a wedding cake. First comes the Feds. They hit you up for 18.4 cents on every gallon of fuel you buy. But that's just for openers. Next in line is your state government -- which will have its hand out for another 20 or so cents per gallon. (The amount varies depending on where you happen to live; some states have considerably higher taxes than others.) Then there are local taxes -- which add another few cents to the tab. The total exaction can amount to some 60 cents per gallon in places like California and New York.

Do the math.

If the total price of a gallon of unleaded regular is $2.75 and the tax on that fuel is 60.8 cents per gallon (as in NY), then the tax rate is on the order of 22 percent. If you spend $50 per week on gas, that's about $572 in taxes you're paying each year. (On top of federal, state and local income and other taxes.)

This is usurious by any standard. And it's made all the more obnoxious given the fact that gas is as much a necessity for the average person as groceries. Indeed, most people have no choice but to use their cars (and thus, burn gas) in order to buy groceries.

But no quarter is given -- literally. If anything, the politicos typically call for more and higher gas taxes. This is supposed to be an incentive to lower consumption -- but if that standard were applied to milk and cheese, there would be a massive public uproar.

And yet, no one really complains. "Big Oil" gets all the grief instead.

Now, at least ExxonMobil performs the useful service of finding crude oil, drilling wells, transporting it, refining it into gas and other useful products, distributing it, and selling it so that you and I can continue to drive and heat our homes.

What exactly does our government do for their cut?

Ludwig von Mises put it best (paraphrasing "Human Action"): Government exists to use its monopoly on violence to create economic shortages.

And that's precisely what they're doing with gas taxes---trying to inflate the price (and their own coffers) to drive down demand for a commodity they don't particularly care for you and me to use.



Blogger Vigilis said...

"This is usurious by any standard."

Teflon, truly an excellent post! Perhaps you are unaware (the alert press never informed us) that the terms "unconscionable" and "usurious" pertaining to financing rates at banks, credit card issuers, and other lenders have been deleted from modern contracts and state regulatory requirements?

How did this happen? Parasitism has increased as we now have more hungry lawyers (over 7,000,000 graduates in today's U.S. workforce) than ever, and they are as greedy and aggressive as ever, but with greater political leverage than ever before.

Our very worst enemies actually lurk within. Just a thought.

8:14 PM  

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