The Answer in Two Parts: Part II

It looks like the only way to have an effective energy policy is to do so at an unacceptable cost. Consider the following.

What if Uncle Sam made you the following offer.

“Look I want to raise your gasoline tax by $1/gallon. That will cost you about $500. I (Uncle Sam) will give you up front $500 if you let me raise the tax on gasoline $1 for one year. I expect I will collect about $500 in taxes during that period and am willing to pay you up front.”

“After six months I (still Uncle Sam) will give you approximately $1000 if you let me increase the tax by an additional $1(now the tax is $2.00/gallon) for the next year. Now it is approximately $1000 because if I collected a little more than $500/consumer in the first six months I will give you a little more than $1000. If I collected a little less then I will give you a little less. However, every penny that is collected in tax will be returned in a rebate.”

One year later I will give you approximately $1500 and the tax will be $3/gallon.

Again every penny that is collected in the tax is returned in the rebate but it is done at a flat rate no matter how much energy you use.



So if you drive a Hummer and pay $3000 in energy taxes you get a $1500 back.



If you take the bus and pay $50 in energy taxes you still get $1500. Advantage busrider.


Everyone who pays the tax gets a rebate.

They could be rebated through:
· payroll tax reductions;
· increased social security payments;
· increased welfare payments.

The only other caveat is that the tax and the rebates would be COLAed.
That is they would increase with the cost of living, preventing the tax shift from
being diluted by inflation.

So now you have comprehensive energy plan which by design has no net cost to the consuming public. But how good a plan is it? Just about perfect.