Gas Taxes

Something to think about, the Federal Government charges an 18.4 cent per gallon tax on gasoline, and a 24.4 cent per gallon tax on diesel. State taxes averaged 21.5 cents per gallon NOT including sales tax. 11 states charged additional sales tax (link). The average U.S. gas price as of May 19th 2008 is $3.791, and they have gone up in the last few days, and probably will keep going with the holiday weekend (link). Working with the number of $3.791, with a moratorium or repeal of taxes on gasoline, the price would be down to about $3.391 for a national average. This would be a huge boost to the economy, since it would cause prices across the board to fall slightly, and therefore drive up demand. Everything that is sold in the United States uses some gasoline at some point in its' production, transportation, and inputs; which also require gasoline. Lowering prices of gas by forty cents would lower production costs of food, shipping costs for all goods, costs for services, and government costs. This subject is also discussed here. Illinois adds a 6.25% sales tax to a 19 cent per gallon flat tax, which using the numbers you just saw, puts it right at an average 3.792. Some states have a higher flat tax, and others charge more sales tax. Cut the taxes, and boost the economy. Even if income taxes needed to be increased to make up the revenue, the psychological effect of lower prices will make it worthwhile.