RugbyD wrote:Matthias wrote:RugbyD wrote:the free market works best when it is distorted the least. raising taxes is distortive, especially when it is done in punitive, behavior-influencing or social engineering fashion.
If this is a theoretical way of saying that raising taxes on gas is bad, I don't think it could be more incorrect.
Proper economic models take account of externalities so that harmful behavior isn't priced too low. It's indisputable that harvesting and using fossil fuels has a negative effect on the environment and by extension the social good. Not levying a tax, or even levying too low of a tax, on this distorts the free market and results in a level of consumption that is greater than would be socially optimal.
The proper way to price this tax would be precisely by social engineering. How much harm is each unit of this good doing? How much lower than that optimum price is it now? The difference should be a tax.
Econ 101, my man.
The negative externalities are neither measurable nor material (debatable on #2, i know) in a non-traceable aggregate sense, so there is no way to determine proper pricing even if there was one. To the extent that environmental harm is specifically traceable and measurable in a micro sense, like runoff into a water supply, private property litigation can rectify financial comp, which would then be passed on to users via higher prices.
I'm ok with gas taxes as a means of funding roads as a kind of user fee though. Taxes to influence behavior are never justifiable from a (my) philosophical standpoint.
If you don't think that carbon emissions are harmful to the environment, then we can just agree to disagree.
But don't dress your environmental beliefs in incorrect Econ theory. Because taxes to properly price negative externalities, especially in cases where the transaction costs to detect, measure, and prove the harm is very high, is absolutely a societal maximizing action. And taxes to reflect the true cost of a good are behavior influencing, which is the whole point. The models don't work any other way.