Do Falling Gas Prices Decrease Tax Revenues?
• The other day, I read an article in which the author indicated that one of the problems with falling gas prices is that they decrease the gas tax revenues of the federal government as well as those of state and local governments. Nothing could be further from the truth. Actually, just the opposite would likely be true. Although obviously a very intelligent person, the author made the all too common mistake of thinking that all that taxes are based on percentages. Most taxes, including the income tax, are. However, gas taxes aren’t based on a percentage of anything. If they were, the author would have been correct in his assumption. Instead, they are levied as a fixed amount per gallon, regardless of the price per gallon.
The other day, I read an article in which the author indicated that one of the problems with falling gas prices is that they decrease the gas tax revenues of the federal government as well as those of state and local governments. Nothing could be further from the truth. Actually, just the opposite would likely be true.
