MIDDLE SCHOOL MODEL CONGRESS 2006
Committee: Energy and Commerce
Principal Authors: Joseph Satran
Bill No: HB-EC-11100602
Co-Authors: Shira Atkins
Title of Bill: An Act to increase the Federal Tax on Gasoline
BE IT ENACTED BY CONGRESS ASSEMBLED
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Preamble: Whereas the price of gasoline in the US is too low, whereas this low price causes
very high consumption, whereas this high consumption increases greenhouse gas emissions
and hence global warming, whereas gasoline consumption leads to economic dependence on
unstable and corrupt regimes abroad, whereas there is a massive budget deficit in the
Federal Government, whereas traffic has become endemic in many areas, whereas a higher
gasoline tax would lead to higher prices and lower consumption of gasoline, whereas higher
gasoline taxes would also lead to less traffic congestion and lower prices for oil, if not for
gasoline,
1. A $1.40 tax shall be levied on each gallon of gasoline sold within the United States.
The tax shall be implemented over the course of the next seven years, rising $.20 per
year until 2013.
2. This bill will take effect in 91 days.
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Middle School Model Congress 2006 Brief
House- Energy and Commerce Committee
Taxes on Gasoline
Hi everyone, welcome to Middle School Model Congress 2006. I'm Joe Satran, and I,
along with my co-chair, Shira Atkins, will be chairing your committee. Our committee is a cool
one; the name may sound dry, but the debates can get very heated.
The first of our two topics is Taxes on Gasoline. Everyone knows that global warming is
a big issue- scientists estimate that global average temperatures will rise between 2.5 and 10.5
degrees Fahrenheit between the years 1990 and 2100. And certainly, people know that America's
dependence on gasoline is a problem. In his 2006 State of the Union address, George Bush said
that, “America is addicted to oil, which is often imported from unstable parts of the world,” like
Saudi Arabia, Venezuela, and Libya. This is a problem for several reasons- it costs money to
import oil, and it makes us support leaders who are doing bad things to their people, including
sometimes supporting terrorism.
At the same time, the United States government is facing the biggest “budget deficit” in
its history. This means that the amount of money the government spends, on things like war,
education, and Social Security, is much greater than the amount of money it receives from taxes.
Though this isn't a big problem in the short run- it can borrow money from people all around the
world- it could hurt the US economy in the long term, as fewer and fewer people become willing
to lend the government money. Thus, the government must think of a way to either cut spending,
never easy, or raise taxes, often even harder.
Economists and some policy makers have suggested a solution to both of these problemsa higher federal tax on gasoline. They propose to put a large tax on gas, which will theoretically
force people to cut down on their driving, thereby reducing emissions of global warminginducing greenhouse gases, and help raise revenue for the federal government. Supporters of this
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tax, including former Federal Reserve chairman Alan Greenspan, former Vice President Al Gore,
and high-profile Economics professsors from Greg Mankiw to Nobel laureate Gary Becker, point
to the fact that many other Western countries have far higher gasoline taxes than the US, and as a
result consume less gasoline. Foreign Policy magazine illustrated that point with the following
graph, which shows a clear link between higher taxes and lower gas consumption:
At the same time, they argue that a gasoline tax could help reduce that price of the actual
oil. If gasoline taxes spread throughout the world, it will reduce the amount of gasoline being
bought from oil-producing nations. This in turn will, under the laws of supply and demand, a
basic principle of economics, will reduce the cost of oil. This is shown in the graph above by
comparing the “Cost of Oil” in the UK to that in the United States. Because the tax on gas is
higher in England, the price of oil itself is lower, even though the final cost to the consumer is
higher. In this way, a higher gasoline tax could transfer money from oil-producing countries to
the governments of oil-consuming countries.
On the other hand, there is very little political support in Congress for higher gasoline
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taxes, for one simple reason: no one wants to pay more for already expensive gas. The opponents
of the tax argue that a higher tax on gasoline will hurt the poor the most, because they are the
ones who spend the most of their money on gasoline, while the rich will have no problem paying
the tax. Some of the people against the higher tax claim that global warming doesn't even exist,
and so there's no need even to address it. Others admit that global warming is a problem, but are
in favor of regulations on things like gas mileage of cars instead of a higher gasoline tax.
Your task is to analyze the facts, and think of a strong position on the topic, which you
will argue at the conference, which will take place on December 14th. I've included a fair amount
of information, but there's plenty more to learn if you want to be on top of your game at MidMC.
I've pointed out some sites to look into at the bottom of this page. If you have any questions, feel
free to e-mail me at MonsieurSatran@comcast.net. Thank- I'm looking forward to meeting you
all!
For more information:
The biggest supporter of the tax is Greg Mankiw, a Harvard economist. He has an excellent blog
at http://gregmankiw.blogspot.com/, which you should read anyways, but here are some
highlight posts that relate to the gasoline tax:
http://gregmankiw.blogspot.com/2006/10/pigou-club-manifesto.html
http://gregmankiw.blogspot.com/2006/11/posner-in-pigou-club.htm
http://gregmankiw.blogspot.com/2006/06/is-gas-tax-regressive.html
Search around that blog, and you'll find lots more.
There are also some good articles from other news sources:
http://www.nytimes.com/2006/10/08/business/yourmoney/08view.html?ex=1317960000&en=3a
749625ac447e79&ei=5090&partner=rssuserland&emc=rss
http://www.slate.com/id/2153390/
Here's some support on the other side, against the tax:
http://nopigouclub.blogspot.com/
http://www.mises.org/econsense/ch59.asp
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And, finally, some basic background information, from the ever-classic wikipedia:
http://en.wikipedia.org/wiki/Gasoline_tax
http://en.wikipedia.org/wiki/Petroleum
http://en.wikipedia.org/wiki/Supply_and_demand
http://en.wikipedia.org/wiki/Pigovian_tax
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