Thanks to the little brother, I got this from Washington Post. Charles Krauthammer is advocating a gas tax in the form of a price floor. He tosses out the number $3 for the sake of argument, and suggests that when gas is selling for less than that, every penny of “excess” between the market price, and the price floor, should be diverted somewhere else, like the general fund, or social security replenishment, etc. I thought to myself, “Interesting.” But it is a slippery slope, as governments are prone to become dependent on taxes of this sort – as the tax revenue falls with rising prices, they will seek to raise the “price floor” in order to hold constant their tax revenues.

But the more I think about it, there is an even greater economic question:

How do you determine what the price would be absent the artificially created price floor? To do so, would require a bureaucratic body that would arbitrarily define and absolutely regulate the profit margins of every gas station in the country. This runs contrary to the foundation of free markets, life, liberty and property rights.

I claim shenanigans on Krauthammer. It is impossible to determine a market price for a commodity, when you eliminate the functions of the market.

I’ll leave you with the final thought, from the same Tax Foundation that I’ve previously cited:

“Unlike the highly volatile path of industry profits, gasoline taxes exhibit steady growth with little regard for changes in the U.S. economy. As lawmakers respond to rising gas prices, they should keep in mind the importance of state and federal gasoline taxes in comparison with oil industry profits.”