A little while ago, Kip refuted the mistaken notion that prices are taxes. Prices are not taxes, they are prices. You’d rather read his post than my digression.

Gary Becker, apparently wasn’t reading KipEsquire that day. It seems to me that Becker is equivocating market prices with taxes. See for yourself:

Federal, state, and local governments of the U.S. combine to impose taxes on gasoline of about 60 cents per gallon. Studies by Resources for the Future suggest that this is more than adequate to cover all effects of pollution, aside perhaps from some larger estimates of the effects of gasoline consumption on greenhouse warming. The purpose of gasoline taxes is to cut consumption by raising gasoline prices to consumers, but the $1 increase [due to market forces] in gasoline prices during the past year has cut gas consumption. These higher prices, if they stay, will cut gasoline usage much further as consumers have more time to adjust their behavior. If the optimal tax on gasoline was $1 when gasoline sold for $2, the effective tax is now $1.60: the 60 cents imposed by governments and the $1 increase due to market forces. So, if anything, this argument suggests that gasoline taxes be reduced rather than increased while prices are so high.

Now, Gary Becker is much smarter than me, and I do not wish to represent anything to the contrary – so it’s quite possible that I’m mistaken in my analysis of his commentary. Perhaps what he meant to say is that the market increase in gas prices has had the net effect of diminished consumption that one would expect from a similar increase in price due to increased taxation. And this may very well be the case.

But until we can demonstrate some sort of fiscal responsibility, any notion of a tax-cut is pretty much useless – it’s really just a deferred payment (plus interest & penalty.) If you think we won’t have to pay it back (and then some) at a later date – I want some of that kool-aid.