Feb
26
2007

Tax tradeoffs may encourage energy conservation

The Congressional Budget Office has released its biannual report on budget options – 374 riveting pages of proposed changes to tax law and spending priorities. Fortunately, we have bloggers interested in this kind of stuff. Greg Mankiw notes that revenue option #48 calls for a $1 per gallon increase in gasoline tax, and, at the same time, a 2% decrease in income tax and other taxes. The net effect would be about even – what you spend in higher gas taxes you'd get back in lower income taxes.

Other bloggers think this is a cool idea. Governments have long used taxes to discourage people from spending money on things that have a negative impact on society. Making gasoline more expensive may boost energy conservation. People who drive less, or buy more efficient cars, could see some real savings.

What do you think? Should the government use taxes to encourage conservation? Leave a message.

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