Four big problems with Biden’s 3-month gas tax holiday

WHAT YOU NEED TO KNOW:


  • President Joe Biden on Wednesday called on Congress to pass legislation that would create a federal tax holiday on gas and diesel fuel for three months.
  • Biden’s approval rating continued to drop due to the high price of gasoline and other products.
  • A chief strategist at AGF Investments laid down four problems why Biden’s proposed 3-month gas tax holiday ” is a bad idea.”

President Joe Biden’s approval rating continued to drop due to the high price of gasoline and other products. U.S. inflation is at 8.6% and gasoline prices average $5 per gallon.

While any president cannot do much about persistent inflation, the president wanted to show he’s trying by calling on Congress to pause the federal gasoline tax for three months.

On Wednesday, Greg Valliere, chief strategist at AGF Investments, wrote in his morning newsletter: “Rarely has a presidential proposal encountered such horrible reviews.”

Valliere laid out four reasons why Biden’s 3-month gas-tax holiday proposal “is a bad idea.”

1. The savings would be minimal. 

Right now, the federal gas tax is 18.4 cents per gallon. If Congress paused the tax and the savings went entirely to consumers, the cost of filling up a 15-gallon will drop from $75 to $72.24 — consumers will save $2.76.

However, consumers will not likely get the entire savings. Some states have suspended state taxes on gasoline, and the Penn Wharton Budget Model found the portion of the savings that went to consumers ranged from 58% to 87%. The rest of the savings went to producers. So if consumers get about 75% of the benefit of a gas tax holiday, prices would drop by about 14 cents per gallon, or about $2.10 per 15-gallon gas.

2. It will surely increase the demand for gas. 

If the gas-tax holiday enticed consumers, then they might buy more gas. The increase in demand puts upward pressure on prices. Economically, it’s counter-productive because demand needs to fall in order for prices to drop.

3. It would take money from the federal highway fund. 

Federal revenue from the gas tax goes directly into the trust fund used to finance the construction, maintenance and repair of highways and other types of infrastructure. For every month a gas-tax holiday is in effect, the infrastructure fund would lose more than $2 billion.

According to Biden, there’s plenty of money for highways from other sources. However, the mood in Congress at the moment is squarely against deficit spending, which in theory can make inflation worse.

4. It is not likely to pass in Congress. 

In March, House Speaker Nancy Pelosi said she is not in favor of a gas-tax holiday. Sen. Joe Manchin opposes the measure, as well. Sen. Tom Carper of Delaware, a close Biden ally, said Tuesday that a gas-tax holiday is “shortsighted and inefficient.”

If Biden can’t get all Democrats to support the legislation, there’s no chance Republicans will back him up.

Source: Yahoo Finance

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5 thoughts on “Four big problems with Biden’s 3-month gas tax holiday

  1. And besides, whatever, so called “savings” to the consumer would be lost to the supplier. We’d still be paying the full rip off price! Democrats got all the money they lost in the Trump Era back in less than 2 years…..the next two years will be ALL profit for the worthless, thieving losers. Choke on your greed, scumbags!

    1. The price isn’t a rip off. It’s the cost associated with supply and demand. Decrease supply, price goes up. Increase demand without increasing supply, same thing…price goes up. The only, THAT’S ONLY WAY to lower gas price, or ANY commodity for that matter, is to increase supply that is more than the current demand.
      The rip off here is our President In Name Only, and his deliberate act to kill fossil fuels in the US so that he gets the backing of the Radical Left Environmental Knotheads and his, and their, buddies, in the wind and solar industry so they can make a killing profit wise. It’s nothing more than a legislated coup to make a monopoly on the energy sector. I’m not opposed to wind and solar energy but it needs to compete with it the current suppliers and make it’s own way, just like they did decades ago. But I don’t believe with our current abilities it has any chance of EVER taking over other methods of electrical supply. And probably NEVER will be able to handle the charging load of the electric modes of transportation they are trying to mandate we buy and use. You can’t control the source that powers that type of energy. Mother Nature can easily sticks it’s ugly mitts into the process and shut down that type of energy production.

  2. Both sides are so hypocritical it’s sickening. When republicans proposed a gas tax holiday they said it was a great idea and democrats were strongly opposed. Now Biden wants to propose a gas tax holiday and the same republicans are opposed while the same democrats are in favor. These people (both sides) just want to oppose each other and the hell with doing what’s good for the country.
    The only real solution is to open up Keystone and reduce regulations and become energy independent again. These people who hate big oil and want them to pay higher taxes are idiots. Who do you think is going to pay for tax increases on oil companies. You’ll find out when you fill up your tank.

  3. No matter what the democRATS do to try to make AMERICANS feel good,I doubt that AMERICA will ever again be as prosperous as it was under President Trump.The radical left intends to destroy AMERICA and the democRATS are going right along with them.

  4. Quote from above “If Biden can’t get all Democrats to support the legislation, there’s no chance Republicans will back him up.” I’m afraid that statement is a little short sided, considering the 14 RHINOs who show support for the proposed gun bill. I think it may come down to how deep they are in the Swamp, if any of them are accepting ‘payments’ that would change how they would otherwise vote, or if anyone has the ‘goods’ on them. I mean, a Republican Senator from the state of Texas voting for ANY STAGE OF ANY KIND OF BILL, about guns or not, that has any mention or Red Flag Laws being incorporated in it is slapping the face of every Conservative in the state after spitting on them. So no, I don’t see anything our of the realm of possibility any more.

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