Tepper School of Business at Carnegie Mellon News
Forget Gas Tax Cuts: Economist says $3.50 Gas Tax Increase Would Reduce Consumption, Boost National Security and Stimulate the Economy
PITTSBURGH, April 15 PRNewswire — WHO: Lester Lave, Professor of Economics at Tepper School of Business at Carnegie Mellon, Co-Director of Carnegie Mellon Electricity Industry Center. Lave discusses his proposal on YouTube at http://www.youtube.com/watch?v=Q2iYuoO6z1M (Logo: http://www.newscom.com/cgi-bin/prnh/20070425/CARNEGIELOGO) WHAT: Lave says a $3.50 per gallon tax on fuel (bringing the price of gas in line with prices in Europe and Japan) would promote energy consumption and reduce the transfer of U.S. wealth to oil-rich nations. He proposes using the gas surcharge to \"forgive\" Social Security payroll taxes on the first $20,000 of income — generating revenue for the U.S. Treasury and boosting consumer purchasing power, concentrating benefits on the working poor. \"Based on the average American's purchase of 500 gallons of gas per year, the surcharge would generate about $540 billion in revenue, whereas the forgiveness of the Social Security payroll tax would cost only $468 billion,\" says Lave. \"Not only would this strategy reduce oil consumption, but the Treasury would realize a net gain of $72 billion. The program would also be advantageous for wage earners of all levels. For example, an individual earning the minimum wage would receive an additional $2,004 in income annually while spending only $1,750 more on gas per year.\" Lave believes that while this approach may not be a permanent solution, such market incentives are the only real way to achieve more immediate changes in consumer behavior and move the U.S. toward a more independent energy policy, steps he believes are critical to national security. WHY: Professor Lave is a leading authority on energy economics and has consulted for a wide range of companies and organizations, including the FTC, EPA, Xerox, Rand Corporation, Mead, General Motors, Cummins, Witco, and the U.S. Departments of Justice, Transportation, Labor and Defense. Professor Lave is a member of the Institute of Medicine of the National Academy of Science, and has been a member of the Environmental Protection Agency's Science Advisory Board since 1986. AVAILABILITY: Anytime, via phone or on-camera/live interview CONTACT: Geof Becker or Sharon Horowitz (412) 268-3486 / (212) 220-4444 gbecker@andrew.cmu.edu / sharon.horowitz@gabbe.com
SOURCE Tepper School of Business at
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