12 Feb 2013

An Odd Proposal to Tax Oil, From the CFR

Economics, Oil, Shameless Self-Promotion 14 Comments

In this IER post I take on a new paper (published through the Council on Foreign Relations) to impose a $50/barrel tax on crude oil. Some excerpts:

The Council on Foreign Relations (CFR) recently released a study by Daniel Ahn and Michael Levi showing how a new tax on oil—which would ultimately raise pump prices by $1.20/gallon—might benefit Americans. The two main reasons were: (a) right now oil is too expensive, so taxing it would help, and (b) The revenue from a new oil tax would allow the government to spend more money, thus making the economy stronger. If the reader has not yet fallen out of his or her chair, in the rest of this blog post I’ll show that I’m not making this up.

Step back and think about what that means. The CFR study is saying that if the government slapped a $50/barrel tax on oil, which works out to $1.20 per gallon of gasoline, and if it then used all of the revenue to increase government spending, then this would help the economy over an 8-year-period.

One might ask, almost in jest, “Well if a new oil tax of 1.5% of GDP is a good idea, why not make it bigger?”

Fortunately, the CFR study does just that. In the next section, they “demonstrate” that doubling the oil tax to 3% of GDP—i.e. $100/barrel of crude, or $2.40/gallon—and using all of the revenue to fuel government spending, would make the economy grow even faster, and create more jobs, than the Variation 1 from above.

14 Responses to “An Odd Proposal to Tax Oil, From the CFR”

  1. The Existential Christian says:

    Why stop at 3%? If the benefits are so huge, make it 50%, or even higher!

  2. Major_Freedom says:

    CFR = Communist Frickin Retards.

  3. Tel says:

    Fortunately, the CFR study does just that. In the next section, they “demonstrate” that doubling the oil tax to 3% of GDP—i.e. $100/barrel of crude, or $2.40/gallon—and using all of the revenue to fuel government spending, would make the economy grow even faster, and create more jobs, than the Variation 1 from above.

    Ha ha, there’s only one way out from here… take that step through the looking glass.

  4. Kevin L says:

    Why stop at oil? Why not tax virtually every good at every step of production and distribution? We could give it an innocuous sounding name like Value Added Tax, so it sounds like the tax is adding value. And then we could use that huge tax increase to spend more on transfer programs, and our economy would be as strong as Europe’s!

  5. konst says:

    What can you say about the CFR and their proposal but that they must be mentally challenged to think that is logical. They’re not living in the real world.

  6. Gamble says:

    Satan is an awesome liar.

  7. Denny says:

    I sometimes think it would be a great idea to let these nut-cases try these schemes just to demonstrate how foolish they are.

    Sadly, all the resulting failures would be pinned on the usual suspects. Free markets, lack of regulation, China, weather etc.

  8. Cody S says:

    Not even that. They wouldn’t be failures!

    It would be much, much worse if we hadn’t taxed the oil.

    Try and disprove that.

  9. Max says:

    Isn’t the main idea that an oil tax could benefit oil importing countries at the expense of oil exporting countries? (Maybe this is too politically charged to state directly…?)

    • Jack says:

      Don’t conflate definitions. Some governments will benefit (or not, depends if they tax succesfully, meaning not killing the goose in the process), no country will benefit.

  10. Matt Tanous says:

    “right now oil is too expensive, so taxing it would help”

    Wha? I knew the CFR was a bit dense, especially with not being able to understand blowback, but this is just too much.

    • Yancey Ward says:

      I am reminded of a guy holding himself hostage.

  11. devo says:

    oh dear god, thanks for this, i cant shoot the messenger, but holy shit. the serious ignorance governing us, and the apathy that’s abundant, is such a buzz kill :/

Leave a Reply to devo

Cancel Reply