Debunking the Gas Tax Holiday

Both Senators McCain and Clinton have stated that they support a suspension of the federal gas tax from Memorial Day to Labor Day. This tax is approximately $0.18 per gallon of gasoline. At first glance, this looks like a nice little break at the gas pump, however, this break is about political pandering for votes and not about smart policy. As it turns out, it is gas producers and retailers who pay this tax, and there is no guarantee that this savings would be passed down to consumers. I have read and heard estimates that this "tax holiday" would likely amount to a total savings of $18 to $30 for the consumer. One side of effect of this suspension is that it would take money away from construction projects to improve the condition and safety of our transportation infrastructure. (Have people already forgotten about the I-35W Mississippi River bridge collapse last August?) This would then create a decrease in the amount of construction, an industry already hit by the housing crisis, and cause a loss of jobs (up to 300,000 according to a Newsweek article). I don't know about the rest of you, but it just doesn't sound worth it to me. Obama's solution to ease the burden at the pump is to create a permanent $1,000 tax rebate for working families. Here are some other articles with more information on the gas tax holiday.

www.taxpayer.net
Newsweek
Washington Post 1
Washington Post 2
New York Times