Taxation for Cruisin' the Nation

As gas prices are at an all time high, consumers are questioning what can be done to reduce the hike. Economists suggest that to decrease the price of gas, it is a simple supply-demand equation, meaning Americans should use less gas to decrease the demand and the price will drop. But how can members an automotive-driven society be encouraged to drastically reduce the number of miles they put on their vehicles every year?

One suggestion that economists make is that “the government should phase in a tax on gasoline to give drivers an incentive to travel fewer miles and use the revenue to develop mass transit and increase research in alternative methods of propulsion.” Taxing gasoline began in America on June 6, 1932 when congress enacted the Revenue Act of 1932. While this act taxed a variety of consumer goods, a 1¢ per gallon on gasoline included by Congress.

Today, gas taxes are determined both on the federal and state level and can be more than 25¢ per gallon on gas purchases. Could an increase in taxes on gas really solve the gas price hike or encourage Americans to search for alternative transportation measures?

Congress searches for phony villains in gas price hike

This Day in History 1932: First Gas Tax Enacted