tag:blogger.com,1999:blog-10424035.post8154600944540849247..comments2023-09-11T08:58:24.710-06:00Comments on Reach Upward: UDOT Seeks Hidden Massive Tax Increase for UtahScott Hinrichshttp://www.blogger.com/profile/11831447472339880148noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-10424035.post-88677807129055525542008-12-08T22:34:00.000-07:002008-12-08T22:34:00.000-07:00The weak point in my argument is that Utah does no...The weak point in my argument is that Utah does not have enough economic clout to affect world prices. <BR/><BR/>The argument I had would only work on a national level where the added increase in gas tax would spur enough conservation to actually affect the price.<BR/><BR/>That is why I premised the first reply on the state of Utah's gas production.<BR/><BR/>Utah is a weird place because our energy production and consumption are fairly well balanced. Our local concerns should be driven by the makeup of the local energy supply. If the summer time spike in usage is causing capacity problems, then we would want the percentage increase. If the annual winter inversion is a bigger concern, then we would want the fixed rate tax to keep prices from falling and encourage waste during the winter.<BR/><BR/>FYI, I linked to to this post on my <A HREF="http://blog.yintercept.com/2008/12/smart-energy-future.html" REL="nofollow">blog</A> (and I added a stock image photo of a skier).y-intercepthttps://www.blogger.com/profile/03389285761013186443noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-52798806385281084132008-12-08T15:28:00.000-07:002008-12-08T15:28:00.000-07:00I can actually ski cross country, but I'm a lousy ...I can actually ski cross country, but I'm a lousy water skier. Besides, I can't fathom owning and operating a boat. The competition to get a spot on the lake is getting fierce anyway. I have brothers that own skiing boats, but I have concluded that the biggest vessel I can enjoy owning and operating is a (human powered) canoe.<BR/><BR/>I see what you are saying about people looking at the total price and the price break point being reached either way. However, I do not believe taxpayers would sit idle and watch their effective gas tax rate increase by 200-300% (or more) when federal policies drop the value of the dollar so low that oil prices shoot through the roof. You'd see tax revolts.<BR/><BR/>Of course, Gov. Huntsman probably assumes that he would be out of office by the next time we see the kind of price fluctuations we've seen recently. So that would be his successor's problem.Scott Hinrichshttps://www.blogger.com/profile/11831447472339880148noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-77212147484005104422008-12-08T15:07:00.000-07:002008-12-08T15:07:00.000-07:00The summer increase in gas prices is predictable. ...The summer increase in gas prices is predictable. It happens every year. As road budgets are done on a yearly basis, the budgets will include both the peaks and the valleys.<BR/><BR/>The big problem is year on year budgets as there are business cycles involved in gas prices. UDOT should be budgeting over a moving average of years.<BR/><BR/>BTW, government taxes designed to soften natural fluctuations in prices have as much (if not more) of distorting effect than taxes pegged to natural fluctuations.<BR/><BR/>The energy sector is driven by peak capacity calculations. Expanding peak capacity is horrendously expensive.<BR/><BR/>In macro economic classes, professors force students to stare at supply and demand curves. <BR/><BR/>In situations where an industry hits peak capacity, you will find that prices will rise until demand ebbs.<BR/><BR/>A percent based tax would have pushed the market over that price point early.<BR/><BR/>Your post acts as if gas spike this summer was the primary problem to solve. I think the fact that our tax system was distorting the fluctuation in gas prices created greater problems for us because it had reduced our ability to handle price fluctuations.<BR/><BR/>The peak price with a percent based system would not be much higher than one with a fixed penny tax because, people, responding to price signals, would be better at pulling back demand during peak capacity days.<BR/><BR/>The fixed tax distorts the price signals that would otherwise cause people to move activities from peak capacity days to lower capacity days.<BR/><BR/>For example, I might put off my annual September waterskiing trip from September (when gas prices are high) to mid January (when gas prices are low)<BR/><BR/>... err, uh, since the lake appears to be frozen, I can cross country ski on it saving even more energy!y-intercepthttps://www.blogger.com/profile/03389285761013186443noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-54444111695759541462008-12-08T09:36:00.000-07:002008-12-08T09:36:00.000-07:00I disagree. As I stated, planning and executing r...I disagree. As I stated, planning and executing road maintenance and construction projects requires as much stability as possible. It is far more costly to try to turn them off and on with wild fluctuations in revenues — which is what would happen if taxes were pegged at a percentage.<BR/><BR/>If taxes had been so formulated, UDOT would today be facing a massive shortfall instead of a relatively minor shortfall. They'd have to shut down almost everything other than snow removal and emergency service (except I'm sure they'd find a way to fund their executives' salaries).<BR/><BR/>The suggestion that it is the appropriate role of government to further distort economic swings is simply bizarre.<BR/><BR/>We are not dealing with the historical 20% price shifts during summer peak demand season. We are talking about extreme price shifts that wreak serious economic damage. Government gouging during those times should be condemned much more than any condemnation of record oil company profits during such swings.Scott Hinrichshttps://www.blogger.com/profile/11831447472339880148noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-52288213372819870512008-12-08T01:04:00.000-07:002008-12-08T01:04:00.000-07:00There is a big swing in gas prices every year ... ...There is a big swing in gas prices every year ... gas prices always go up during the driving season (summer). Smart businesses already know this and account for it in pricing.<BR/><BR/>I think the make up of the local gas production system should be the determining factor in the question of fixed tax v. percent tax. If we are pegging the maximum production capacity each summer, then the percentage tax is best because it would be encouraging conservation when conservation does the most.<BR/><BR/>Since the spikes in gas prices spur people to conserve, the fact that the percentage tax magnifies volatility would be a good thing as well.<BR/><BR/>Perhaps if we had a percentage tax, people would not have been quite as shocked with the 2008 summer gas price spike.y-intercepthttps://www.blogger.com/profile/03389285761013186443noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-65652102689956618792008-12-06T23:21:00.000-07:002008-12-06T23:21:00.000-07:00This is a great blog. Keep up the good work! I'll ...This is a great blog. Keep up the good work! I'll be checking back and forth for updates! God bless!Seth Adam Smithhttps://www.blogger.com/profile/11404644644184200881noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-12842680368989088382008-12-05T08:47:00.000-07:002008-12-05T08:47:00.000-07:00Thank you for the correction. Vehicles over 10,00...Thank you for the correction. Vehicles over 10,000 lbs gross weight do pay state fuel tax for the miles they travel within the state. That's one of the reasons they have those weigh stations near the borders.Scott Hinrichshttps://www.blogger.com/profile/11831447472339880148noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-49265501745887140532008-12-04T23:24:00.000-07:002008-12-04T23:24:00.000-07:00You're wrong about the way truckers pay diesel fue...You're wrong about the way truckers pay diesel fuel tax. Even if they fuel up in Evanston and drive all the way to Wendover without filling up in Utah, they still pay gas taxes in Utah. It's a complicated formula, but truckers pay state gas taxes based on mileage in the state, not where they get their fuel.Unknownhttps://www.blogger.com/profile/16614087917247086736noreply@blogger.com