Thoughts on Biden's "Gas Tax Holiday" Proposal

I hate taxes.

I'm all for any non-taxation, including "holidays" on particular taxes. So yay, Biden.

Now, will the proposed federal gas tax holiday have a huge effect on people's lives?

On a quick search -- I'm sure the number has changed since 2017, but I assume not terribly much -- American drivers use an average of 656 gallons of gasoline per year.

That's 12.6 gallons per week.

The federal gasoline tax is 18.4 cents per gallon, so the "holiday" would produce a savings of $2.32 per week for each American driver.

Well, it ain't nothin'.

But neither is it really anything to write home about.

One argument I've heard against it is that it would be "inflationary."

I guess it would be, in two senses.

Inflation is more money chasing fewer goods/services, and writ large it's a matter of how many new dollars the Federal Reserve creates versus production of goods and services.

At the micro level ("price inflation"), well, you now have $2.32 more in your pocket after you buy gas than you otherwise would have, and you're presumably going to spend it on stuff that you wouldn't have spent it on otherwise. So there will be an additional tiny increment to the already ugly "price inflation."

At the micro level -- the Fed creating new dollars -- the question is:

Is the federal government going to cut its spending by the amount of revenue it's no longer bringing in due to the gas tax holiday?

And the answer is:

Sure, and if you believe that, I would like you to also know that the word "gullible" is written on the ceiling.

Government spending is going to keep on rolling.

Instead of collecting gas tax revenues, they'll just borrow that money on top of all the other money they're already borrowing.

Which means that the Fed will wave its magic wand and create even more dollars out of thin air, even though there's not any likely corresponding increase of production of goods and services in the economy.

Which means inflation.

If I had to guess, that inflationary effect will hit your wallet for at least a good chunk of, if not more than, your $2.32 weekly windfall.

So yeah, I guess the "gas tax holiday" is just feel-good do-something-anything bullshit.

But I still like non-taxation, including "holidays."