The Roanoke Times: RoundTable

Comments

# 1

[June 27, 2008 9:01 AM]

Other John

SPeaking of the gas price editorial...I love how the RT uses some nice statistics to completely falsify the notion that gas taxes are not paid by consumers. Problem is, a lot of folks will fall for it. You say there is no real correlation between gas taxes and the final pump price, which certainly appears to be true. BUT, any tax levied on a consumer good that is purchased by the consumer is paid BY the consumer! Who else pays a consumer tax on gas...the oil companies? They pass any taxes they pay on to the consumer and simply collect the tax revenue and turn it over to the government. It's this kind of reidiculous logic being spewed by media and schools that has kept the electorate mostly uninformed and clueless as to the real workings of the economy and government. Whatever the tax on gasoline is, be it 17.5 cents, 25 cents, of a dollar...it is being paid by the consumer...why else are there tags at every gas station on the pump saying EXACLTY how much tax per gallon is being paid out of the purchase price (paid by the consumer) to the federal and state governments?

# 2

[June 27, 2008 9:10 AM]

Dan Radmacher

OJ,

The whole point of the editorial is that the cost of the tax is not necessarily reflected at the pump because so many other factors come to bear on what oil companies can charge in any given location.

That's why the state paying the second-lowest tax in the nation actually pays a penny more per gallon than the state paying the highest tax in the nation.

Yeah, the consumer is paying the whole tax, but does that matter to the consumer if the end price of a gallon doesn't go up?

# 3

[June 27, 2008 10:04 AM]

Josh

I often think Dan just doesn't read.

As we mentioned yesterday in the Gas Tax thread, the table Dan uses reflects state excise taxes ALONE. Nothing about state sales taxes, nothing about added costs for environmental requirements which are essentially the same as taxes. These costs all come from big government.

The states which may have lower prices but higher taxes are generally within easy reach of the Gulf of Mexico, the origin of nearly half the country's refined oil.

Saying there is no pattern or correlation between taxes and prices means the RT is either too lazy or doesn't know how to glean information from the tables they use.

# 4

[June 27, 2008 10:25 AM]

Henry

Wormer.....dead
Neidemeyer....dead
al-Qaeda leader Abu Khalaf.....dead

http://news.bbc.co.uk/1/hi/world/middle_east/7477235.stm

His metabolic processes are now history! He's off the twig! He's kicked the bucket, He's shuffled off his mortal coil, run down the curtain and joined the bleedin' choir invisible!!
THIS IS AN EX-al-Qaeda leader !!

# 5

[June 27, 2008 10:36 AM]

Ed S.

For the moment I think I see what Dan is saying. Following the comment yesterday in the "pre-editorial", I agreed with the opinion that the tax would be directly reflected, and that the tax and total cost alone would could not be used as an accurate measure as there are so many other variables.

However, if I understand Dan correctly, the overall cost to the consumer may not directly show the tax because it would factor in along with the other variables. While the consumer would certainly bear the the tax (it would not fall to the company), the market price would adjust based on all of the factors. In the end, the total price will go up because of the tax, but not necessarily by the amount of the tax. Since the market swings fairly widely (I'm not going to do the statistics on market fluctuations vs the tax rate), it would likely swing significantly more just due to fluctuations than the set amount of the tax.

Personally, I don't agree with raising the tax at this point. I take the conservation approach, meaning look at cutting waste and excess first; Like I do at home, I cut unnecessary expenses before demanding a raise from my boss. However, I wanted to make sure I understand Dan's point correctly (Dan?) as I think I understand what he's saying.

# 6

[June 27, 2008 10:55 AM]

Other John

Dan, if you can enlighten me as to how that would work, I am all ears. To me, if you take a gallon of gas, currently priced 3.859 at my local Sheetz (with the 17.5 cent state tax included), and then raise the state taxes to 23.5 cents, the price is going to go up to 3.919 by simple math of adding the 6 cents to the final price. The oil companies, refiners, transporters, and station owners are not going to absorb that new 6 cent tax, so it will be directly passed to the consumer. Now if some other factors play in and simultaneously reduce the actual cost of the gasoline at the exact same instant that the tax goes into effect, that would be the only way that a 6 cent tax would not raise the final price by 6 cents.

# 7

[June 27, 2008 11:24 AM]

Dan Radmacher

Ed,

You get it exactly - and I'm not even sure that, in the end, the price will go up at all. The gas tax is just too small of an input to be reflected in the overall price.

OJ,

The data show that the level of the state gas tax does not have any correlation to the price paid at the pump. Yes, raise it 6 cents in one day, and you'll see the price go up, but soon all the other market forces will come to bear, and the tax increase will be absorbed, just as current taxes currently are.

The data don't lie: The gas tax correlation to the price of gas is .06 - which is minuscule. If the correlation were 1.0 you'd expect the price of gas to rise a penny for each penny increase to the tax. You do the math to figure out the expected impact with a correlation of .06.

Oh, and Josh is funny. When did Wisconsin move to within easy reach of the Gulf?

# 8

[June 27, 2008 11:42 AM]

Blue John

Let's look at the tax another way.

For a twenty gallon fill-up @ 3.859 the cost will be $77.18.

If the tax was raised 0.06 cents and the total amount was added per gallon, the cost would be 3.919 times the twenty gallons for a total of $78.38.

78.38 - 77.18 = $1.20 difference.

Is $1.20 out of a $78.38 purchase really too much to pay for a top notch highway system?

The problem is the gas price, not the amount of tax.

# 9

[June 27, 2008 11:44 AM]

Henry

Dan

So why not raise the tax to $5 a gallon and really make some momey?

# 10

[June 27, 2008 12:14 PM]

Blue John

Another record oil price was set today. Exxon must have put the TWO BILLION they saved from their oil spill into the futures market.

And this just in, the IRS has increased the allowable mileage charge by 0.08 cents. The rate is in effect from 7-1-08 until 12-31-08. The new rate is 0.585 cents per mile.

Meanwhile, some people are choking over the possibility of a six cents increase over several years. Seems silly doesn't it?

# 11

[June 27, 2008 12:16 PM]

BUD

and how do we get a guarantee that the "top notch highway system" is right around the corner? If the VDOT said okay at current funding we are going to do the following projects over the next 5 years... should the 6 cent increase in the gas tax occur..we will do these additional projects.. problem is from the gov--almosy any gov--that accountability is just too darn cumbersome.

# 12

[June 27, 2008 1:04 PM]

Blue John

I am not following you BUD.

VDOT has a six year plan based on need. They recently listed the projects that will be delayed, and the ones that are on track. VDOT runs a pretty lean agency now, and has been audited several times in the last few years. I used to work at VDOT, and I can tell you for a fact, that operations were and are conducted with cost savings in mind. Try working for a government agency and receiving an across the board 2.0% cost of living increase in a two year period.

I have also seen the condition of several of the bridges in our region, and can assure you that sooner, rather than later, without additional funding, we will be looking at lengthy detours around some of these structures.

It is a disgrace that the future of Virginia's Highway System has become a victim of the no tax crowd. Rest assured we will be paying, and paying dearly, in the not too distant future. One can try to dismiss the severity of the condition of our roadways with a flip comment if so desired, but we have a problem that if action is taken now, it will still take years to recover from the inaction in the past.

# 13

[June 27, 2008 2:35 PM]

Josh

Pop geography question for Dan:

What major U.S. river connects Wisconsin with the Gulf of Mexico? (Hint: It's the 2nd busiest inland waterway in the world.)

# 14

[June 27, 2008 3:41 PM]

Dan Radmacher

Josh,

How many states border the Mississippi? Do they all have cheap gas? (Actually, let me answer my own question - many of them do - 7 of the 10 Mississippi-bordering states rank in the top 10 cheapest states, which only reinforces the notion that factors other than gas taxes dictate the price of a gallon of gas.)

North Carolina pays almost a dime more in tax than Virginia, but average prices there are only a penny higher. When did North Carolina end up in better proximity to the Gulf (or the Mississippi) than Virginia?

# 15

[June 27, 2008 4:30 PM]

Other John

Dan, I don't doubt that there is no significant correlation between gas taxes and gas prices...the statistics are fairly clear on that point. But using that to say that increasing the gas tax will not increase the gas price is stupidity...because the tax will be added, levied, and paid for by the consumer. If the tax is raised by 6 cents, the total tax paid, which is included in the price, will rise by 6 cents. There is no magical mystery in how that new tax will be paid, because it is not absorbed by some hidden force that magically causes the cost of gas to go down, thereby not affecting the total price. I really wonder how you can logically claim that raising the gas taxes will not likewise raise the price...because using the tax-price correlation is not the correct arguement on the matter to begin with.

# 16

[June 27, 2008 4:37 PM]

Henry

Gas prices are more complex than that. I paid $4 in Florida and $3.85 in Va. But gas went up today. Gas prices can vary station to station.

The question is : Does the price of gas affect the price of newspaper home delivery? So far, it has not.

# 17

[June 27, 2008 7:06 PM]

Ed S.

Henry, I would imagine that advertisers bear the brunt of costs associated with the paper, and would therefore absorb most of any increased costs from fuel.

# 18

[June 28, 2008 6:53 AM]

BUD

Blue,
the point I am making is what does a citizen of Va. get for the proposed increase in the state gas tax? VDOT ought to be able to say with ALMOST certainty, with the additional revenue we can do this/ this and that on top of what is cuurently scheduled.. my point is how often have we seen an fee/tax increased with the gov promise of a situation being rectified only to be looking at the problem still existing years later.

# 19

[June 28, 2008 8:11 AM]

Josh

Dan,

We'll give this one more try; then you're on your own. OK, amigo?

Your mistake is assuming the numbers in column on the left of your table is free of state taxes.

You look at those "base prices" which appear to vary and conclude there is no relation between gas prices and the state taxes.

When you examine those numbers on the left, the "base prices", carefully, there is a pretty reliable pattern going on; that is, the farther you get from the Gulf, the higher the "base price" goes, and that appears to be the ONLY significant variant in price, other than taxes.

Base price around the Gulf is in the low $3.90s. As you move up the mid-Atlantic, it's in the $3.90s, and in New England and further west, it's just over $4.00. Any anomalies can be explained by the existence of state taxes which do not appear in your table.

Examples:

Florida. Being right on the Gulf, one would think the "base price" should be in the low $3.90s on par with Texas and Mississippi. It's $4.04. Why? In addition to the state tax, each county gets to tack on it's own, which ranges from 9 to 17 cents per gallon. Voila! Your chart shows a base price a dime higher.

Georgia: Higher at $4.00 than North Carolina, South Carolina, or Virginia. Why? Well in addition to the 7.5 cents tax shown on your chart, Georgia also tacks on a 4% sales tax. Bingo. There's your difference.

Connecticut: Most of the other New England States' show a price of just over $4 a gallon. Connecticut? A whopping $4.37. Are Connecticut's prices higher for some random unknown reason as you seem to imply? No. Try state taxes again. Connecticut takes on a whopping 26 cpg tax in addition to the 25 your chart shows. Add to that a 5% wholesale tax, also not in your table.

Virginia and North Carolina, base prices nearly the same as you would expect with NC's being a little lower; the only difference in retail price is due to NC's high state tax.

"When did North Carolina end up in better proximity to the Gulf than Virginia?"

Uhhhhh. Never mind, Dan. LOL.

# 20

[June 28, 2008 10:51 AM]

Will

What you folks don't seem to realize is that every individual state will apply taxes to any number of items in various rates. Some states choose not to tax income but will tax personal property, food, drugs, etc. Other states will tax income but offer lower state sales taxes.

At the end of the day, if you're looking at it correctly, you have to evaluate ALL the taxes imposed by the state on a resident or visitor to that state.

Weigh in other factors as to whether the state is more of a tourist destination versus a "home state", you'll find another set of tax variables.

Trying to isolate one type of tax, that being a gas tax isn't accomplishing anything.

The question comes to mind how does one intend to pay for the services and infrastructure that residents of a state have come to expect? I don't see individuals ponying up the funds to build a bridge.

If the state needs road repairs and improvement, are you going to the private sector to solicite donations Josh? I doubt it.

# 21

[June 28, 2008 1:47 PM]

Blue John

BUD

I'm with you now, and you bring up a very good point.

Va. needs a dedicated source of income for the highway dept. I also think the commissioner should not be a political appointee, rather the best candidate chosen by a qualified search committee. For years the highway budget has been the state's piggy bank, and a dedicated source should stop this practice. Last year when the fees (I love the way taxes are called fees so we don't have to call them taxes) were enacted in Northern Va., one of the county administrators attempted to use the new funding source to balance his budget (Fairfax County I think). There was an outcry from the business community, and he was stopped.

VDOT would be in a position to tell you exactly what projects could be built if they know what their budget will be. This would also make any questions of accountability easier to address.

The only way we can ever expect more from our politicians, is to use the power of our vote and throw the bums out unless they quit putting their parties before the citizens that elect and pay them.

It's hot outside, keep your beer cold!