How about an immediate and permanent reduction in the payroll tax, financed by a gradual, permanent, and substantial increase in the gasoline tax? Make the two tax changes equal in present value, so while the package results in a short-run budget deficit, there is no long-term budget impact. Call it the create-jobs, save-the-environment, reduce-traffic-congestion, budget-neutral tax shift.Actually, I think the name is kind of catchy. :)
Okay, I have to work on the marketing.
On my hope list for the Obama administration, this ranks #1.
It makes no sense to me to mandate that the auto companies create high mileage cars as part of a bailout package. Instead the concession should be that they will not lobby against a gasoline tax (as they have in the past). With higher gasoline prices customers will choose to buy high mileage cars for economic reasons and no additional incentives will be needed for Detroit to build those kind of cars.
Unfortunately, Obama doesn't appear to be in favor of a gasoline tax at this moment.
via Greg Mankiw