A CONTRARIAN ECONOMIST FAVORS THE GAS TAX HOLIDAY PROPOSAL.

A CONTRARIAN ECONOMIST FAVORS THE GAS TAX HOLIDAY PROPOSAL. Both Hillary Clinton and John McCain have proposed that we suspend the 18 cent a gallon federal gas tax. Bryan Caplan pointed out here that almost every economist disagrees with the proposal. Caplan then says that he favors it. The reason economists oppose suspending the tax is that economic theory says that suppliers (oil companies) will pocket the 18 cents. (Kids, draw a vertical supply curve, a demand curve and then a new demand curve 18 cents below that and see what you get). Caplan supports the holiday because “the tax holiday is a relatively cheap symbolic gesture that makes truly bad policies less likely.” You could think of the proposal as a “garbage can issue”, as I posted on here, serving to distract attention from worse proposals. Caplan says, “The best we can expect is for Washington to try to channel the public’s misconceptions in relatively harmless directions.” In other words, as I posted here, “In this wicked world, we do the best we can.”