Charles Krauthammer has an important piece in the Weekly Standard joining those calling for an increase in the gas tax in the US compensated for by an equivalent reduction in the payroll tax. Here’s what he is proposing:
“A net-zero gas tax. Not a freestanding gas tax but a swap that couples the tax with an equal payroll tax reduction. A two-part solution that yields the government no net increase in revenue and, more importantly—that is why this proposal is different from others–immediately renders the average gasoline consumer financially whole.
Here is how it works. The simultaneous enactment of two measures: A $1 increase in the federal gasoline tax–together with an immediate $14 a week reduction of the FICA tax. Indeed, that reduction in payroll tax should go into effect the preceding week, so that the upside of the swap (the cash from the payroll tax rebate) is in hand even before the downside (the tax) kicks in.
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