3 ms·

As you just pointed out the tax alone is still about 100% of the base cost. Not many goods are the US are taxed like that. It works because it's a universal goo

As you just pointed out the tax alone is still about 100% of the base cost. Not many goods are the US are taxed like that. It works because it's a universal good.

wilg 3y ago
OK, but doesn’t invalidate the comparison is to another country where they tax gas more.
eesmith 3y ago
It is not about 100% but well less than 30%. "On average, as of April 2019, state and local taxes and fees add 34.24 cents to gasoline and 35.89 cents to diesel, for a total US volume-weighted average fuel tax of 52.64 cents per gallon for gas and 60.29 cents per gallon for diesel" - https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_State... In 2019 gasoline wholesale price was around $1.80 - https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMA_EPM0_PWG_NUS_DPG&f=M https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=E... 0.5264 /1.8 = 30% New York Harbor Conventional Gasoline Regular Spot Price FOB is US$2.61 per gallon today - https://www.indexmundi.com/commodities/?commodity=gasoline https://www.indexmundi.com/commodities/?commodity=gasoline . .5264 /2.61 = 20% Note that the wholesale price does not include the cost to deliver to the gas station or nor storage and dispensing costs at the station, so the percentage at point of sale will be slower than these numbers. Cigarettes are not a universal good. There is a federal excise tax on cigarettes of $1.01 per pack and state taxes from $0.17/pack in Missouri to $5.35/pack in New York, plus possible city taxes. "As of 2011, Phillip Morris lists total government revenue, including federal, state, local, and sales taxes, as 55% of the estimated retail price of a pack of cigarettes in the United States" and "[WHO] estimates that taxes make up 42.5% of the cost of a pack of cigarettes in the U.S." Numbers and quotes from https://en.wikipedia.org/wiki/Cigarette_taxes_in_the_United_States https://en.wikipedia.org/wiki/Cigarette_taxes_in_the_United_.... That is nearly 100% of the base cost. Some cities have an extra tax on sugary drinks. Also not a universal good. "Kaplan and his colleagues found that, on average, prices for sugar-sweetened drinks went up by 33.1%". https://www.npr.org/sections/health-shots/2024/01/06/1223243244/cities-with-soda-taxes-saw-sales-of-sugary-drinks-fall-as-prices-rose-study-find https://www.npr.org/sections/health-shots/2024/01/06/1223243... Note that the additional 33% is on top of sales tax, meaning the total tax on sugary drinks was more than 33%. So both cigarettes and sugary drinks (in some areas) have a higher tax rate than gasoline. Bear in mind that some of the fuel tax is used defray the high cost of car infrastructure; "defray" because most of the infrastructure cost is paid by sources other than fuel taxes.

As you just pointed out the tax alone is still about 100% of the base cost. Not many goods are the US are taxed like that. It works because it's a universal good.

wilg 3y ago

OK, but doesn’t invalidate the comparison is to another country where they tax gas more.

eesmith 3y ago

It is not about 100% but well less than 30%. "On average, as of April 2019, state and local taxes and fees add 34.24 cents to gasoline and 35.89 cents to diesel, for a total US volume-weighted average fuel tax of 52.64 cents per gallon for gas and 60.29 cents per gallon for diesel" - https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_State... In 2019 gasoline wholesale price was around $1.80 - https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMA_EPM0_PWG_NUS_DPG&f=M https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=E... 0.5264 /1.8 = 30% New York Harbor Conventional Gasoline Regular Spot Price FOB is US$2.61 per gallon today - https://www.indexmundi.com/commodities/?commodity=gasoline https://www.indexmundi.com/commodities/?commodity=gasoline . .5264 /2.61 = 20% Note that the wholesale price does not include the cost to deliver to the gas station or nor storage and dispensing costs at the station, so the percentage at point of sale will be slower than these numbers. Cigarettes are not a universal good. There is a federal excise tax on cigarettes of $1.01 per pack and state taxes from $0.17/pack in Missouri to $5.35/pack in New York, plus possible city taxes. "As of 2011, Phillip Morris lists total government revenue, including federal, state, local, and sales taxes, as 55% of the estimated retail price of a pack of cigarettes in the United States" and "[WHO] estimates that taxes make up 42.5% of the cost of a pack of cigarettes in the U.S." Numbers and quotes from https://en.wikipedia.org/wiki/Cigarette_taxes_in_the_United_States https://en.wikipedia.org/wiki/Cigarette_taxes_in_the_United_.... That is nearly 100% of the base cost. Some cities have an extra tax on sugary drinks. Also not a universal good. "Kaplan and his colleagues found that, on average, prices for sugar-sweetened drinks went up by 33.1%". https://www.npr.org/sections/health-shots/2024/01/06/1223243244/cities-with-soda-taxes-saw-sales-of-sugary-drinks-fall-as-prices-rose-study-find https://www.npr.org/sections/health-shots/2024/01/06/1223243... Note that the additional 33% is on top of sales tax, meaning the total tax on sugary drinks was more than 33%. So both cigarettes and sugary drinks (in some areas) have a higher tax rate than gasoline. Bear in mind that some of the fuel tax is used defray the high cost of car infrastructure; "defray" because most of the infrastructure cost is paid by sources other than fuel taxes.