Are gas taxes too low? Many commentators think so.
Hillary Clinton and John McCain are catching flak for their proposal to grant a gas tax-holiday to drivers this summer. Clinton was challenged to name one economist who agreed with her idea. She demurred on this.
I can think of one: Milton Friedman. Years ago, he said that he’s in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible. Why? Because it’s the only way to get the government to rein in spending. If spending isn’t checked, the government intrudes into more and more areas of our lives, limiting our freedoms.
The strength of the American economy is its ability to adapt rapidly to new conditions. The root of that dynamism is our economic freedom. Limiting government revenue in order to hold the line on government growth is a good goal.
Clinton and McCain may not have had this in mind when. But in the long run reduced spending could help us all.
Douglas R. Tengdin, CFA
Chief Investment Officer
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