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Economists: Gas tax helps oil companies, not the people

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posted on May, 4 2008 @ 12:50 AM

Hillary Clinton and John McCain are both pushing a ``gas-tax holiday'' to give consumers an 18.4- cent-a-gallon price break. Clinton says the plan will take excess profits from oil companies. McCain says it will help families buy school supplies.

Economists have a different take: They say the oil companies may end up the biggest beneficiaries, while the aid to families wouldn't be enough to buy a $35 backpack.

The trouble with the plan, they say, is that oil prices are rising because of low supplies, and companies will continue to charge the average $3.60 a gallon and just pocket the money that would have gone to federal taxes.

``That's $10 billion, and it's going into the pockets of oil refiners,'' said Leonard Burman of the Tax Policy Center in Washington. ``The last time I checked, they didn't need it.''

New York Mayor Michael Bloomberg said the proposal was ``about the dumbest thing I've heard in a long time from an economic point of view.''

``We're trying to discourage people from driving and we're trying to end our energy dependence,'' Bloomberg told reporters at City Hall in New York

Economists think it is a bad idea, yet the media is slamming Obama for opposing it. It is just a pretty crazy idea that would cost billions in tax revenue that would only save the average family about $18.00 a month.

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