If he doesn't watch out Duncan Black could give economists a good name

Here he explains how concerns that "sin" taxes, like the tax on gasoline are regressive have nothing to do with whether fiscal policy could be improved.

In fewer words, tax codes are not as progressive as they could be, so a rational legislature could align private interest more closely with the public interest at the cost of making the tax code less progressive then make further changes to restore the current level of progressivity. If you want a clear explanation, click the link.

Atrios begins by noting that he doesn't usually waste his time with optimal or improving or such silly concepts as rational legislators. I think he is right to keep Conner Black PhD far away from his blog most of the time.

I would like to make a slightly more specific proposal.

Raise the tax on gasoline. Divide the money by the population. Give poor households with no employed members their share. Use the rest of the money to increase the earned income tax credit.

Gasoline consumption rises with income (even though it rises less than proportionally). This means that if one assumes no change in behavior my proposal would move income from the richer to the poorer. This is good. The proposed policy would change incentives in two ways. First, of course, an increased tax on gasoline would encourage conservation. This is obviously good as Black explains in a way even economists can understand. Second the tax would increase incentives for the non employed to seek employment thus fighting the culture of poverty.

So in a static model, in which we ignore incentive effects, my policy would be an improvement. All the incentive effects are good. No one who believes in economics can doubt that my proposal would make the world a better place. I don't believe in economics and it still sounds reasonable to me.

I think my proposed policy reform has no costs for society. The only problem for the well meaning politician who proposes it is that he or she would have to look for a new line of work.

As Atrios stresses in his introduction, current policy is so awful that it is easy to see how to improve it. The problem is politics not policy.

update: It seems I have been reading Atrios for years including months after it went nonymous without getting the Bloggers first name right. Thanks to David Weman for lots including pointing it out.