Fred Foldvary wrote: > > From: "Thomas TerBush" <[EMAIL PROTECTED]> > > > The government here in Japan has a sly "solution" to this > problem. Here the government maintains a stable gas price > target by fluctuating the tax. > > As the price of oil changes, the government adjusts the > tax to keep prices around US$4.50 a gallon. Since there's > no price change, no one complains (well, I complain, but > I'm definitely in the minority here in every way).< > > If the supply of oil is fixed in the short run, then a tax > on the sales price of oil should not affect the price to the > consumer and just affects the profits of the seller. So > perhaps the government has not really provided a solution at > all, but just fools the public into thinking so. Since > Japan imports all its oil, even in the longer run, if the > tax is reduced, the demand would not change, so would the > price not be affected? Where would the supply-side effect > come from? Just because the world supply is fixed, does not mean that one country can't reduce after-tax prices by cutting taxes. Inelastically supplied to the world, elastically supplied to individual countries. -- Prof. Bryan Caplan [EMAIL PROTECTED] http://www.gmu.edu/departments/economics/bcaplan "[W]hen we attempt to prove by direct argument, what is really self-evident, the reasoning will always be inconclusive; for it will either take for granted the thing to be proved, or something not more evident; and so, instead of giving strength to the conclusion, will rather tempt those to doubt of it, who never did so before." -- Thomas Reid, _Essays on the Active Powers of the Human Mind_