This week, the Biden Administration proposed to suspend federal gasoline and diesel taxes to relieve pressure on consumers facing high fuel prices. They proposed to eliminate the 18c per gallon gasoline tax and the 24c per gallon diesel tax for 90 days.
From an economic perspective, this is a bad idea.
Two weeks ago, I wrote about how elasticities matter for understanding the benefits of international trade. This week, elasticities will tell us why this tax holiday is a bad idea.