Even trickier is the canonical obviously correct but deeply unpopular policy, the Carbon Tax, or its more accepted incomplete alternative the Gasoline Tax. Insanely, there are calls for a gas tax holiday or other cut, at exactly the time when we need to reduce consumption. That’s why the price is going up. A price is a signal wrapped up in an incentive.
Carbon taxes actually poll strongly: an average of +36 net favorability across the 8 polls I’ve seen since 2020.
This might not be the time to push a carbon tax, but as you say, avoiding gas tax holidays would be similarly good. I created a campaign to do this, starting in California. We’re currently called Save the Gas Tax, but will probably rename to Stop Oil Subsidies soon.
Following in the UK’s footsteps with household transfers would be a much better use of funds if we want to spend to reduce pressure at the pump.
Only if you itemize rather than taking the standard deduction!
For example, suppose you purchase a binary contract that pays $1 if an event occurs (and $0 if it doesn’t) and you believe there’s a 50% chance of the event. If you win, you receive $1 in gross winnings. With a 30% marginal tax rate and without itemizing, you’d pay tax on the full $1—leaving you with a net of $0.70. Given that you paid some amount x for the contract, your net gain on a win is $0.70−x, while a loss means you lose the entire x.
To break even, the expected value of the bet must be zero:
0.5×(0.70−x)+0.5×(−x)=0
This simplifies to:
0.35−x=0⟹x=0.35
Thus, if you believe the event is 50% likely (and considering only taxation, not other factors like transaction fees or opportunity costs), you would only gain if you paid under $0.35 for the contract.