Hacker News Reader

Comment by Mountain_Skies | Hacker News Reader

18.4 cents per gallon is a federal tax. States and local governments add on various sales and per gallon taxes that average close to $0.50 per gallon, though the sales tax portion will have driven some of that tax cost down. California adds 58.8 cents per gallon of taxes plus a 2.25% sales tax. Other states can be much lower but no matter where you are, there's a price floor due to taxes.

View on HN

The real question I haven't seen much discussion of, is who covers state and local govts massive loss of tax revenue. They cant print money like the fed.

Is the fed going to monetize their debt as well?

They can raise property gax, income tax, or gas tax, and yes the Fed govt can print money and grant it to states, as it does for highways and Medicaid.

I think 17% of that 2 trillion is going to directly to state and local governments. And a much of the rest of it will be indirectly taxed by state and local governments in various ways. https://www.visualcapitalist.com/the-anatomy-of-the-2-trilli...

That doesn't actually follow. If the station across the street is selling at a loss, you can either keep prices high and make zero revenue, or sell at a loss and make some revenue.

Of course you'll go out of business after a while below that floor so this situation wouldn't be sustainable, but it's consistent with economics that it could happen. (edit: I guess saudi arabia et al. are pretty much in this position now)

Why would making revenue be preferable in this case? If I have to buy gas for $1 a gallon from my supplier and can only sell it for $0.90, why not close up shop for awhile, then I don't have to deal with maintenance, don't have to pay the cashier, etc.

Sure if you have fixed costs like debt you have to pay you may make a loss on your business as a whole, but selling at negative gross margins only makes sense if you're somehow being strategic about it.

I was assuming the station already paid for the gas...I think it depends on whether that's true or not.

Reply on news.ycombinator.com