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Congress Faces Tough Decisions on Gasoline Tax

The tax that helps support our transport infrastructure, set to expire in September, hasn't been adjusted for inflation in 18 years.

By Sam Smith Aug 15, 2011 4:15AM
(Federal Gas Tax chart. Image courtesy Infrastructurist.)As Reuters reminds us, Congress will have to deal with the gasoline tax this fall. The levy, which produces several billion dollars in government revenue annually, is approximately 18.4 cents for every gallon of gas sold. The proceeds help maintain our roadways and now-crumbling infrastructure. Set to expire on Sept. 30, just after Congress returns from recess, the tax isn't indexed for inflation and hasn't been adjusted in an astonishing 18 years. So you can see why we are a bit concerned over its renewal.

There are a handful of possible outcomes here. First, Congress could postpone the decision, temporarily extending the tax's expiration deadline. Second, it could simply reinstate the current tax, keeping the 18.4-cent rate in spite of the fact that much of our road network is falling apart. And third, it could abolish the federal tax altogether, letting individual states determine how much to collect at the pump. If we're lucky -- and this is not sarcasm -- no matter who ends up collecting the gas tax, the amount collected will go up. 

Wait for it -- yep, there you go. That sound you just heard, that sudden, distant rumbling? That's the sound of a nation of drivers recoiling in horror. 

(Fuel prices. Image: New York Times.)Check out the graphic at the top of this post. It was produced by Infrastructurist, an excellent website that regularly examines matters relating to the nation's infrastructure. (Clever name, then.) It details the evolution of the federal gas tax over the past century, beginning with the penny-a-gallon days of 1932. Note that it essentially stayed the same, just 4 cents, from 1959 to 1983. This should tell you something about the government's approach to the tax. Long story short: No politician looking to stay popular will touch it. Or talk much about it. 

Amazingly, even though common sense leads you to believe that most people are against a higher gas tax -- it's a tax raise, for one, which no one likes, but it's also an implicit raise in the price of gasoline, which really gets people worked up -- the average American is incredibly uneducated on the subject. This Infrastructurist post cites a survey performed in 2009 in which a whopping 60 percent of respondents believe that the government raises the gas tax annually. Thirty-one percent of them rated their experience with traffic congestion as "very poor." Crucially, the survey also produced the following information:
A majority also answered that traffic congestion was not “a fact of life” — in other words, people believe something can be done about it. A majority (55%) also responded that our country’s infrastructure is outdated, unreliable and inefficient. On the statement, “Transportation infrastructure funding decisions are based more on politics than need?” a whopping 62% said they strongly agree.

(Fuel prices. Image: New York Times.)This is neither the time nor the place to argue for or against an increase in the gas tax, or to detail the pros and cons of the tax's ownership (i.e., federal versus state). But it is a place to point you toward relevant information. For starters, take a look at the Reuters piece linked above. Note the comment regarding agendas, and remember the politics line quoted above. Then read the thoughts of Car and Driver's Aaron Robinson and Infrastructurist's Jebediah Reed, both of whom make eloquent cases for -- well, I'll let you find out. (Reed's post is dated and short but still relevant; note, however, that there's still "no way of paying for it," as he mentions.) 

So how about you? What's your take on all this -- should we be paying more, paying less, paying the states, what? My take, for what it's worth, is simple: Even in a time when 25 percent of America can't afford to repair its cars, change is needed. Broken cars are one thing, but bridges are collapsing and most of the nation's highways look like a moonscape. We have one of the lowest gasoline taxes in the developed world, either in terms of percentage or real dollars, and not coincidentally we've also got some of the worst roads. Cheap gas is great. Infrastructure that doesn't fall apart beneath you would be better. 


121Comments
Aug 29, 2011 8:18AM
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I am in favor of a "Gas Tax" like Euopre has.  Pricing doe not flucuate much between cities and more goes to fixing roadways and infrastructure.  so if they change it to .25 per gallon that is fine with me.  We have been neglecting out infrastructure and roadways since WWII

Aug 18, 2011 3:36AM
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Oh look! All the self-declared 'conservatives' want things for free. The horror of more than 18 cents a gallon gas-tax! After all we are ENTITLED to cheap gas aren't we?

This isn't about being entitled to cheap gas.  This is about being entitled to a government that doesn't squander our money.  Do you think most Americans would mind paying their fair share of taxes if the money was actually used wisely and for its intended purpose?  The gas tax, like most everything else in our broken and corrupt government, is siphoned off for things other than road construction and maintenance.  THAT'S why the government doesn't deserve a penny more from any of us.  Not until they can prove they're not wasting half of what we give them.  Is that an unreasonable request when 40% of what Obama is spending has to be borrowed? 
Aug 17, 2011 5:32PM
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Oh look! All the self-declared 'conservatives' want things for free. The horror of more than 18 cents a gallon gas-tax! After all we are ENTITLED to cheap gas aren't we?

I have an idea: in Iraq gas is cheap and nobody fixes the roads and you drive up a trash-littered dust-track to your 'estate-behind-walls'. If you have money. That works for me! Maybe that's where we are heading? True hardcore 'everybody-for-himself'? Or maybe we should have gas even cheaper than in Venezuela and pay the difference with what? Our budget surpluses? Oh forgot - we are living beyond our means already! Shoot that won't work! Maybe we can just 'drill, drill, drill' till the cows come home and mandate we sell it below what it costs to squeeze it out of the earth. We all know we are 'being ripped off' by big oil, don't we?

Well let's just pray like Mr. Perry and maybe the roads and bridges will magically not fall apart!

Oh and btw, unemployment in Germany and much of Western Europe is lower than in the US despite high gas-taxes. Of course, once benefits and the now loafing (under) self-employed over here are factored in we maybe more up at 20% unemployment too.

Now get this; gas is even more taxed in Norway, an oil exporter and more than 100% hydro-power self-sufficient society. What are they thinking over there? Saving all that money for what? A rainy day? Pah-leazze!

Aug 17, 2011 11:16AM
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The us consumes more than 50 million gallons a day!! Do the math. Man are we being screwed. The government isnt using it for roads they are lining their pockets at our expense.
Aug 17, 2011 11:03AM
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First off, excellent and informative article on an important topic that effects everyone.  In my opinion, the problem with gas tax is that it's inherently regressive: a middle class dad or mom working two jobs to support their family pays at exactly the same rate as a CEO, a hedge fund manager, or a retired United States Senator on a speaking tour.  If we're going to increase taxes, how about starting with income taxes: specifically, the top income bracket of all annual earnings above $379k.  The top tax rate has dropped by half, from 70%, to its current 35% over the past thirty years.  To make matters worse, the wealthiest Americans mostly pay capital gains tax.  The LTCG tax rate is currently only 15%.  Before anyone starts to ask the already suffering middle class who pay 31% (25%, plus payroll tax), first begin by taxing those who have gotten the sweetest deals and best tax breaks over the last thirty years.  Any way you slice it, by growth of income, by net worth, by overall tax liability as a percentage of income, the wealthy have a had a rollicking bonanza over the last thirty years while middle class jobs have been exported to increase the incomes of those who have already been receiving the biggest tax breaks.   The rich are richer than they have ever been in American history, and they have received unprecedented tax reductions since 1982.  More importantly still, the wealthiest Americans are actually ASKING for higher taxes (see Buffett & Gates).  Under those circumstances, why would ANY politician even consider raising a tax aimed strait at the heart of the already reeling American middle class?
Aug 17, 2011 9:26AM
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No problem, go bio-diesel and make your own and pay no taxes at all.
Aug 17, 2011 8:01AM
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First do we know if all of the current Gas tax's goes to roads,,How much does it take for the Government to spread the money around, is it efficient, maybe you should have a privatized entity that controls the money in a more efficient manner, any one knows the Government takes allot of money to distribute money, Case point Cash for Clunkers give 4500 dollars cost 25,000 dollars great ratio,

Government is not the answer beside defense of this country, unless of course your one of the 35 million+ getting Government checks,

Aug 17, 2011 7:45AM
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I sure hope they don't tax people by the miles they drive, because then it won't matter to drivers how much they do it, they'll be taxed the same, which is a disincentive to cutting pollution. If you tax gas by the gallon, it will encourage people to use less gas, not drive fewer miles.
Aug 17, 2011 5:52AM
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One of the reasons you go to those place is because there are not the mega roads and people there, so be careful what you wish for.

 

There are also many examples of pork projects that cost disproportionately more that the population they benefit - bridges to nowhere, etc.

 

Aug 17, 2011 5:17AM
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With that thinking there would be no highways linking LA to Vegas or any highways through Montana or Wyoming or any roads leading to your favorite recreational (skiing, boating, camping...) spots as these areas do not have big populations, and most motorists would fill up near home so the tax dollars would go to improvements near where they live not where they vacation. Think about the consequences of you thoughts before just blurting them out.
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