In President Obama’s State of the Union address last January, he referred to the problem of our crumbling transportation infrastructure.
One solution is at the gas pump. When you filled your tank, you paid for fuel and probably also a road. In 1956, the first interstate highway system was financed with a 3-cent a gallon fuel tax. Now the federal tax is 18.4 cents for gasoline. Add that to your state’s tax and the total could be as high as 67 cents a gallon if you live in New York or California. (For state gas taxes, please see below.)
Still though, because gas taxes just don’t raise enough money, the federal Highway Trust Fund might soon be broke. Do you think the gas tax should go up? Or would you support being taxed by the mile with your GPS providing the data? Or, should we add more tolls and use EZ pass everywhere?
Before you decide, please consider your tax philosophy. Yes, you could say that a tax at the pump is fair because we all pay the same amount for the same purchase. Or, you could say you approve of the gas tax being used on roads because it means that the people who use the roads are paying for them.
However, do you feel okay about regressive taxation? With regressive taxes like the gas tax, people who earn less pay a higher proportion of their incomes. (A $10 tax on someone who earns $100 is 10%; a $10 tax on someone who earns $1000 is 1%.)
And finally, Harvard economist Ed Glaeser said that 4 words summarize 40 years of transportation research at Harvard: “Bus Good; Train Bad.”
Sources and Resources: While a good WSJ article on gasoline taxes was the source of most of my gas tax facts, I do recommend this Bloomberg article by Ed Glaeser and this Hamilton Project paper on infrastructure spending. Also, here, EconLife looks further at highway spending and the Highway Trust Fund.