Source: WonkBlog

Category: Energy, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “Why the federal gas tax is too low”

  1. Frilton Miedman says:

    While the tax is below inflation, take a look at a chart of RBOB prices.

    For those of us that acknowledge wealth & wage disparity has become a problem for economic growth, it’s a given that any sales or consumption tax has a regressive effect.

    A family that makes $30K will use roughly the same amount of RBOB as a family that makes $100K, equating to a 300% greater tax burden as a % of income for the lower income family in that example.

  2. rd says:

    One truck stresses a pavement more than hundreds of cars. Bridges are designed for truck loads, not car loads. So both the gas and diesel taxes need to be looked at together. However, the diesel tax issue is similar to the gas tax issue as it doesn’t go up with inflation either.

  3. theexpertisin says:

    That’s what we need. Another tax on essentials out of the hides of the middle and lower class.Isn’t crapping out trillions of debt and debasing the value of the dollar over the years via Santa-style government bad enough?

  4. constantnormal says:

    I wonder how the comparison of gas taxes to median household income would look … perhaps it is being constrained by an inability of the masses to pay more … median household income after healthcare and utility costs would be even better, but it makes sense (to me) to consider the federal gas tax to be another utility cost, representing the transportation network of roadways.

    • constantnormal says:

      It does seem to, at least at the start and end of the range of years in this chart, correlate better with median household income in the US …

      http://research.stlouisfed.org/fred2/graph/?g=CpT

      At the start of 1984, the median US household income was $24,415
      at the start of 1990, it was $29,943,
      at the start of 1993, it was $31,241,
      and at the start of 2012, it was $51,017, gaining a tad over 100% in that span of years, while the federal gas tax grew by about 100 as well in the span of years from 1984 to 2012.

      Not that I believe for a nanosecond that the Powers-That-Be set the federal gas tax according to what the median households can afford to pay … that would be something vaguely like representative government, which I am not sure has ever existed here other than as a purely academic concept.

      • Frilton Miedman says:

        In 1984, RBOB ranged around $1.00.

        While median wages are up 200% since, RBOB is up almost 400%, never mind food, housing, healthcare.

        Also as Victor illuminates below, state taxes are more egregious, for that matter, state & local taxes overall have neutralized the progressive nature of Fed taxes, total taxes as a % of income actually only varies within a few % from top to bottom income brackets.

      • Frilton Miedman says:

        Edit my last, intended to type wages up 100% since, while RBOB is up almost 300%.

      • 873450 says:

        “federal gas tax grew by about 100 as well in the span of years from 1984 to 2012″

        I guess it’s about how charts get interpreted. During the 9-year period 1984-1993, at a time when median US income increased around 33% (according to your stats) and inflation decreased, Reagan-Bush spiked the Fed gas tax up more than 450%, from 4 cents to 18.4 cents. Except for what looks like a slight decrease during Clinton’s 1st term, for 20+ years before and 20+ years after Reagan-Bush the Fed gas tax does not change.

        WonkBlog suggests pegging the Fed gas tax to an inflation or fuel price index would increase revenue flow to our nearly broke Highway Trust Fund. The new revenue would enable us to build new infrastructure, maintain/repair existing infrastructure and create high-paying, skilled construction jobs for a few million unemployed Americans who could then go buy things and pay taxes. But that’s why we can’t do it. We prefer to shoot ourselves in the foot electing politicians to say “No!” Then we go pointing fingers, blaming and firing people after the bridge collapses.

  5. victor says:

    In California, in addition to the fed. gasoline tax of $0.184/gal: State tax=$0.529/gal. Diesel tax: fed tax=0.244$/gal plus State Tax=$0.496/gal. Increase any of these and the working stiff gets stiffed further. So, 20 gallons in his beat up 1996 Ford pick up truck, @ $4.20/gal sets him back $84 for the week of which the Fed gets $3.68 and the State gets $10.58 (17% in taxes paid with $ already taxed). Note that part of the State tax is a Sale Tax which varies with the price of gasoline.
    States with high gasoline and Diesel taxes: HI, ILL, IN, CONN, MI, NY. Lowest: NJ (go figure), see:
    http://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States

  6. Iamthe50percent says:

    Can’t get excited. Eight cents is about the size of the daily fluctuations in price here. It would be lost in the noise.

  7. SecondLook says:

    A few years ago, the idea of revenue-neutral increase in the national gasoline tax was floated about, and had some support among a fair number of conservative thinkers.
    It would work like this: Say annual gasoline consumption per car averages 700 gallons. Put a dollar per gallon tax on it, and rebate the tax via a reduction in payroll taxes; retirees would get the money back through a SS increase. The key is that rebate would be equal per capita for every car owner (proof of car ownership would be have to be filed) – own a car, and get the $700 back.
    So, the less gasoline you consume, from either having a higher than average efficient vehicle, or just by driving less, the more money that would end up in your pocket. Conversely, less efficient, high mileage drivers would end up paying more then they got back.
    It doesn’t give government more revenues, it gives people an active choice with a good incentive to migrate faster to towards fuel efficiency, and less pollution.

    However, we all know, that kind of Pigovian tax would never pass any legislative body in the US.

    • victor says:

      “Conversely, less efficient, high mileage drivers would end up paying more then they got back”. But isn’t it a fact that many POOR people drive less efficient cars and are high mileage drivers as they only own one (beat up inefficient) car/truck? So, there you go again: punish the meek via what you’d call a Pigovian tax when in fact it would be just another (regressive) tax. Not to mention the additional tax filing complications.