Raising the Federal Gas Tax: When Talking Billions, Context Please!

June 19th, 2014 at 11:59 am

Good for Sens. Corker (R-TN) and Murphy (D-CT) for proposing a long overdue 12 cent increase in the federal gas tax that finances the highway trust fund.  The 18.4 cent tax has been unchanged since 1993, despite the increased price of building materials, improved mileage, and more recently, reduction in miles driven.

Under the broad assumption that households and businesses want a decent transportation infrastructure, we demonstrably cannot support that with the current revenue stream.  In fact, we have not been able to do so for years now, and Congress has patched the fund with transfers from general revenues.

So good for the Senators for being grownups about this.  On the other hand, they seem to have some language in there about cutting some other taxes to get around Norquist’s “no-new-taxes” pledge.  That’s unnecessary and counterproductive.

The predictable attacks all reference $164 billion over ten years, which is apparently what the proposal would raise.  Every article I saw had that number in it and none had this number: 0.07%.  That’s $164 billion as a share of GDP over the next decade.  It’s less than one-half of 1% of GDP and it’s a) the proper context for such a number–what share of the income generated over the next decade should we spend on roads and transit?–and b) it sounds less scary because it is less scary.

How could it possibly be that the richest nation on earth can’t afford to devote less than 1% of output over the next decade to maintaining its public transportation infrastructure?

I’m going on CNBC at 2 to argue about this.  One tough question, for which I don’t have much of an answer: given that this tax increase will not be in place in time to replenish the trust fund, which will need a new infusion in weeks if we want to avoid project delays, where can Congress find the money for this?  Thankfully, a tax repatriation holiday seems to be off the table (it’s a gimmick that can’t pay for anything because it loses revenues).  But that table is looking awfully bare.

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8 comments in reply to "Raising the Federal Gas Tax: When Talking Billions, Context Please!"

  1. Larry Signor says:

    This issue always seems like a no-brainer. A cost/revenue discussion is missing many of the benefits that would accrue to an economy and our populace with a modernized transportation system.
    1. A fuel efficiency increase is the most apparent benefit.
    2. Lower fleet maintenance would free some discretionary spending and lengthen the life of our national vehicle fleet. (Think decreasing rents via auto loans).
    3. The time premium of transportation would decrease.
    4. Jobs would be generated by increased spending, implying an expanding tax/user base.
    5. Think co2…a higher gas price and an improved highway system would dampen carbon based climate change…less gas, oil, diesel, tires, plastic parts, etc. would be produced and consumed.
    6. Health care benefits due to fewer accidents/injuries caused by an antiquated system. (Vehicle insurance costs would surely decrease, as well).

    Here is the BIG one: Our legislature would actually accomplish something positive for the country. Wouldn’t that be a hoot!

  2. Robert Buttons says:

    We have a falling dollar and mideast turmoil creating higher oil prices. We have rapidly rising food prices. I can’t understand how an increasing tax burden will help the middle class.

    • Larry Signor says:

      So you are advocating we should walk/bicycle/run to work, on an incrementally increasing basis. This may be a new conservative/libertarian approach to fight global climate change. Progressives, like myself, are able to appreciate useful conservative/libertarian initiatives. Thank you, RB.

  3. rjs says:

    more context: $164 billion in dollar bills laid end to end would run 15,901,000 miles, or roughly from NY to California and back 2,648 times…

  4. Th says:

    Not that I would advocate this, but you could point out that lots of states have turned down billions in Medicaid expansion money. The money might pave some potholes on the way to the cemetery for all those without health insurance.

  5. mere mortal says:

    “0.07%. That’s $164 billion as a share of GDP over the next decade. It’s less than one-half of 1% of GDP”

    Surely, you meant “less than one *tenth* of 1%” ?