Green Update: Higher Gas Taxes? Don’t Be Ridiculous.

Old gas pumps

Basically, U.S. drivers would rather pay speculators and investors—the people responsible for the higher gas prices about which they endlessly complain—than put more money into a government fund to maintain our highways and infrastructure.

They would rather have an intricate, unfair and fraudulent system called CAFE regulate car mileage standards than let the price of gasoline and the market produce fuel-efficient cars, which would be a better deal for consumers and automakers both.

Now, some are talking about letting the gas tax (18.4 cents per gallon) expire on September 30, which would soon put thousands of rail and highway workers off their jobs, just the kind of stimulus work the country needs, right?

A few nut-case types like Grover Norquist are even proposing that the states administer gas tax funds and pay for their own roads. In a short time, U.S. highways would become like the roads I drive on in Mexico. Imagine how that patchwork system would help the economy.

So, the sensible thing to do would be to raise the gas tax to provide desperately needed infrastructure and road repair, create jobs and give a shot in the arm to the U.S. economy. In June GM’s Dan Akerson proposed raising it a dollar a gallon.

Gas prices in U.S. vs. EuropeWell, it ain’t gonna happen. Instead, betting is that Congress will extend the present law, even though the current rate hasn’t been changed in 18 years. As we showed here two weeks ago, the U.S. pays far less in gas taxes and overall gas cost than any other developed country.

If you’re going to reduce oil (and gasoline) consumption, there will be a price to pay. But a higher tax, though apparently impossible to achieve now politically, is fairer and will help our staggering economy. Nobody’s talking about lowering other taxes to compensate for a higher tax on gas.

The benefits are obvious: It would discourage unnecessary driving, congestion and accidents. It would give us better cars than the impenetrable and unworkable CAFE standards. It would produce a multiplier effect in job creation and infrastructure improvement. It would give us cleaner air, get us out of the Middle East, etc., etc.

And it is not going to happen, even though polls have suggested that a large majority of people want and will pay for better infrastructure. There’s a good argument for higher gas taxes here. And the New York Times just came out for it.

But the best argument of all comes from looking at the people who oppose it.

Would you be for a higher gas tax if there was a provision to lower your payroll or income tax accordingly?


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  1. Here in Michigan we already drive on those Mexican roads you mention. Michigan has what is probably the most corrupt and senseless highway funding system in the country, and the result is third-world roads.
    Michigan has a state gas tax, but it’s levied at a flat rate/gallon rather than a percentage. That means that rising gas prices and typically falling consumption result in a decrease in tax revenues. Not very smart. In addition, Michigan levies 6% sales tax on gas. (except for the gas tax portion but including the fed gas tax portion.) Rather than going into the highway fund, our greedy politicians in Michigan spend that money elsewhere. Add to that the greedy Washington politicians who take a federal tax gas and then (after p i s s i n g away half of it on administrative overhead, doles it back to the states with a disproportionate amount going to the state who need it least.
    Michigan needs to reform their gasoline struture by doing the following:
    1. Outlaw commodoty pricing of fuels and enforce a cost+margin. That eliminates the senseless swings in the fuel prices, often on a daily basis, and all timed and manaipulated to put more money in fuel producer’s pockets.
    2. Eliminate most or all of the federal gas tax and allow states to collect the money instead, kicking extra to the feds only if there is a surplus. That alone will probably generate a 30% increase in state highway spending.
    3. Change the state gas tax to a percentage rather than a flat rate and have it reflect the current flat rate plus what is being charged for sales tax. Eliminate the sales tax on gas.
    4. Make it mandatory for ALL taxes collected on highway fuels to be dedicated to highway funding.
    In Michigan alone, that would likely double or triple highway funding. If you could also eliminate the country’s heaviest truck traffic and have more money to hire good highway designers (only the bottom of the class will work for Michigan’s low wages) then we could get some better roads here.

  2. Your analysis and thesis are, as usual, very sensible and would no doubt work during the 90s, especially at the height of the internet bubble. We were awash with money and throwing every penny we earned into the stock market because we were going to become rich beyond our wildest dreams. No one would have noticed an increase in the gas tax and no one would have cared. Well, that didn’t happen and what we got was a loud painful CRASH.

    Today is quite another another story and we have to deal with a massive recession and unemployment and on top of that, we have a debt crisis. The Tea Party has captured the minds of moderate Republicans and they are hell bent on CUTTING spending when most responsible economists say we should be spending a lot more and taxing a lot more. No one is going to support your arguments and solutions because they make TOO MUCH SENSE. As you suggest that’s what we ought to do, but the economy precludes any movement toward your solution.

    I just filled my little Subie wagon and it cost me $50. That’s $2600 a year for my 12,000 yearly miles. People who work, drive more, and have children are probably paying $4000 for their family’s trips. Increasing the gas tax now, would be even more devastating to lower income and moderate income folks, so now probably is not the time to do that as much sense as it makes. Your sensible solution about reducing your payroll tax sure makes sense to me as that should end up being a zero sum game. I’m not crazy about the income tax suggestion because one would have to wait a year to get that money back. How can you feed your family well when you have to wait a year for your refund?

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