Why conservatives should support raising the gasoline tax

On May 1, President Trump mentioned that he might be willing to support raising the gasoline and diesel tax to pay for infrastructure improvements.  Bloomberg News reports:

"It's something that I would certainly consider," Trump said Monday in an interview with Bloomberg News in the Oval Office, describing the idea as supported by truckers "if we earmarked money toward the highways."

However, the next day, Grover Norquist, president of Americans for Tax Reform, tried to quash Trump's openness on this issue.  He told Fox Business that the current rate of taxation would be sufficient if certain other changes were enacted.

In contrast to this "conservative" defender of taxpayers, the lobbyists for those who would pay the tax actually favor raising its rate, so long as the revenue really goes toward improving the roads.  For example, in 2015, the American Automobile Association and the American Trucking Association joined the U.S. Chamber of Commerce in a letter to lawmakers that stated:

Americans are frustrated with our nation's crumbling infrastructure, including increasingly congested highways and deficient roads and bridges. Thirty-two percent of major roads are in poor or mediocre condition. This neglect costs the average driver $324 each year in additional vehicle repairs and operating costs.

In this case, the taxpayers are right, and this "conservative" defender of taxpayers is wrong.  User taxes are an appropriate and efficient way to pay for highway spending.  They fall directly on those who benefit from such spending.  Each purchase of fuel to run an automotive vehicle helps pay for the roads on which that vehicle will drive.

This system is currently broken.  The Concord Coalition reported in 2016 that by the time the current highway spending bill lapses, Congress will have transferred $143,000,000,000 from other revenue streams (and budget gimmicks and borrowing) to cover highway trust fund shortfalls since 2008 alone.

If nothing is done, nothing will improve.  By early in the next decade, about $20 billion per year will have to be transferred from other sources to cover the highway trust fund shortfall.  My income taxes, your capital gains taxes, and everyone's future taxes are being used to subsidize the transportation system when, historically, user fees and user taxes have appropriately let the transportation system pay its own way.

Why is the system broken?  Because the gasoline excise tax has been severely eroded by inflation.  Since the inception of the Interstate Highway System and the creation of the Highway Trust Fund in the mid-1950s, the gasoline excise tax has averaged 24 cents per gallon (in March 2017 dollars as adjusted using the consumer price index).

The graph below shows the inflation-adjusted value of the gasoline tax over time.  Currently, the excise tax is only 18.4 cents per gallon.  This shortfall threatens to undermine our capacity to use transportation use taxes and fees to pay for transportation infrastructure.  The inevitable results, if nothing is done, are debt and potholes.

­­­­­­

The solution is simple.  The gasoline tax and other fuel taxes should be increased, and we may also need a way to tax vehicles that use alternative fuels.  Highway users should once more shoulder the burden of paying for highway infrastructure.

In the longer term, this problem should probably be addressed by indexing the tax rate to some measure of inflation.  That way, the costs paid by highway users will keep pace with inflation, and other sources of revenue will not have to be cannibalized to subsidize infrastructure spending that can and should and ought to be financed by those who use that infrastructure.

The principle that highway users should pay for their highways makes sense, and the custodians of the "conservative" label are wrong.  Republican Dwight D. Eisenhower significantly raised the gasoline and diesel tax during the 1950s and used the proceeds to inaugurate the Interstate Highway System.  These new highways contributed to decades of rapid U.S. economic growth.

President Trump is on the right track when he says he would consider raising this tax rate if the funds were earmarked for highways.  Doing so should be the conservative position.

Jesse Richman is associate professor of political science at Old Dominion University.  The Richmans co-authored the 2014 book Balanced Trade, published by Lexington Books, and the 2008 book Trading Away Our Future, published by Ideal Taxes Association.

On May 1, President Trump mentioned that he might be willing to support raising the gasoline and diesel tax to pay for infrastructure improvements.  Bloomberg News reports:

"It's something that I would certainly consider," Trump said Monday in an interview with Bloomberg News in the Oval Office, describing the idea as supported by truckers "if we earmarked money toward the highways."

However, the next day, Grover Norquist, president of Americans for Tax Reform, tried to quash Trump's openness on this issue.  He told Fox Business that the current rate of taxation would be sufficient if certain other changes were enacted.

In contrast to this "conservative" defender of taxpayers, the lobbyists for those who would pay the tax actually favor raising its rate, so long as the revenue really goes toward improving the roads.  For example, in 2015, the American Automobile Association and the American Trucking Association joined the U.S. Chamber of Commerce in a letter to lawmakers that stated:

Americans are frustrated with our nation's crumbling infrastructure, including increasingly congested highways and deficient roads and bridges. Thirty-two percent of major roads are in poor or mediocre condition. This neglect costs the average driver $324 each year in additional vehicle repairs and operating costs.

In this case, the taxpayers are right, and this "conservative" defender of taxpayers is wrong.  User taxes are an appropriate and efficient way to pay for highway spending.  They fall directly on those who benefit from such spending.  Each purchase of fuel to run an automotive vehicle helps pay for the roads on which that vehicle will drive.

This system is currently broken.  The Concord Coalition reported in 2016 that by the time the current highway spending bill lapses, Congress will have transferred $143,000,000,000 from other revenue streams (and budget gimmicks and borrowing) to cover highway trust fund shortfalls since 2008 alone.

If nothing is done, nothing will improve.  By early in the next decade, about $20 billion per year will have to be transferred from other sources to cover the highway trust fund shortfall.  My income taxes, your capital gains taxes, and everyone's future taxes are being used to subsidize the transportation system when, historically, user fees and user taxes have appropriately let the transportation system pay its own way.

Why is the system broken?  Because the gasoline excise tax has been severely eroded by inflation.  Since the inception of the Interstate Highway System and the creation of the Highway Trust Fund in the mid-1950s, the gasoline excise tax has averaged 24 cents per gallon (in March 2017 dollars as adjusted using the consumer price index).

The graph below shows the inflation-adjusted value of the gasoline tax over time.  Currently, the excise tax is only 18.4 cents per gallon.  This shortfall threatens to undermine our capacity to use transportation use taxes and fees to pay for transportation infrastructure.  The inevitable results, if nothing is done, are debt and potholes.

­­­­­­

The solution is simple.  The gasoline tax and other fuel taxes should be increased, and we may also need a way to tax vehicles that use alternative fuels.  Highway users should once more shoulder the burden of paying for highway infrastructure.

In the longer term, this problem should probably be addressed by indexing the tax rate to some measure of inflation.  That way, the costs paid by highway users will keep pace with inflation, and other sources of revenue will not have to be cannibalized to subsidize infrastructure spending that can and should and ought to be financed by those who use that infrastructure.

The principle that highway users should pay for their highways makes sense, and the custodians of the "conservative" label are wrong.  Republican Dwight D. Eisenhower significantly raised the gasoline and diesel tax during the 1950s and used the proceeds to inaugurate the Interstate Highway System.  These new highways contributed to decades of rapid U.S. economic growth.

President Trump is on the right track when he says he would consider raising this tax rate if the funds were earmarked for highways.  Doing so should be the conservative position.

Jesse Richman is associate professor of political science at Old Dominion University.  The Richmans co-authored the 2014 book Balanced Trade, published by Lexington Books, and the 2008 book Trading Away Our Future, published by Ideal Taxes Association.

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