If Our Gas Taxes Go Up, Will Gas Prices Become Unfair?
Faced with dwindling cash reserves, several states are considering raising their Gas Tax. Those with efficient vehicles will come out ahead. Low income families, the trucking industry and the alternative fuel industry will finish last.
Now I am all for taxes - there are many essential services that the government performs and they need money to do this. Most often, gas tax goes directly into maintaining and repairing roads and highways - a costly endeavor - but absolutely essential to keep our country alive.
What I’m specifically concerned about is how this will affect three groups: those with low incomes, the trucking industry, and the alternative fuel industry.
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Low Income Families
Those with low incomes often rely on their cars very heavily - to get to work, shopping for the family, etc. The bottom line is never far outside of their minds and making the baseline cost of fuel go up even more sounds like a dangerous idea. Public transportation would be a possible alternative, but it is not always available, convenient or even less expensive than owning a car.
Trucking Industry
The trucking industry is absolutely essential to the American economy - with the amount of sprawl that we have, and the under-developed rail infrastructure, the responsibility for getting goods to where they need to go falls on the truckers. Times have been tough lately for truckers; they are very high users of fuel and fuel costs have been going all over the place for the past year. I know I’ve noticed “fuel surcharge” on many invoices - evidence of the bind the trucking industry is in.
Alternative Fuel Industry
Alternative fuels will also be hard hit with raised taxes, as they get taxed just like petroleum. Although some states have limited tax credits available for alternative fuels, alternative fuels are generally more expensive than petroleum fuels. Any increase in their price will make them less appealing to the public and therefore money going towards research and development will be scarcer as well.
Taxes Broken Down
There are three different sorts of tax that are commonly found on gas and diesel: Local, State and Federal tax. Federal Gas Tax is always $0.184 for gas and $0.244 per gallon for diesel. State Gas Tax and Local Gas Tax varies from from location to location. For example, in Eugene, Oregon, every gallon of diesel has the following taxes placed on it:
$0.244 Federal + $0.24 State + $0.05 City = $0.534 per gallon.
California, New Hampshire, Oregon, Massachusetts, Illinois, Iowa, Ohio are all considering raising their fuel taxes. Here is a current state by state breakdown of combined State and Federal Gas Tax. Please note that it is an average of fuel tax across the state and does not reflect proposed increases.
| State | Gasoline Tax |
|---|---|
| Alabama | $0.393 |
| Alaska | $0.184 |
| Arizona | $0.374 |
| Arkansas | $0.402 |
| California | $0.671 |
| Colorado | $0.404 |
| Connecticut | $0.656 |
| Delaware | $0.414 |
| Florida | $0.516 |
| Georgia | $0.465 |
| Hawaii | $0.510 |
| Idaho | $0.434 |
| Illinois | $0.644 |
| Indiana | $0.594 |
| Iowa | $0.404 |
| Kansas | $0.433 |
| Kentucky | $0.409 |
| Louisiana | $0.384 |
| Maine | $0.483 |
| Maryland | $0.419 |
| Massachusetts | $0.419 |
| Michigan | $0.594 |
| Minnesota | $0.440 |
| Mississippi | $0.372 |
| Missouri | $0.360 |
| Montana | $0.462 |
| Nebraska | $0.453 |
| Nevada | $0.510 |
| New Hampshire | $0.380 |
| New Jersey | $0.329 |
| New Mexico | $0.364 |
| New York | $0.609 |
| North Carolina | $0.486 |
| North Dakota | $0.414 |
| Ohio | $0.464 |
| Oklahoma | $0.354 |
| Oregon | $0.434 |
| Pennsylvania | $0.507 |
| Rhode Island | $0.494 |
| South Carolina | $0.352 |
| South Dakota | $0.424 |
| Tennessee | $0.398 |
| Texas | $0.384 |
| Utah | $0.429 |
| Vermont | $0.384 |
| Virginia | $0.384 |
| Washington | $0.559 |
| West Virginia | $0.506 |
| Wisconsin | $0.513 |
| Wyoming | $0.324 |
Photo Credit: Sonny Side Up! on Flickr under Creative Commons license.
Interesting article but I don’t get the point on BioFuels. The administration can choose to structure the tax however they would like. They can easily exempt them from the tax increase or eliminate them from the current gas taxes.
And we need to get away from urban sprawl. just because we have had a bad policy these years. we shouldnt feed the flames. let those property values fall due to increased food costs, this will reduce further construction.
hopefully for low income familes, money will quickly go to public transit. however it goes back to the same problem of sprawl. If our economy was geared so that people (particularly low income individuals) lived within urban areas this would not be such a problem. I live in a nice suburb of NYC but there is a bus stop at the bottom of my street that gets me into manhattan in 30 mins during rush hour (bus only lanes!)
Lets rethink how we live as a society. That is the only way we will achieve tomorrow’s challenges.
@ Andrew,
Sure lets just totally remake ourselves in Europe’s image because we know they have no problems over there.
BOT,
This is just another way for greedy politicians to get their grubby palms on more money to waste. I hope everyone votes no on any tax raises in their communities unless there is guarantees on how the money will be spent. I live in a part of the world that has seen more than it’s fair share of dirty politicians and I for one do not trust them with the money they already have. There are a lot of lwoer income families that would be devestated if there was a tax increase because they will not be able to cope once the inevitable price increase occurs. Everyone knows once the gas tax is raised it will take a miracle to get it lowered.
Andrew- I totally agree with your comments. I notice that many of the new eco-friendly initiatives we read about also ignore what you point out: the need to rethink the way we live as a society. Too often we are creating band-aids for the consequences of living poorly.
We need to create walkable communities, to have work, school, and housing within easy reach so that we don’t have to rely so heavily on personal transportation. We need to improve our public transportation system and make it an attractive, eco-friendly alternative. A revolution in thinking is required to make the true, lasting changes we need to make.
Actually we SHOULD remake ourselves into Europe or Japan or any other country thats been around for longer the 233 years. I’ll gladly pay 2 dollars in gas taxes if that money would fund public transit. In fact i’d glady put a nuclear power plant in my backyard to gid rid of gas once and for all and i’m an environmentalist. What’s wrong with building walkable cities and a great train and metro system. add these all together and not only would we have a more environmentally friendly nation but we might also have a country with less obese people than overweight people.
The major objections that I have to city living are that every single city that I know of has crappy public schools and way too many violent criminals running around loose.
trung may like city living and it is a lot of fun when you are in your twenties, unmarried and without kids but if you have other people besides yourself who depend on you, a nice safe suburb with good schools looks a lot more attractive.
Anyway, here’s my modest proposal for taxing oil. We should have a NAFTA Oil Tax. The three countries that make up NAFTA should agree to a nominal tax of $1.00 a barrel for oil imported from outside of the NAFTA countries. Since we import more oil from Canada than any other country, this will minimize the disruption on our economy. The thing that will make this politically palatable is that the revenue should be committed to paying for the costs of NAFTA citizens in other NAFTA countries. Canada can use the taxes they collect from whatever minimal amount of oil they import to defray the cost of US citizens or Mexicans who get sick in their country and make use of their government health care system. Mexico can use the revenue for whatever costs that US and Canadian citizens incur in their country.
From the Los Angeles school district to the hospitals in Dallas to the county jails in Chicago there will be people applying to defray the cost of other NAFTA country citizens in the US. The people who’s property taxes are currently paying for those school systems, emergency rooms and jails will form a political constituency who will pressure their elected representatives to pass that NAFTA Oil Tax.
It is hard to get people enthusiastic about raising a tax unless they think that they are going to see some benefits from it. I think that you could probably see pretty widespread political support for putting a NAFTA Oil Tax in place and that support would be there for raising that tax to defray some of the costs that immigrants from another NAFTA country put on social services.
@ trung,
Wow you nailed it, it is all the suburbs fault we have obesity in America. That type of fairytale thinking is exactly why nothing meaningful is rarely achieved. Put down your soy latte and try to think in real world solutions. It is not feasible to rebuild America, but it is feasible to build mass transit from the suburbs to the city centers. It is not feasible to run America off of renewable power, but it is possible to build things like clean nuclear and use this until truly renewable power is available. Until all the crazy ultra hippies can focus on realistic solutions America will continue to function poorly. As to everyone wanting to emulate Europe, stop and go do a little research. Most of their city centers are over 300 years old. They did not have to change anything to prevent urban spread because there was no where to spread. America was a country founded on space and individualism and that is not going to change quickly. So go tell all the people enduring the coldest winter in decades how their living in the suburbs is causing global warming. Better yet go have a sit in at Al Gores strip mine.
I find it interesting that we, the taxpayer, must continue to live within the resources we have (income)regardless of our needs (expenses). The same should hold true for MY goverment. In these tough times where any tax increase on a basic staple (yes gas is a staple for most of the country except in the large population centers) becomes a form of repression. Those of us who can afford to purchase new cars have… they are good buys now. The individuals making 10-12 bucks and hour living 30 miles form is/ her job because they can not afford the rent or mortgage for something closer should not have to pay more taxes.
For those who would like to emulate “Europe”, they should first understand that that the cities and population centers formed from royal or “landed” owership of most property. One could not own the land that one’s house was on, one only could lease it. This is still true in some countries. I would rather own my little piece of the rock than lease it from ‘the man’ I also would rather be held responeable for my own future than have others, who by the way may NOT have MY best interest in mind, be resposiable for me.
I have lived in over 20 countries and visited over 100 in my 60 plus years and I am hear to tell you we my not have it @ 100% but our current way of life is so far ahead of the rest of the world that everyone is moving here and no one is leaving!!
“Those with low incomes often rely on their cars very heavily - to get to work, shopping for the family, etc.”
The only study numbers I’ve heard of on the topic actually suggest gas taxes are progressive; the rich have more disposable income and are more likely to spend money more freely on gasoline. Not surprisingly, low income people tend to consume less gas (even per dollar income).
Of course there are always the special cases that we can point to where a particular minimum wage worker decides to live 45 miles from his or her work. I’ve read about these people in national news but I’ve never met one even though I grew up in the Midwest. On the other hand I’ve met dozens of people who own SUVs for no reason but don’t care about reducing gas waste because the price of gas is so low.
I hope the other points in this article were better researched (and thought out) than this first one.
Then charge a tax on SUV’s and cars that get less than 20 mpg, not on gas. If you have never met anyone that has to drive 45 minutes to work, you must live in a very small town. Every major city has thousands if not hundreds of thousands of people that have to commute over 45 minutes to work. This is just another excuse for the Dems to raise taxes. As usual they claim to try and help the common man, but all they do is make their life worse. The only way to make taxes fair is a flat tax with 0 loop holes. If everybody pays the same percentage without the ability to get out of owed money than the country would have plenty of money to run.
Just because Europe did not have the ability to sprawl doesn’t mean they arent better off. I also do not advocate taking away people’s choice to live wherever they please. However, these are the people who complained about high gas prices and wanted us to lower gas taxes. Sure its cheaper to live out in the country but one must balance this with lower wages and longer commutes. Why should society subsidize their decisions. If more people lived within public transit (even if they dont choose to use it regularly) we could weather the high gas prices better.
@doug - Good luck getting a flat tax even if the dems u seem to despise weren’t around, its hard to get any politician to accept something that takes away their leverage. Loopholes = election wins. I personally disagree with a flat tax but I wont even go there because it is so impractical.