(Opinion): The Next “Green” Problem: Paying for Highway Construction and Repair
Being a member of the reality-based coalition, I love the idea of hybrid and electric cars. Makes me happy to stick it in the eye of Big Oil, that Castro-esque nut in South America, and OPEC.
But the next thing we need to start thinking hard about is something we all hate…which is linked to something we all love. The collection of gax taxes and a smooth, efficient road system.
As we all know, gas taxes pay for road construction and repair. Even though we hate the tax, we despise pot-holed roads with a religious fervor. Here in Chicago, we’re afflicted by a new breed of pothole, smaller but substantially deeper; perfect for shearing wheels and axles.
The tax is reasonably efficient in its administration. He who buys gas helps pay for the roads. How much do we buy and pay?
In 2007, Americans purchased 142 billion gallons of gasoline, which at 18.7 cents per gallon, gave us about $26 billion dollars in federal funds for highway repair. That was based on an 2006 average of 23.27 mpg for all US passenger cars and light trucks. Clearly the number doesn’t include diesel taxes or state fuel taxes as well.
Just before I was ready to sharpen a pencil and do some “cipherin’”, as Jethro Bodine called it, I saw this great analysis on lost gas tax revenue due to higher MPG by the great state of Oregon. It’s from 2005, which shows you some people have been thinking about this for awhile. The study is a quick but dense read, so I encourage you to go to to page 6 for the assumptions, and page 8 for the conclusions.
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Bottom line, if MPG increases by they foresee a big dip in tax revenues against current (2005) averages. Let’s look at 2010. Oregon says without an improvement in their 2005 state average MPG of 19.78, they’d rake in $493.4 million in tax revenues (see Column B). If there is a “medium” increase in MPG, the state estmates that they’d see just $433 million in gas taxes. Needless to say, $60 million is a lot of money to make up.
The report was part of an effort to insitute a road “user tax”, which is similar to what the Brits have. Not a very good idea, and the wrong horse to back in a race. Plus, from a political point of view, it’s a quick way for the average pol to take an early retirement.
But…hats off to Oregon for starting to think about the problem.
Something about that phrase, “be careful of what you ask for…you may get it” is ringing true.
Speaking as one of those Oregonians who may have to pay mileage taxes….Recently our state legislature proposed a bicycle registration fee that would be the same cost as registering a car,also for the purpose of getting more transportation dollars. While I agree that increased fuel efficiency means less tax revenue, the idea of making people pay more to use less is a bad idea. This all suggests that some other funding source is needed for road maintenance & etc. I would love to hear an idea for a truly equitable transportation tax. Should it be based on the vehicle weight? The number of axles? Or maybe mileage IS the best idea?
I’m pretty libertarian (e.g. I voted for Ron Paul), but the gas tax is actually one of the fairest taxes
in the system, IMHO, and I’d like to see a portion of the income tax and/or payroll tax shifted to the gas tax.
Think about it, a higher gas tax (and lower income/payroll tax) would:
1) discourage wasteful driving
2) encourage fuel efficiency
3) encourage mass transit
4) encourage employment (more bring-home pay)
5) result in less power to (and therefore, fear of) the IRS
5) enable fair ways for the taxed to minimize their tax rate (e.g. walk, ride bike, live closer to work,
etc.)
I realize this would have a cascade effect of making all consumer goods cost more, but everyone would have more money in their paychecks to afford it.
That last 5) should be a 6), of course…wish there was an edit button….
I have a better idea. Instead of raising taxes, how about we force the states to use the money more effectively. There is not enough accountability in the distribution of government money.
When you really get down to it there is only one source of money that is taxed, PERSONAL INCOME. Any tax placed onto any other source is just a cost that is passed on to the ultimate buyer.
Sales taxes are visible. They are added to the purchase price of the product at the time of sale so that the buyer sees them. Inventory taxes, or value added taxes, are hidden in that they become part of the cost of the material that becomes the retail sale item. These taxes are marked up with the profit margin and then taxed again when the final sale is made.
By revoking taxes on anything except income, we would immediately see just how much money is going to taxes, and we would also greatly reduce the cost of producing goods. To insure the fairest prices, we would allow an “Excess Profits Tax” to be placed on profits above a predetermined net fair profit margin. To insure against ridiculous salaries for top executives, we could set a maximum differential between minimum wage and maximum wage in any company. Any wages above the maximum would not be accountable as costs but must be considered as profits subject to the excess profits tax. This would not prevent these huge salaries from being paid. It would simply prevent them from being considered as legitimate business expenses and therefore costs.
There is always going to be a proponent of “targeted” taxes for a special purpose. It is sometimes very difficult to see that these taxes hurt all of us because they increase the cost of something that we desire. An example is a “road use tax” assessed on trucks because trucks increase the maintenance costs of roadways. So let’s just tax trucks to pay these costs. But it doesn’t really work that way. The “truck taxes” are incorporated into the costs of the goods that are transported and we pay it in higher prices.
You might find that a flat income tax with a single exemption which should, in my opinion be equal to the minimum wage or the Social Security “retirement benefit” which should be the same amount would allow people enough discretion for them to choose the environmentally sound product.
In any event, products manufactured in the U. S. without the imposition of taxes, would greatly improve our export position.
I don’t think it matters where and how much taxes are charged for potholes or anything else that needs fixing. Some of that money will be “redirected” to the Olympic funding because that is the only thing Mayor Daley really cares about. That is his legacy and once the Olympics are done (if Chicago wins the bid), I bet Daley would care less what happens to the city. Where is the money that the city has collected in past tax raises? Seems Chicagoans pay more every year but the services seem to become more lax every year. Why doesn’t Daley remove those planters from the middle of the road and instead, fix the potholes? Besides, I’d hate to be in dire need of an ambulance in the middle of rush hour because those planters prevent emergency vehicles from getting to their destinations on time.