Skip to content

Taxing questions.

February 21, 2018

Remember when we said that new taxes would eventually cut into the benefits from the Tax Cut Act?

That was inevitable, both at the state and Federal level, given the fact that the President has an ambitious agenda for playing catch-up on all the things that weren’t funded during the. previous administration, particularly the military and roads and bridges.

Enter the gas tax, or rather a proposal to increase it.

If the President gets all the public-private spending he wants on highway infrastructure, the Federal portion of the money has to come from somewhere, and apparently, the money received to date isn’t sitting in a savings account somewhere.

Actually, the title of Highway Trust Fund is a bit of a misnomer, since a lot of it goes for things other than highways.

Some of it has been spent as intended, while some of it has been legally siphoned off for things like mass transit, bike paths, walking paths and the like, uses that are permitted because the fuel tax is divided into two funds, with only about 60% allocated for road and bridge maintenance.

Whatever it has been spent on, the Highway Trust Fund is essentially bankrupt, having been kept solvent by transfers from the General Fund and other creative spending fixes for at least the past decade.

Raising the gas tax, (or rather the fuel tax, since it covers everything from jet fuel to diesel to gas for your lawnmower) is promoted as a user fee, and to some extent it is.

Obviously if you have to buy fuel, you are using the highways and airport services it’s supposed to pay for, if not directly, then by purchasing the goods that travel throughout the country on commercial vehicles, planes and trains.

Which gets us to the crux of the matter.

At some point, probably now, we are going to have to differentiate between things we need and things we want.

Do we want free college tuition, or bridges that are safe to cross? Do we want to fund a bike path, or roads that don’t have giant potholes? How about “free” women’s healthcare versus airport runways that don’t crumble under the weight of the planes?

Also at issue is whether people that buy and use fuel should have to subsidize road maintenance for vehicles that use no fuel at all.

President Trump wants to leverage a little Federal money to entice large private investment in “infrastructure” i.e.  mostly targeting transportation routes. .

That’s great, but even if it works, private businesses will not spend a dime if they can’t recoup it.

There are two ways to do that. Either they can submit flat bids that have a built-in profit margin, or they can charge an ongoing fee, to use the roads and bridges they build or renovate.

In areas where volume makes tolls attractive, that can cost an office worker  driving in to work from suburban New Jersey as much as $15 per crossing, while commercial six-axle  trucks pay as much as $126 per crossing, according to this 2015 article from

In areas where traffic is sparse, the tolls would have to be exponentially higher.

Another “fix” could be adding an annual highway user fee to license plate or registration for aircraft renewals. That would at least spread the cost over a greater number of users who don’t buy gas at the pump. Private businesses like freight companies and airlines already add a fuel surtax, and transport costs are added to the markup on retail sales prices.

In short, like it or not, you can’t rob from Peter to pay Paul forever. At some point, the bills become due.

From → op-ed

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: