Now that the infrastructure bill is being debated seriously, one of the things stopping it from moving ahead is an insistence by some Democrats that it not include an increase in the motor fuels tax — the 19c/gallon tax on gasoline and the like that has been the same since Bill Clinton’s first term. Their objection is that it would hit working-class drivers, and they only want to tax the rich.
That is a totally lame excuse. Taxes serve two functions. One is to raise revenue. The other is to influence consumption by impacting market prices. Gasoline consumption is bad. Motor fuels are bad. They contribute hugely to global warming, and also create some air pollution. They are also necessary, because we depend on our motor vehicles. That makes them a perfect choice to raise taxes — people will pay, but will be encouraged to use less.
Yes, working people drive too. But we raised the cigarette tax and it discouraged smoking. The objection to that, at the time, was that it impacted working people too, since they often smoked. But they now smoke less! That is good for them and good for the economy, since health care costs are out of control. As is the climate.
Market forces are the best way to get things done, when they can be unleashed correctly. A higher gas tax would encourage the use of more economical vehicles. Instead of an Expedition, drive an Escort, commute in a Corolla instead of a Tundra. Rent the big truck for special events that need it, not everyday solo driving. Right now the American motor vehicle industry is largely phasing out car production in favor of trucks only, since with gas below $3/gallon Americans flock to big SUVs and pickups. And those get awful mileage. Hybrids aren’t selling well.
Electric cars are sort of catching on, but are a niche market, far from ready for most people (let’s not go into details here), and even if they magically appeared overnight, the power grid in many places couldn’t support them. Electrification of vehicles will take many years and should probably start with fleet vehicles (delivery trucks, etc.) that travel known distances not too far from their charger. They use a lot of gas and don’t have distance worries.
So let’s encourage more use of public transit and especially more use of high-mileage vehicles. A higher gas tax won’t kill you. In Europe, the tax ranges from about $1.60 to over $3 per gallon, and total retail prices are often over $7/gallon. The US rate is 19 cents federal plus varying state rates that together don’t add up to squat. Yet Europe prospers and they are more economically equal than the US. They also have better trains and bus service.
Idiotic substitute ideas involve taxing all vehicles equally per mile (further subsidize the big SUVs) or having GPS trackers on all cars to be sure that they’re paying for their miles. That violates privacy too. The oil companies must love it though.
Let’s raise the tax 25c/gallon now, to pay for infrastructure. And let’s keep adding 5c/year going forward. That way people will know that their next car should be more efficient if they don’t want to pay more. And maybe they’ll choose to live closer to work rather than have a long commute to the exurbs. (No coincidence that exurbs are heavily Republican even as inner suburbs turn Democratic.)
But what about the pledge to not tax anyone but the rich? Easily done. Raise the personal exemption on the federal income tax, so people start paying taxes at a higher income level. And maybe the earned income credit for the poorest. That simply gives it back equally to everyone, so those who drive say 10,000 miles/year with a 25 MPG car come out neutral. Yes, some working people will pay more, some less, but that will balance out, and people will have control as the tax rises going forward.
We don’t give away cigarettes any more just because they were once popular among the poor, and we shouldn’t subsidize profligate fuel use either. The gas tax needs to go up.