Against raising the gas tax

| January 13, 2015

Editorials from the Washington Post to the New York Times called for a gas tax rise last week, with Charles Krauthammer arguing that a $1 per gallon tax would mean more efficient cars – and, if offset by progressive tax breaks on low-income workers, “reduce the disincentive to work” in the form of Social Security taxes.

 

The gasoline tax isn't the best way to manage America's infrastructure and environmental issues. Image from the National Library of Wales.

The gasoline tax isn’t the best way to manage America’s infrastructure and environmental issues. Image from the National Library of Wales.

Meanwhile, the New York Times argued that the windfall from a higher gas tax should be used to fix longstanding funding gaps. We’ve heard about the U.S.’s infrastructure problems for years, and every time a bridge collapses, those calls will get louder – including from usually spending-averse Republicans like James Inhofe and Bob Corker.

On one hand, this is the perfect time to hit Americans with higher transportation prices. The average American car stays on the road for a little over 10 years, so even ten thousand SUVs kept off the road will mean less pollution and net lower carbon consumption for awhile. It could mean either much-needed revenue for infrastructure, or a way to fine-tune a progressive tax policy through consumption-spurring breaks.

Let’s just breathe for a minute, though. Yes, lower gas prices are an unexpected gift to Americans, and yes, they’re already buying bigger cars as a result – perhaps foolishly, as nothing lasts forever. But levying a tax of $12 per week per American solely to influence purchasing choices doesn’t seem like it’s necessarily the right tool for the job.

First of all, it means another bruising battle when the tax needs to be raised (or lowered) again in the future. The $1 gasoline tax is a purely arbitrary amount, and there’s no reason to think it’s the right one, any more than the $0.184 per gallon we’ve been saddled with since President Bill Clinton is. Congressional intransigence dating back decades has prevented the tax from being adjusted even when it needed to, and there’s no reason to expect that to change soon. Even keying the gasoline tax to inflation doesn’t necessarily cover all the bases, since the projects that the highway trust fund is expected to cover shift from year to year.

Second, we’re not sure how many people opt not to work because of Social Security taxes, but we’re guessing that unemployed Americans don’t think on the margins in quite the way their policy wonks do, and the promise of an additional $0.47 per minimum-wage hour doesn’t seem likely to produce the results Krauthammer expects.

Finally, there’s a perfectly workable alternative out there – why not just tax cars based on fuel efficiency, rather than the noxiously regressive gas tax? The United Kingdom has long charged a Vehicle Excise Duty for registrations, adjusting the amount according to engine size and fuel consumption; when consumers purchase a car in the UK, they often ask (or are told) what “band” it’s in, which provides a shorthand for how heavily taxed it will be when they pay for registration. Since miles per gallon figures are easily fudged by car companies, making miles per gallon an ineffective way of gauging fuel economy – let alone overall environmental impact – but a banded registration system would allow government to take a more holistic look at environmental impact, taking into account shipping and manufacture, not just miles per gallon.

Most importantly, though, to rest U.S. environmental policy on the fuel economy of our vehicles is to miss an opportunity. Alongside a banded tax that takes fuel efficiency and net impact into account, we need a tax on vehicle miles traveled. These two measures would push consumers to shorten their commutes and select less damaging cars, sure, but over time they might also encourage Americans to gather in more densely populated areas. While fuel economy and the gas tax will change over time, the built environment adjusts much more slowly, but with broader consequences.

A town or city where no one commutes farther than a few miles is one that takes our environmental challenges seriously, that doesn’t need as much money from the Federal cashbox – it’s a place that’s built to last, and to consume less.

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