Monday, February 23, 2015

We don't need to abolish, lower, or increase the current federal gas tax

Oil PricesThe moment gasoline prices started to fall, I knew that Tax Fever would set in to the short-sighted fools of both parties in Congress.

This is a moment when we will see in all likelihood why the mainstream is bringing us down. They will ignore the business cycle, ignore that sooner or later prices will go the other way for oil and the tax become another nail in America's economic coffin. But they will do it now because it is expedient.

First we have Republicans calling for elimination of deductions and exclusions on taxes in return for lower marginal rates, knowing full well that another Congress will increase the marginal rates once the cover has been removed. Now we have Republicans calling for an increase in gas taxes, the most regressive taxes we tolerate -- and on the argument that gas has never been cheaper and that this is the time to do it.

We don't need to abolish, lower, or increase the current federal gas tax. We need to return its use to its original purposes. If Moonbeam wants to fund his bullet-train to nowhere, let him get the money from Californians.

Like our school systems, infrastructure is not a problem of funding but how it is used. Increased funding in schools almost exclusively goes to bloated bureaucracy (administrators have increased at a pace 20 times faster than the student body) and the exact same pattern is seen in transportation.

Additionally, transit funding increases did little more than make it more expensive, inflation adjusted, to maintain road systems per mile. For instance, government dumped some $14 million into a one mile maintenance project, no bridges, on a road leading into Camden, Alabama, population 2,200, industry - government (welfare, public schooling, government services) and not much else.

Government has little incentive to keep costs down. Funding increases just make contract administration looser and places greater focus on cost-plus projects where contractors bleed the taxpayers for all that they can.

More money? Roads will still be the same, we'll just pay more for the same service.

The most economically efficient manner in which to collect monies for highway critical infrastructure remains at the gas pump.  Admin cost overhang associated with the gasoline and diesel fuel tax is less than 1%.

Tolling and VMT admin cost overhead runs from 15% to 22% of monies collected.  How many highway miles and bridges do you think could be maintained or built with that cost delta?

No, the problem with the highway fund lies with politicians raiding said fund to provide funding for their crony-capitalist friends.  You see, diversions of taxes collected specifically for highway infrastructure is regularly conducted providing political payback in the form of bridle paths, bicycle trails, frisbee parks, beautification efforts, but of greater concern and cost, is the diversion of gasoline and diesel fuel taxes for urban transit.

Stop the diversion of funds and there will be no need to raise taxes.

When the gas tax goes to pay for roads, I'm fine with it. Much easier to administer and collect than individual tolls or--god-forbid--GPS tracking and per-mile tax (although an annual tax based on GVW and simple odometer reading would work OK instead).

EVs aside, the gas tax is a very close proxy for a direct user fee: the more you drive, the more you pay. The bigger your vehicle (Gross Vehicle Weight), the more damage you do, the more you pay (fuel economy  being inversely related to GVW).

If Congress wants to build commuter trolley lines, use general funds--and realize that there's no provision for it in the Constitution. Federal spending on such side projects has increased 38% since 2008, while highway spending is flat.

Here’s what the politicians won’t say: simply using the taxes that are supposed to pay for highways to, well, pay for highways makes the HTF 98% solvent for the next decade, no tax increase necessary.

We just need government to show a little restraint on where they spend our money.

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