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Tag Archives: highway finance

Abolish the Gas Tax?

By | | Transportation
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Last month, the Eno Center for Transportation proposed to abolish the gas tax, and the Antiplanner panned the idea. This week, the Wall Street Journal proposes abolish the gas tax, and the Antiplanner thinks it may be right.

The difference is that Eno wanted to replace the gas tax with federal transportation spending out of general funds in a deliberate effort to make transportation even more politicized than it is today. The Journal, on the other hand, wants to de-politicize highway spending.

The problem is that the Journal never actually says what it proposes to do instead of the gas tax. Reading between the lines, what the Journal is really proposing is to abolish the federal gas tax, while letting states fund highways out of gas taxes, tolls, mileage-based user fees, or whatever fees work best in each state. Too bad it didn’t bother to make the case for that, or even explain it.

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Highway User Fees

By | | Transportation
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The American Petroleum Institute has a web page showing how much of the price you pay for gasoline goes to the government in each state. They include ordinary gas taxes as well as sales taxes on gasoline, but not taxes paid by the oil companies themselves.


Click image to go to the API web site for more detail.

Their goal, I suppose, is to show that the oil companies aren’t making anywhere near as much profit off of gasoline as the government is. But the map also shows some clear geographic differences. First, the lowest taxes are in the sunbelt, while the highest are in ultra-blue states on the coasts and upper Midwest. Second, the range in gas (excise) taxes is quite wide, from 10.5 cents per gallon in New Jersey to 37.5 cents in Washington state.

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The Tax Foundation Responds to the Antiplanner

By | | Follow up, Transportation
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Last Thursday, January 17, the Tax Foundation (TF) issued a paper arguing that only 32 percent of state and local highway costs were paid out of user fees, while the remaining costs came from “general funds.” In a post here, I pointed out that, actually, user fees for highways cover 76 percent of the costs of roads and most of the remaining 24 percent come from interest on user fees before they are spend and bond sales that will be repaid out of user fees.

TF replied, saying the Antiplanner “conflates taxes and fees.” In fact, TF specifically said that state gas taxes are user fees, but somehow defined federal gas taxes as “general funds.” I simply argued that, to be consistent, TF should count federal gas taxes as user fees as well.

TF went on to say, the Antiplanner “suggests we include federal gasoline tax collections in state-local revenue.” Again, TF said that federal gas tax collections are “general funds” and I disagreed with that statement. If state gas tax collections are user fees, then federal gas tax collections are too. They are certainly not general funds, any more than state gas taxes are general funds, since federal law dedicates them to transportation projects and mostly to highways.

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