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Posts from the "Gas Tax" Category

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Building Cloverleafs Won’t Inspire Americans to Pay More for Transportation

The federal transportation fund is running out of money, threatening the country with potholes, stopped construction, and economic downturn. Congress, which has kept the program solvent with short-term patches for years, now finds itself unable to do more than buy a few months’ time.

Mainstream opinion pins the blame for this state of affairs on partisanship and anti-tax extremism. But the crisis has a deeper cause. In transportation, as in so many areas of American politics, the terms of debate are controlled by an elite that has lost touch with the rest of the country.

Voters on both the Tea Party right and the urban left have lost the desire to pay higher taxes for new roads. Yet powerful highway bureaucracies and their political allies insist that added revenues must go toward ever more cloverleafs and interstates. They keep searching for money to build what voters don’t want to pay for, a quest doomed to end in futility.

The roots of the congressional deadlock are best seen far from Washington.

When Texas Governor Rick Perry took office in 2000, he found himself caught between campaign contributors’ yearning to build expressways and conservative hostility to tax increases. He sought a way out with an aggressive program of toll-road building.

But when the highways opened, drivers rebelled against the stiff fees. Revenue fell far below forecasts, and grassroots activists launched an anti-toll campaign. At last month’s state Republican convention, the insurgents triumphed. The state party platform now calls for no new tolls (as well as no new taxes).

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Is Obama Opposed to the Bipartisan Gas Tax Proposal or Just Noncommittal?

Yesterday, The Huffington Post ran this headline: “White House Appears More Open To A Gas Tax Hike.” Minutes later, The Hill published this one: “White House opposes gas tax hike to fix transportation funding.” So, which is it?

Josh Earnest, on his first day as White House press secretary, said the president "would not support" a gas tax hike. But other officials have softpedaled the question. Photo: ##https://www.facebook.com/topic/White-House-Press-Secretary/108184749201716##Tamara Keith/Facebook##

Josh Earnest, on his first day as White House press secretary, said the president “would not support” a gas tax hike. But other officials have softpedaled the question. Photo: Tamara Keith/Facebook

The Hill’s headline was based on a statement by new White House press secretary Josh Earnest, who said about a gas tax increase: “That’s something that we’ve said a couple of times that we wouldn’t support.” But HuffPo got a different quote, which gave them a different perspective.

“The Administration has not proposed and has no plans to propose an increase in the gas tax,” White House spokesman Matt Lehrich told HuffPo. “It is critical that we pass a bill that not only avoids a short-term funding crisis but provides certainty and lays the groundwork for sustained economic growth. So we appreciate that members on both sides of the aisle continue to recognize the need for a long-term infrastructure bill, and we look forward to continuing to [work] with Congress to get this done.”

HuffPo also reports that Ryan Daniels, a Department of Transportation spokesman, said that while the “Department has outlined a plan involving pro-growth business tax reform,” it was “open to ideas that Congress comes up with.”

Non-committal at best. But, it’s a far cry from Earnest’s claim that the administration “wouldn’t support” a gas tax increase. Earnest made that statement on his first day on the job — perhaps he overstated the case.

President Obama has come out in support of a convoluted plan to close corporate tax loopholes and repatriate some offshore profits as a means of paying for transportation — though such a scheme would upend the “user pays” ethic that has undergirded transportation policy for decades and would only pay for a four-year bill.

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Senators Murphy (D) and Corker (R) Propose 12-Cent Gas Tax Increase

There are several proposals on the table to stave off the impending insolvency of the Highway Trust Fund (which pays for transit, biking, and walking projects too) in two months. Just now, two senators teamed up to announce one that might actually have a chance.

The R after Sen. Bob Corker's name might make all the difference for this proposal. Photo: ##http://www.corker.senate.gov/public/index.cfm?FuseAction=Images.Display&ImageGallery_id=a36a3e1a-0103-b714-2285-f8fb90d613e1##Office of Sen. Corker##

The R after Sen. Bob Corker’s name might make all the difference for this proposal. Photo: Office of Sen. Corker

Sens. Bob Corker (R-TN) and Chris Murphy (D-CT) have proposed increasing the gas tax by 12 cents a gallon over two years. The federal gas tax currently stands at 18.4 cents a gallon, where it has been set since 1993, when gas cost $1.16 a gallon. The senators’ proposal would also extend some expiring tax cuts as a way to reduce the impact on Americans.

“I know raising the gas tax isn’t an easy choice, but we’re not elected to make easy decisions – we’re elected to make the hard ones,” said Murphy. “This modest increase will pay dividends in the long run and I encourage my colleagues to get behind this bipartisan proposal.”

This proposal — while still not introduced as a formal bill — has far more potential than anything else that’s been offered. President Obama’s corporate tax scheme was dead on arrival, even though it had support from the Republican chair of the Ways and Means Committee, Dave Camp. Rep. Peter DeFazio’s idea of a per-barrel oil fee and Sen. Barbara Boxer’s idea for a wholesale oil tax don’t have Republican support. Neither does Rep. Earl Blumenauer’s 15-cent gas tax hike, which was the most logical proposal on the table, until now. What the House Republicans want to do is fund the transportation bill by reducing Saturday postal service — a hare-brained scheme if ever there was one.

What gives this proposal a fighting chance, of course, is Bob Corker’s name on it. Not only is Corker a Republican, but he’s a respected leader on the Banking Committee. It’s also a sign that maybe, just maybe, as we stare down the barrel of a real funding shortfall, members of Congress might find the gumption to do what they all know needs to be done: raise the gas tax.

“In Washington, far too often, we huff and puff about paying for proposals that are unpopular, yet throw future generations under the bus when public pressure mounts on popular proposals that have broad support,” said Corker. “Congress should be embarrassed that it has played chicken with the Highway Trust Fund and allowed it to become one of the largest budgeting failures in the federal government. If Americans feel that having modern roads and bridges is important then Congress should have the courage to pay for it.”

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Barbara Boxer’s Transportation Bill: Same As It Ever Was

The future of national transportation policy is pretty much like the present of national transportation policy, if the Senate Environment and Public Works Committee has its way: underfunded and highway-centric.

This is your freight network, America. Enjoy. Photo: ##http://www.komu.com/news/licking-man-sentenced-for-arson-fires-at-truck-stops/##KOMU##

This is your freight network, America. Enjoy. Photo: KOMU

The bill released by Senator Barbara Boxer’s EPW Committee yesterday [PDF] rejects pretty much everything the Obama administration put forth in its bill, including permanent funding for TIGER and the elimination of red tape that prevents states from tolling interstates. The administration called for spending $302 billion over four years, while the EPW bill envisions a $265 billion budget over six years — although that figure does not include transit or rail.

And that’s part of the problem. The administration put forward a comprehensive, multi-modal transportation bill proposal. But in the Senate, the process is shepherded by EPW, and EPW only writes the highway component of the bill, then hands it over to the Banking Committee for the transit piece and the Commerce Committee for the rail and safety piece. And of course, nothing at all will happen unless the Senate Finance Committee can find a way to pay for it.

“It’s disappointing that the Senate is still operating under complete modal siloes and not thinking of this as a comprehensive system in any way, shape, or form,” said Joshua Schank of the Eno Center for Transportation.

Boxer has long hinted that she doesn’t see much need to change the policies laid out in the current transportation bill, MAP-21, which was negotiated less than two years ago. And by that standard, she has delivered. While there are some updates to MAP-21, by and large, the EPW bill maintains the status quo right down to the level of funding, which is only adjusted for inflation.

Of the few changes included in the bill, the proposals are hit-or-miss. Here’s the rundown.

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Uncle Sam Wants You to Drive: 5 Tax Breaks for Cars in the U.S. Tax Code

It’s April 15. If you bought an electric car in 2013, you can claim a tax break today. If you bought a plug-in hybrid, you can get a tax break today. But if you don’t own a car and walk to work instead? Sorry, Charlie.

Bought a shiny new electric car? Congratulations, you get a huge tax break. Photo: StockMonkeys.com

There’s a whole array of goodies in the U.S. tax code for drivers, the automobile industry, and oil companies. Here are the ABC’s (and the DE’s) of these tax-day gifts that help clog our streets with cars.

Alternative vehicle logistics. President Obama wants to extend the tax break for people who invest in properties involved in the production of advanced vehicles or the fuels they use. The Treasury Department argues that the $2.3 billion allocated for this incentive under the 2009 stimulus wasn’t enough, and that it didn’t reach more than two-thirds of eligible applicants.

Biofuels. You can get a dollar from Uncle Sam for every gallon of biodiesel you produce, though this is the last year for that one.

Car commuting and driving for work. The granddaddy of all tax incentives for driving is the $250 per month that car commuters can claim in tax-free income to cover parking expenses. Once you’re on the clock, your driving expenses are also eligible for a tax deduction. The IRS lets you write off 56.5 cents for every mile you drive for your job. As Turbo Tax’s fact sheet says plainly: “More miles, more money.” You can even write off trips to search for a job, see a rental property you own, or do volunteer work (though that one gets a lower rate). In some cases, you can even claim deductions for car washing and polishing.

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Concrete Proposals for Raising Gas Tax Finally on the Table

After a lot of vague talk about transportation revenues since the passage of MAP-21 — “everything is on the table” and “we need to think outside the box” — real proposals are finally being presented.

Rep. Earl Blumenauer is introducing a bill to raise the gas tax by 15 cents a gallon. Photo: Michael Clapp/##http://www.opb.org/news/article/wyden-blumenauer-address-security-and-privacy-concerns/##OPB##

Rep. Earl Blumenauer is introducing a bill to raise the gas tax by 15 cents a gallon. Photo: Michael Clapp/OPB

A few months ago, House Transportation Committee Chair Bill Shuster told me, “The surest way to kill something is to get out there way far in front before anything is possible.” He said you’ve got to figure out when the timing is right.

Apparently, it’s right now.

Tomorrow, Rep. Earl Blumenauer (D-OR) will introduce a bill to raise the federal gas tax by 15 cents a gallon, the amount suggested a few years back by the Simpson-Bowles deficit commission.

The proposal would go a long way toward solving the immediate problem: The Highway Trust Fund is projected to be flat broke by the time a new transportation bill needs to be negotiated next year. But it still doesn’t tie the tax to inflation or the price of gas, so Congress would still periodically need to take on the politically difficult task of voting to raise it. And in the long term, it could prove unsustainable to keep transportation funding tied to gas consumption, which is dropping with greater fuel efficiency and less driving.

Still, when Blumenauer announces his bill tomorrow, he’ll be flanked by people representing labor, business, transit, transportation reform groups, and road builders. All of those interests have been banging the drum for greater transportation investment for years. They are not picky about how the revenue gets raised.

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A Golden Opportunity for Congress to Avoid the Transportation “Fiscal Cliff”

The Transit Account of the Highway Trust Fund is expected to slip into negative territory in 2015. Estimates are based on CBO's February 2013 baseline projections. Image: CBO

MAP-21 expires in a year and five months. When it does, if lawmakers haven’t already found a solution to the “transportation fiscal cliff,” they’ll have to do one of three things, according to a report issued last week by the Congressional Budget Office [PDF]:

  • Transfer $14 billion more in general funds
  • Raise the gas tax by 10 cents a gallon
  • Cut the authority to obligate funds in 2015 from about $51 billion projected under current law to about $4 billion

“If lawmakers chose to wait until fiscal year 2015,” wrote CBO analyst Sarah Puro, “at the expiration of MAP-21, to reduce spending, those cuts in 2015 would need to total about 92 percent for the highway account and 100 percent for the transit account.”

It couldn’t be clearer. Congress has to stop dithering and start working on a revenue solution, stat. Oh, and the president and his new secretary of transportation have to get behind it, guns blazing.

Congress has three potential vehicles for a revenue solution: 1) a “grand bargain” on the deficit, the sequester and the fiscal cliff, 2) tax reform, and 3) the next surface transportation bill.

And what will that “revenue solution” be? The simplest, most easily implemented fix is a gas tax hike, but over the long term, taxing fossil fuels as a way to pay for transportation infrastructure just won’t cut it.

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Virginia’s Transpo Future: Charge Drivers Less to Build More Roads

Congratulations are owed to Virginia Governor Bob McDonnell. He’s scored a victory on his transportation funding plan, cementing his legacy (though infuriating conservatives, including his hand-picked successor). His achievement is being called the first bipartisan initiative to pass in Virginia in decades. And what does this great deed accomplish? Secure revenue to fuel a new era of wasteful road-building in the commonwealth of Virginia.

McDonnell's new transportation funding plan will pay for the wasteful and unnecessary expansion of Route 460. Photo: Doug Kerr/flickr

Virginia’s state House and Senate both voted this weekend to approve McDonnell’s funding plan for transportation, despite opposition from anti-tax activists. McDonnell’s original proposal to eliminate the gas tax entirely got massaged a little bit, turning into a 3.5 percent tax on the wholesale price of gas.

His proposal to raise the sales tax survived the legislature, as did the $100 tax on alternative fuels – an idea that is somewhat less backwards now that some semblance of gas tax remains. Democrats hate it, though, and McDonnell has already signaled a vague willingness to “review” it.

The sales tax hike, however, is as backwards as ever. McDonnell is raising the sales tax 0.3 percent in most parts of the state but 6 percent in the populous Hampton Roads and northern Virginia areas. Much of the extra funds raised in those areas will go to local projects, but it still means the most urban and transit-rich areas, where most of the state’s non-drivers live, will pay more for a plan that disproportionately funds rural roads.

Drivers will pay five cents per gallon less than they did under the old gas tax, given current prices — shrinking their contribution by about 30 percent. Rather than strengthen the gas tax’s small but important incentive to drive less, McDonnell’s plan turns it the other way.

The other reason the sales tax hike won’t do the trick is that sales taxes aren’t an appropriate tool when what you need is a stable source of funding.

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State Budget Includes $625 Million Road Bailout for 2013

For years, Albany has raided the state’s highway trust fund, using general tax revenue to patch holes. This year, the governor’s budget, as filed in the Senate and Assembly, includes a mammoth $625 million road bailout, larger than the $519 million projected in the financial plan and higher than most trust fund bailouts in previous years.

As it siphons money from the state's highway trust fund, Albany continues to use the general fund to subsidize roads. Photo: Doug Kerr/Flickr

The Dedicated Highway and Bridge Trust Fund, created in 1991 using fuel taxes and vehicle registration fees, is meant to pay for road construction and repair. By 1993, it was already being used to pay off Thruway Authority debt. Soon enough, it was raided to pay for road plowing and DMV salaries. Through 2008, only one third of the fund’s revenue was used to cover capital costs, according to Comptroller Thomas P. DiNapoli.

A bill to keep highway trust fund revenue from being diverted has stalled in the Assembly. Even that bill, however, wouldn’t solve the underlying problem: New York is spending more on roads than it collects in fuel taxes, tolls, and fees. (All told, federal and state gas taxes and automobile fees pay for only 54 percent of New York’s state and local bridge and road spending, according to the non-profit Tax Foundation.)

“Raids from dedicated revenue streams and general fund transfers are not funding solutions,” said Veronica Vanterpool of the Tri-State Transportation Campaign. “They are last resort measures when new revenue sources are not being considered.”

In the meantime, the trust fund raids continue, pushing more of the burden for supporting highways from drivers to all taxpayers, including the 54 percent of New York City households that don’t even own a car.

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Drivers Cover Just 51 Percent of U.S. Road Spending

There’s a persistent misconception in American culture that transit is a big drain on public coffers while roads conveniently and totally pay for themselves through the magic of gas taxes. And that used to be true — at least for interstate highways, a fraction of the total road network.

Drivers directly pay for just 50.7 percent of the cost of the American road system. Image: Wikipedia

But that was many, many failed attempts to raise the gas tax ago. A new report from the Tax Foundation shows 50.7 percent of America’s road spending comes from gas taxes, tolls, and other fees levied on drivers. The other 49.3 percent? Well, that comes from general tax dollars, just like education and health care. The way we spend on roads has nothing to do with the free market, or even how much people use roads.

“Nationwide in 2010, state and local governments raised $37 billion in motor fuel taxes and $12 billion in tolls and non-fuel taxes, but spent $155 billion on highways,” writes the Tax Foundation’s Joseph Henchman. Another $28 billion of that $155 billion comes from revenue from the federal gas tax.

Meanwhile, transit fares cover 21 percent of costs nationwide, indicating that the difference in subsidies for roads and transit is not as great as it’s often made out to be. (Though in absolute terms, there is a big difference: The total subsidy for roads dwarfs the total subsidy for transit.)

Even more interesting is to compare roads to Amtrak, a favorite target of self-styled fiscal conservatives in Congress. Amtrak recovers about 85 percent of its operating costs from tickets — a relative bargain compared to other modes.

The Tax Foundation also analyzed transportation spending in every state to determine which states subsidize their road systems the most through general taxes. Drivers in Delaware, Florida, New Jersey, North Carolina, and New York cover the highest share of road spending compared to drivers in other states. Drivers in Wyoming, Alaska, South Dakota, and Vermont cover the lowest share.

Correction: An earlier version of this story, using Tax Foundation calculations that don’t factor in the federal gas tax, understated the share of road spending covered by drivers.