NATIONAL REVIEW ONLINE www.nationalreview.com
June 20, 2014 4:00 AM
Don’t Raise the Gas Tax
By The Editors
The federal Highway Trust Fund, historically, is a fund that the government can’t be trusted to spend on federal highways. Unfortunately, Senator Bob Corker (R., Tenn.) is proposing to put more money in it by raising the federal gasoline tax, a proposal he’s concocted with Senator Chris Murphy (D., Conn.).
Corker’s idea is bad policy and bad politics. The politics: Gas prices are rising rapidly, taxes on fuel are regressive, and Americans, rightly, really don’t like when you raise any kind of tax at all.
There’s no pressing policy reason to increase the tax. The trust fund has plenty of money to fund highway priorities that the federal government needs to address — especially if federal money were spent more efficiently. But the fund is running dry because, instead, Congress has repeatedly lavished spending on non-highway priorities and on intrastate issues. Drivers across America shouldn’t have to pay for projects that House appropriators like, but that’s the way the trust fund works now. Corker is proposing to let this continue.
Corker is bound by a pledge he’s made to voters not to raise taxes, but his plan has a way around it: Package the gas-tax hike with renewing a bunch of tax breaks called “extenders” that expired at the beginning of this year. This more than adds up as a fiscal matter, but not an economic or political one. The result would be to cut taxes on particular corporations and for particular kinds of consumption and investment (producing wind energy, for instance) while raising taxes on almost all consumers. Moreover, it’s expected that most of these tax extenders will be renewed at some point anyway, as they are every year, so Corker can’t really claim that they’ll make up for the new tax increase he’s proposing.
We have a better idea: Cut the gas tax and let states pay for the highways within their borders. Senator Mike Lee (R., Utah) and Representative Tom Graves (R., Ga.) have proposed a bill that would do essentially this, and it makes a number of other important improvements to highway policies.
Some American infrastructure needs improvement, and some taxpayer-funded projects eventually pay for themselves, but states are in a far better position to decide which projects are worth financing. American infrastructure is also so expensive that many projects that might be economically sensible are not. This is especially true of federal projects, and Congress should work on that — the requirement that all federal contractors pay an excessive “prevailing wage” is one problem — before it digs its hand deeper into the taxpayer’s pocket.