Bacon's Rebellion

Democracy Thrives in Sunlight

The Political Economy of the Gas Tax

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by

James A. Bacon
in ,

I have long argued that the debate over the motor fuels tax shakes out over class lines. The gas is regressive, in that lower-income people pay a higher percentage of their income for the tax than wealthy people. Yet wealthy people place the greatest premium on their time stuck in traffic and are most agitated by the traffic congestion that higher gas taxes are meant to address. That’s why Virginia’s major business lobbies, which are populated by higher-income citizens, have consistently supported the idea of more taxes for roads.

Now comes data from an April 9-10 Gallup poll confirming at least part of my analysis. Gallup asked Americans whether they would support a hike in the gas tax in their state and broke down the numbers by annual household income. The first column in the chart below shows the % voting for a higher gas tax, the second the % voting against.


The results are as expected. The lowest-income Americans are less inclined to vote against gas taxes because they are less likely to own a car. Once you get into the lower-middle class, however, the cost of car ownership is a major concern and resistance to higher gas taxes is the most intense. Objections diminish with successfully higher income groups.

This data shows why so many politicians — especially Republicans, whose constituencies tend to be more rural, suburban and dependent upon automobiles for transportation — are so reluctant to raise the gas tax. Here in Virginia, increasing the sales tax by a fraction of a cent generated less opposition, even though it actually raises a lot more money.

For sure, raising gasoline taxes to finance new road construction is a political non-starter. But I persist in believing that people could accept gas tax increases if they knew that the revenue went to maintaining existing roads, rather than building some boondoggle highway for God-knows-who. Virginia should  dedicate the gas tax to maintenance only, and the tax should float with the rising or falling cost of the maintenance budget. If only Gallup would dig deeper into the issue…

— JAB

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5 responses to “The Political Economy of the Gas Tax”

  1. DJRippert Avatar
    DJRippert

    How about this poll in Virginia:

    How would you prefer to finance transportation improvements in Virginia?

    a) Raise the gas tax
    b) Eliminate tax breaks targeted at specific companies or industries?

    You think the Imperial Clown Show in Richmond would ever let that poll see the light of day?

    Crooks. Our legislature is simply crooked.

  2. Breckinridge Avatar
    Breckinridge

    1) A similar pattern would take place on any consumption tax, such as the general sales tax, cigarette tax, excise taxes on beer, etc. In fact, anything but the income tax, where it would be the high income respondents getting a little tender about the wallet. But a range of from 25 to 36 “against” doesn’t indicate a deep divide.

    2) I’d like to think maintenance would be an easier sell, but probably not. Not really.

    3)DJR — I’m sure a poll asking voters if they’d like to cut “tax breaks” for some unspecified “special interest” would garner, oh, about 97 percent support. Or some out of town company. But in reality they would squawk if it was THEM that was the special interest, they’d whine like everybody else. One element of the recent bill did just that, eliminating (in part) the lower discounted sales tax paid by car buyers — certainly car sales is a specific industry.

  3. larryg Avatar
    larryg

    yeah… the “eliminate tax breaks” is bogus… from a practical perspective unless everyone takes a haircut and no one really escapes …..

    the beauty of the other 46 states in transportation is that a lot of it is in the local budget and people DO know the details of the spending.

    Right now, in Va:

    1. how many people could tell you how much it costs to plow one mile of subdivision road

    2. – how about re-paving one mile of road?

    3. how about the cost to build one mile of two lane road?

    how many people in Va know these numbers much less how they relate to the county/locality they live in?

  4. salz Avatar
    salz

    A rational gasoline tax is NOT truly regressive because the poor take the bus. According to the National Surface Transportation and Revenue study a few years ago, American governments subsidize driving at a $145 billion annual rate while subsidizing transit b$39 billion. About two-thirds of transit riders have family incomes of less than $50,000 but in 2011, according to Metro Magazine, the journal of transit, 56 percent of bus companies raised fares and over 70 percent added a fuel surcharge. Aht Amalgamated Transit Union reports that 5,000 plus bus drivers have been laid off during this recession.

    Meanwhile, The Victoria Transportation Policy Institute reports that it costs society 54 cents for every mile that we drive.

    Mr. Bacon is right. A decent gasoline user fee, like Maryland, is definitely a step in the right direction.

  5. larryg Avatar
    larryg

    good points about who rides transit – AND who pays for transit!

    but the Md point is a clinker. Md squandered 3 BILLION dollars on the Intercounty Connector and now it’s killing them financially with half or less of the projected traffic and they are now boosting tolls on other roads AND looking for yet another gas tax increase!

    for myself – I support user fees but the gas tax is fatally flawed because while users pay the fee – there is virtually no accountability as to how the money is spent – as Jim has pointed out.

    A toll is (somewhat) more voluntary AND there is some level of accountability in terms of what you get (or not) for your money.

    The ICC is an example of a much more transparent process than road taxes are – because it’s pretty clear – at least right now- that the ROI on that road is terrible – AND it’s a safe bet that Md is not going to be building too many more like it anytime soon!

    I still think we have yet to optimize toll roads. Each toll transponder has a unique, customer-identifiable number. Why not offer drivers the option of including a lottery entry when they use a toll road? Judging from the 7-11’s these days – people would FLOCK to the toll roads to get both a less congested ride AND a chance to strike it rich!

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