The Growing Road Tax Problem

The interstate highway system was established in the 1950’s to improve transportation between the states (Wikipedia has a good history.) Its initiation was typical of a government project – it cost about 5 times as much and took about 3 times as long as initially estimated – but overall it’s been a pretty good success story for the pro-government crowd. It’s essentially a public good with positive externalities that helps facilitate transportation and communication between states. The opportunities and conveniences it provides are probably a much greater contribution to the overall economy than what the states would have had without it (although you can probably find a libertarian to argue otherwise).

Of course, ongoing maintenance of the highway system costs money, and in 1956 a tax was established on gas. Its current value of 18.4 cents per gallon has been basically unchanged since 1993. There are a few other sources of revenue and a few other uses of the revenue (see linked article), but for the most part the highway system is maintained by the tax.

In all the Tea Party rhetoric these days against taxes, it’s easy to forget one of the main reasons governments collect taxes at all – to pay for things that everybody uses. And for years, the federal gas tax has been one of the best examples out there of a proper tax. Unlike, say, income tax or sales tax, there’s a pretty direct correlation to what you’re paying for and where that money goes to improve your life. It’s not perfect – everybody doesn’t drive on the interstate in equal proportions – but it’s pretty good. People who use the most gas are the ones most likely to be driving down the long interstates, causing wear and tear on those roads but also paying into the gas tax. To put it simply: road use and gas use have been pretty strongly related.

But things are changing.

Continue reading The Growing Road Tax Problem