• Dec 3, 2010
Senator Alan Simpson (left) and Erskine Bowles (right), Co-Chairman of the Deficit Reduction Commission

There is a sport in Washington D.C. that comes around like deer season every year: the gas tax debate. And stepping into the clearing this week with brown overcoats and deer antler hats are some former legislators and government officials – none of whom have to run for office – who are recommending a 15-cent additional federal gas tax starting in 2013 to help trim the federal budget deficit.

This measure has about as much chance of getting through the new Congress as a proclamation that would make Earth Day a national bank holiday. Still, given the fact that the Feds have laid a claim to my nine-year old son's unborn children's piggybanks, it's worth a few minutes to air out the subject.

The co-chairman of the bipartisan deficit reduction commission, former Clinton Administration official Erskine Bowles and former Republican Senator Alan Simpson, have called for a sweeping set of reforms in the way of taxes, spending cuts and elimination of a myriad of tax credits and deductions to which we have grown accustomed – mortgage interest for one.
The 15-cent per gallon hike in Federal gas taxes is paltry by European standards, but would be used specifically for transportation infrastructure improvement: roads, bridges, etc.

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Gas taxes are the single most unpopular tax an elected official can foist upon a voter according to elected officials. A couple of years ago, I had lunch with Rep. John Dingell (D-MI) who has held the Southeast Michigan seat since Eisenhower was President. Seriously. He agreed that it was a smart and sound policy, but one that "kills you with the voters." Of course, that discussion was about a headline-grabbing, heart-clutching $1.00-a gallon hike in the tax. The commission is only talking about a 15-cent additional tax. In today's pump reality, that means gas would go from about $3.00 a gallon in Michigan where I live to $3.15.

Man pumping gas

If you figure ten gallons of gas a week, or even 20, is purchased by most Americans who drive their cars regularly, that comes to $1.50 to $3.00 a week. I know this subject inflames passions, but I'm hard pressed to find a person with enough money to be actually driving a vehicle in the first place who also can't absorb an additional $1.50 to $3.00 a week.

But that's not the point, you say? The point is that tax-and-spend liberals will spend and spend and spend while they keep heaping new taxes on our backs. That's probably true, though, both parties are guilty of hiking taxes over time without addressing spending. Seriously.

The point, though, is that a gas tax is – *gulp• – a good tax. If, as the commission suggests, the gas tax hike is targeted for infrastructure improvement, that's a lot of improved roads and bridges, and a lot of jobs. As someone who recently had a flat tire and bent wheel from a Rt. 80 pothole, and a $500.00 bill to go with it, I think this is a good idea.

While I'm not keen to embrace Europe's $7.00-per gallon-plus system, it's hard to argue against the facts that European roads put their U.S. counterparts to shame. And the European Union is not overburdened with gas guzzler SUVs driven by sole drivers they way we are in the U.S. On the contrary, in Europe, a Ford Focus is a family car. That idea may not play well in rural Georgia, but I'm confronted by the reality that I don't see European families out demonstrating against having to buy Focuses and Toyota Corollas for families of four.

You know who else has been for higher gas taxes? George Bush and Dick Cheney.
You know who else has apparently been for higher gas taxes? Ford CEO Alan Mulally and Ford chairman Bill Ford, former General Motors CEO Rick Wagoner, former Chrysler CEO Tom Lasorda. And, hold on to your hats... George W. Bush and Dick Cheney.

According to two sources who were in the room in a March 2007 meeting with Detroit CEOs, Bush and Cheney both agreed that while higher gas taxes were a good idea for both deficit reduction and driving the sale of high fuel economy vehicles, they ultimately dismissed such moves for political, not rational, reasons. And neither would admit to supporting it in public.

Lee Iacocca may have said it best when he said the reason Americans are so violently opposed to higher gas taxes is that after the publicity around it is used by one political side or the other, the voter is reminded of the tax two or three times a week when they gas up and watch the dial spin higher and higher.

To be fair, Bowles and Simpson aren't completely without allies on the Hill. Tom Carper of Delaware, a Democrat, and George Voinovich of Ohio, a Republican, wrote to President Obama's commission on reducing the federal debt, proposing the measure. They suggest that 10 cents of the increase go toward paying down the debt, and the rest toward transportation infrastructure. Of the two, only Carper is running for re-election. Voinovich, a Republican from Ohio (where my tire blew on the pothole) is retiring.

10 cents of the increase would go towards deficit reduction, the remaining 5 cents toward infrastructure.
The overall deficit reduction plan looks smart, but completely unfeasible, politically, in its entirety. To simplify and to lower individual and corporate tax rates, the co-chairmen's plan eliminates or scales back $1.1 trillion in tax breaks, ranging from the popular deduction on mortgage interest to charitable givings, both of which would be replaced with 12 percent nonrefundable tax credits available to all taxpayers. The changes, the co-chairmen claim, would allow the corporate tax rate to drop from 35 percent to 26 percent and for the six existing individual tax brackets (currently ranging from 10 percent to 35 percent) to be boiled down to three: 8 percent, 14 percent and 23 percent.

Those numbers look, on the surface, compelling, and as if they would attract anti-tax Republicans to the bargaining table. But don't count on it. For every member of Congress who would vote for a bill containing a gas tax, there is an opponent in the next election who will make an ad superimposing their face on a gas pump dial spinning out of control.

David Kiley, an award winning journalist, covers the auto industry from Ann Arbor, MI. He has followed the industry for 25 years, and held posts including Detroit Bureau Chief for USA Today and senior correspondent for BusinessWeek. He is also the author of two books on the industry: Getting The Bugs Out: The Rise, Fall and Comeback of Volkswagen in America [John Wiley and Sons 2001], and Driven: Inside BMW, The Most Admired Car Company in the World [Wiley, 2004].

[Images: Mark Wilson and Justin Sullivan/Getty]


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    • 1 Second Ago
  • 85 Comments
      • 4 Years Ago
      Well, I guess there's always the alternative method of fund raising that I think was proposed in Oregon; put a transponder in every vehicle and tax per mile driven. I think this was proposed because they (Oregon) were seeing less tax revenue because people were switching to more fuel efficient vehicles and therefore using less gas. I think I have that information correct.
      • 4 Years Ago
      "The point, though, is that a gas tax is – *gulp• – a good tax"

      So true, wish the majority could see that. This tax would be a great thing.
      • 4 Years Ago

      OK, as long as we get normal speed limits on those improved roads like they do in Europe. 55 mph for trucks and 80 mph for cars - I'm all for it.
      • 4 Years Ago
      Yes please!

      As we increase the tax rate on gasoline, demand for it will be reduced. "After-tax" prices will go down, consumption will go down meaning less money being sent overseas to countries that would like to do us harm.

      I know this tax will get a cold reception from a car blog, but it really does make sense.

      The only problem with it is that it affects poor households disproportionately since if you are poor and have a car, you use just as much gas as someone who is rich and has the same commute (maybe even less if the rich guy has a hybrid).

      Therein lies the political problem: its a higher tax on the poor (Dems don't like that) and its an additional tax (Repubs don't like that).
        • 4 Years Ago
        If you're really poor, you don't drive, you take the bus.

        Or walk.
        • 4 Years Ago
        @BoxerFanatic

        The Bush Tax cuts certainly did not raise revenue:
        http://voices.washingtonpost.com/postpartisan/2010/08/cherry-picking_season.html

        What a laughable assertion, but we are all guilty of a little hubris now and then.
        That being said, your comments are always very thoughtful, though I do not agree with your politics.
        • 4 Years Ago
        True, but there are some people that are not so poor, or not fortunate enough to live in a place with viable public transportation.
        • 4 Years Ago
        Hey Boxer-

        George W Bush is calling. Not even he believes that crap anymore.
      • 4 Years Ago
      What about CAFE?
      • 4 Years Ago
      People that can't do math shouldn't be posting blogs or running our country.

      "it's just 15 cents".

      No, it's 15 cents more per gallon on everything transported by truck.

      Raw materials get to the plant, add this tax on. The refined material goes out of the plant, add another 15 cents to it. The plant that mixes it with someting else to make plastic then sends it to an injection mold company to make a part? Add 15 cents. The part goes to get put together with others? Add 15 cents.

      The product goes to the company that made it's warehouse? Add 15 cents. They distribute it to the warehouse of whoever buys it? Add 15 cents. The company celling the product ships it to a store. Add 15 cents. You drive to get it and take it home, there's another 15 cents.

      On everything you buy forever.

      Yeah, it's just 15 cents that adds up to money your government then gives to itself to pay overpriced union employee's that have pensions worth more then you'll ever see in your paycheck durring your lifetime. That is untill your state files for bankruptcy.

      Yeah, just 15 cents.... Which BTW does ZERO to help safety, or improve the automobile. Put all that money into developing lighter weight vehicles, make trucks lighter, whatever. Not into the pockets of politicians that just hand it out to thier friends.
        • 4 Years Ago
        add the tax to gasoline only. That keeps the cost from being added to the cost of goods shipped. anything shipped is moved with diesel. That also encourages a cheaper price on more fuel effecient diesel.
      • 4 Years Ago
      great article! it would help address so many problems: economic, environmental, health issues caused by air pollution and even lack of exercise!
      • 4 Years Ago
      This policy was adopted by John Major's government in the UK in the early 1990's. Although traditionally, there are rises of £0.02 ($0.03) or so per litre each year during the annual budget, Major's government instilled a fuel escalator which hiked excise duties by 6% over the rate of prevailing inflation each year. During the course of the 1990's fuel prices almost doubled. Very effective income generator for any government and I've long said that in the US, hikes in excise duties, sales tax and other indirect taxation will become more commonplace.
      • 4 Years Ago
      15 cents is nothing. It needs to be indexed to inflation or a percent of the price of a gallon of gas, not a flat rate. The highway trust fund is broke, and our infrastructure is crumbling. It's not a partisan issue, it's an economic issue.
        • 4 Years Ago
        Paul, I agree with you on many of your points. But regardless, the highway trust fund is broke.
        • 4 Years Ago
        @pual34
        the gas tax is to influence consumer behavior and for governmental revenue. I don't really agree with both, but the amount their asking for is not that much, and, as luis said, if it is indexed to the price of inflation, should be okay.


        And dare they raise it to european levels, it will diminish the benefits that great fuel efficient vehicles (small cars or hybrids) give us, thus punishing both responsible and "irresponsible" consumers... and we can always kick them all out of office like the 2010, 2008, and 2006 elections. Activist government balanced by an activist citizenry.

        @luis
        I don't really care about infrastructural spending... because they'll say it is for that and then find some other stupid project to spend it on. And seeing how they appropriated 800billion dollars of stimulus cash, they seem far more interested in building highspeed trains(which compared to our highways, gives no economic benefit whatsoever!) anyways, then spending it on fixing our highways and bridges.
        • 4 Years Ago
        @market: $800B was not stimulus. Almost 1/2 of that was tax cuts, which the Rs (and Ds) always fail to mention. The actual spending on infrastructure was less than $200B, a drop in the bucket compared to the, oh I don't know, several trillion dollars in needs we have just to bring our system into a state of good repair, let alone modernize it to keep up with China. High speed rail in this country will work, but $8B for a few segments won't do the trick. Just like $200B is not enough to repair all the roads and other transit infrastructure we need to be fixing.

        Yes, the stimulus was a failure, but that's because 1. it wasn't big enough and 2. much of it went to tax cuts which were not stimulative. I think the other 3rd went to help the states out, which is why they are just now laying off tens of thousands, causing more economic distress.

        Because of Obama's desire to please everyone, he has pleased no one. He and the Dems should have passed a $2T (YES TRILLION) stimulus focusing on JOBS JOBS JOBS, building our infrastructure past a state of good repair ONLY. Instead we got jack.
        • 4 Years Ago
        Yea, we need more taxes because we don't have enough money, right?

        Meanwhile, we bail out huge banks, huge auto corporations, entire foreign economics, foreign banks, fund a war that is taking place on at least four fronts, if not more, fund huge entitlement programs, and more. Yet we suddenly need to raise taxes to pay for our highways?

        Here's a hint: how about spending some of the money we already have on useful things like Federal highways instead of things like the pointless and failed war on drugs? Or all the money we supposedly dedicate to education, only to see zero rise in test scores and the decreasing ability of the American student to compete with foreign students?

        If your money is burning in a pit, the solution isn't to steal more money from poor people and to throw it in. The solution is to put out the fire. What the US needs, then, is a fire hose.
        • 4 Years Ago
        Move to Europe, land of plentiful gas tax.
        • 4 Years Ago
        The highway trust fund is not broke, it was looted for non-highway purposes.

        and don't forget the CAFR scam. Understand that and you break out of that limited mindset of: more taxes, or reduced services [austerity].
        http://video.google.com/videoplay?docid=2860538828528453481#
      • 4 Years Ago
      I'm surprised this article didn't bring up one of the most important issues. With the new CAFE standards, the government is requiring automakers to increase their fuel efficiency. This leads to companies to put expensive tech into cars to help them get to those levels. Case is still relatively inexpensive so people don't drive any less and all the profit goes to the car industry's. With a gas tax, people will drive less since gas is more and companies will be induced to make more fuel efficient cars, benefiting from economies of scale so this new tech doesn't cost as much compared to if its just forced on the auto makers. Plus, the money goes (hopefully) back to repairing our roads, infrastructure, reducing the deficit, debt, ect. CAFE is a tax on car purchasers but the money goes to the industries, why not have it go to help all of those who drive cars?
      • 4 Years Ago
      I know!

      Let's tax concerts at a $5 a ticket rate. Most people who go to concerts can afford that. We'll take the money and invest it in the arts so there can be better music performed at concerts. Everyone would benefit and we could take $3 and pay down the debt and $1 for better concert halls and the other dollar could help people play the guitar better and have better sound equipment.

      Then we could had a 50 cent tax on all coffee drinks, again, to improve the cups design and drivethrough efficiency, with 30 cents to pay down the debt. We will drink less, the cups will get smaller, and that would be good for all of us and the environment. Just think how happy the trees would be!
      • 4 Years Ago
      15 cents? How about a dollar. I am 100% for any hike in gas taxes. We drive ridiculous vehicles in this country for no real reason, perceived is the more likely reason. When gas hit $4/gal people really changed attitudes. We need to be back there.
        • 4 Years Ago
        I have a suggestion for those of you that are so eager to pay an extra buck or more a gallon and trust our government to do the right thing with the money... calculate how many gallons you bought this year and write a check to the treasury for that amount and leave the rest of us out of it!
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