There are rumblings that the Tea Party will turn its small government, lower taxes, spending cuts eye towards the federal gas tax, which is up for renewal later this year. If so, I have a short message for the Tea Party (if anyone is listening): After the debt ceiling debate and U.S. credit rating downgrade by the S&P last Friday, please recognize that there are some taxes worth paying and this is one.
The argument is that it is inefficient for states to remit taxes to the federal government, who then turns around and reallocates them back to the states. In fact, it is another example of ineffective big government as the states are viewed as better equipped to determine how that money should be spent. Prima facie, this makes sense, but what is wholly missing from the analysis is the necessity for a coordinating body to support the needs of interstate commerce. Without that coordinating effort, roads and bridges will vary in condition, safety, and availability from state to state. Why? Here are two primary reasons:
- Less populous states will have lower tax bases to support roads and bridges than more populous ones. Obviously, tax revenue and infrastructure quality/investment correlate highly.
- States will always have conflicting and competing funding priorities with road projects, which means these projects will not always receive needed investment dollars in some states
So what? Less populous states probably don’t need the same level of infrastructure investment as others. Wrong. Roads are traveled by more than cars. Trucks hauling goods across the country rely on these roads to get to their destination safely and cost-effectively. If a less populous state decides to invest its limited dollars elsewhere and lets roads and bridges decline, then the cost of transportation will go up for freight companies relying on these roads due to such reasons as poorer gas mileage and more breakdowns as they will get poorer gas mileage, more breakdowns, and more miles driven from finding alternative routes. In the end, destination states will see higher prices on goods.
As much as we are a federation of states and many decisions are best made at the state and local level, we are still a united states. Interstate commerce is the lifeblood of our country, and there must be some reliance that our roads and bridges will support that lifeblood. So, there must be a centralized authority making decisions (not all decisions by the way as the federal gas tax comprises only 28% of all dollars spent on infrastructure projects) on where to spend money for the national good. Will it do so always in the most efficient manner? Possibly not. Might there be a better way to allocate the funds and measure the effective use of those funds? You bet. But one thing is absolutely clear, the federal gas tax revenue is essential and cannot go away in the hopes that states will raises taxes to make up the difference and do a better job. As our roads are already in bad shape with the American Society of Civil Engineers giving them a D-; we actually need to invest more and not less in our infrastructure.
Please, let me say it again, message to the Team Party: There are some taxes worth paying. The Federal gas tax is one.
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Excise Motor Fuel Tax