Essay by:
Megan Henry
American University

When considering an increase in the gas tax, some people may shudder when reminiscing on gasoline costs rising to four dollars a gallon this past year. But in reality, an increase in the federal gas tax is really not too devastating since it has not increased since 1993 (Buechner, 1997). The tax then and now remains at 18.4 cents per gallon. It is not a question that the gasoline tax needs to increase; the question is how. I have taken a look at what a normal increase in the gas tax would do and compared it to other options, including a tax per mile driven and what is called a "net-zero" gas tax. Regardless of which one we choose, it is obvious that there needs to be a raise in the gas tax.

The Highway Trust Fund was established in 1956 and was created to allocate funds for the interstate highways (Buechner, 1997). These revenues are collected from a portion of the gasoline tax. In 1997, almost 84 percent of these revenues were distributed towards interstate highways (Buechner, 1997). Over 6,000 earmarks diverted billions of dollars away from investments in basic infrastructure and force states to divert resources away from pressing transportation needs (Strom, 2007). David Strom wrote an article where he thinks we should eliminate the federal gas tax to put citizens in control of how transportation dollars are spent (Strom, 2007). Congressman Fred Thompson agrees that a tax increase on top of state and local gas taxes is financing infrastructure repairs that the states do not even determine which infrastructure problems are their priority (Thompson, 2007). Thompson argues that the problem is not necessarily the tax, but rather the politics around the funding process (Thompson, 2007).

Since people are trying to drive less, the current tax is insufficient to fund road, bridge, and transit programs (AP, 2009). President Obama has expressed concern over this disconnect and the current economic climate and should be concerned about hurting consumers and slowing the economy. His fears are legitimate, however, a New York Times/CBS poll in 2006 showed that Americans would support higher gas taxes if they knew what the money was being used for. One example given was if it was spent on reducing global warming. Another was if it would reduce our dependency on foreign oil (West, 2006).

As people start to drive more fuel-efficient cars, a suggestion to battle the unreliability of the gas tax is by taxing by the mile by using GPS chips to track miles driven to determine the amount owed (Johnson, 2009). This method has been compared to using electricity in your home; you turn it on and get charged for when it is on (Johnson, 2009). In an article by Joan Lowy, she suggests it may decrease the incentive for people to buy fuel-efficient cars if they are being taxed at the same rate as gas-guzzlers (Lowy, 2009). Since this is only being discussed state by state, my question is what happens when you are driving cross county or just into other states that do not have a mileage charge? The tax is considered to be environmentally friendly by encouraging motorists to drive less (Lowy, 2009). Another concern I have is that this method is extremely intrusive. The government would know exactly where you are at all times. If people were livid about their phone lines being tapped, I imagine they would not be too thrilled about this method either. Not to mention the need to create another department, which then also needs to be funded and seems to worsen our economic problems.

In terms of going down the line of environmentally friendliness and less driving, another idea is offsetting the gasoline tax increase by lowering federal income taxes. This would also reduce gasoline consumption but not have a tremendous financial impact on consumers(West, 2006). Charles Krauthammer, contributing editor to the Weekly Standard, wrote an interesting article on this concept, also known as the net-zero gas tax. He points out some very attractive and strong comments, including the fact that Britain has a tax that is nearly four dollars per gallon, which is more than 20 times our gas tax. Politicians fear approaching this, and avoid this like it was thin ice. However, Krauthammer also points out that during a time of a recession, taxing does not seem ideal. Some benefits of taxing that he is in favor of are making us less dependent on oil exporters and a gradual shift toward fuel-efficient cars. Reducing our gas consumption can reduce oil prices worldwide and “put us on the road to energy independence” and is a “desirable national good” (Krauthammer, 2009).

The idea of a net-zero gas tax is extremely appealing to me. Next to all of the options mentioned, I believe this would have the most benefit especially relevant to our current economic environment. Krauthammer implies that using a net-zero gas tax is time sensitive. He points out the fact that we had a historic high gas price fall almost three dollars to its current level. The net-zero gas tax proposed by Mr. Krauthammer would increase the federal gas tax by one dollar, and at the same time the FICA tax would be reduced by $14 a week. This reduction in the payroll tax is based on the studies that show that the average gas consumption for the consumer is roughly 14-15 gallons per week. Thus, “the average driver comes out even.” (Krauthammer, 2009). He argues that this is simply transferring money and the government does not gain revenue (Krauthammer, 2009). The net-zero gas tax also puts us in control by putting money back into the consumers’ pocket; it is simply a wash.

Senator Richard Lugar wrote a piece for the Washington Post and agreed in cutting the payroll tax, which disproportionately affects the lowest-paid employees, so workers would see extra money every payday (Lugar, 2009). Also, a significant increase in the gas tax will be more likely to decrease consumption and change SUV sales. As we saw, between November 2007 and October 2008 the United States experienced the largest driving decline in history (Krauthammer, 2009). While those reported they would be more supportive if they knew what it was going toward, why not combine the net-zero gas tax with less earmarks and a defined revenue distribution.

Not only could the gas tax be going toward environmental considerations, but also the change in behavior due to the increased gas tax would also be beneficial in the long run by reducing our demand, and then affect other countries worldwide. Americans sent nearly $430 billion to other countries in 2008 for the cost of imported oil (Lugar, 2009). Krauthammer illustrates how the regimes of Russia, Venezuela, and Iran will be hurting from our lack of dependence on their production of foreign oil and it would not be coming from U.S. defense dollars or “the risk of a single U.S. soldier” (Krauthammer, 2009). Senator Lugar concurs, and states, “those hundreds of billions should be spent to build a new energy economy here, not shipped to dangerous regimes overseas.”

To reiterate, the key benefits of a net-zero gas tax are that it is revenue neutral and not punitive to the consumer since the increase in the tax is offset by the reduction in payroll tax. It encourages the market, not the government, to modify products to more fuel-efficient vehicles, while also allowing us to further develop our own natural resources. The nation defense measures are also a large part of this. It takes countries like Russia and Venezuela who depend heavily on oil revenue and puts them on their knees because they cannot meet budgetary needs and keeps them from meddling elsewhere. This will humble OPEC because the U.S. consumes 25 percent, making us a swing nation that can hurt others when we reduce consumption.
Since an increase in the gas tax seems to be inevitable and moving towards more environmentally conscious actions is also of concern, I believe Charles Krauthammer’s suggestion for a net-zero gas tax is the most beneficial. Hot issues such as climate change and environmentally friendliness, national security and economic costs of foreign oil make the net-zero gas tax option extremely appealing. It combines all of these into one simple solution, and what better time to do it than during a recession when drivers will get money back into their pockets. There would be no need to create another department to keep track of the GPS chips and miles driven, no need to create a disincentive for fuel-efficient cars, and no need to raise the fuel tax with an undetermined funding destination.

Works Cited

Buechner, William. "History of the Gasoline Tax." American Road & Transportation
Builders. ARTBA.

"Commission Urges 50 Percent Hike in Fuel Taxes to Fund Highway Construction." AP [Washington] 1 Jan. 2009.

Johnson, Glen. "Massachusetts may consider a mileage charge." AP [Boston] 17 Feb. 2009.

Krauthammer, Charles. "The Net-Zero Gas Tax." The Weekly Standard 5 Jan. 2009: 17-21.

Lowy, Joan. "Panel: Raise gas tax, charge drivers by ile." AP [Washington] 27 Feb. 2009.

Lugar, Richard. "Raise The Gas Tax." The Washington Post 1 Feb. 2009.

Strom, David. "Eliminate the Federal Gas Tax." Townhall. 04 Dec. 2007.

Thompson, Fred. "The Gas Tax." Townhall. 13 Aug. 2007.

West, Larry. "Americans Would Support Higher Gas Tax to Reduce Global Warming." 2007.

Re: Examining the Federal Gasoline Tax


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Essay Comment!


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Re: Examining the Federal Gasoline Tax

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Re: Examining the Federal Gasoline Tax: Increasing Is Not The

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