Government: It’s All About The Money
February 17, 2018 at 4:06 a.m.
By Gary [email protected]
And while Democrats and Republicans generally agree that America’s roads, railways and bridges need work, there’s little agreement on how to pay for it.
And let’s be honest. That’s what policy always boils down to.
Trump’s plan is for $1.5 trillion in infrastructure improvements over 10 years. But he only ponies up $200 billion of federal money.
The rest is supposed to come from state and local governments and private companies. The theory goes that these people would be incentivized to spend money on projects through grants, loans or lines of credit from the federal government.
So will $200 billion in federal dollars spur the creation of the other $1.3 trillion? Some analysts say it’s possible. Some say it’s a pipe dream.
I’m far from an expert on such matters, but if I had to take a guess, I’d say no, you can’t turn 200 billion federal dollars into $1.5 trillion of infrastructure improvements.
There are plenty of people who say the federal government should raise the gasoline tax to fund the program.
The last time the gas tax was increased significantly was 1993, when it went from 14.1 to 18.3 cents per gallon. In 1997 it was raised another tenth of a cent to 18.4 cents, which is where it is today. (Diesel fuel is taxed at 24.4 cents per gallon.)
In 2015, the government collected $33.66 billion in fuel tax revenue.
For purposes of this column, let’s say that between diesel and gasoline, the tax comes out around 20 cents a gallon. That means that for every penny of federal tax, the government collects approximately $1.683 billion.
So raise the gas tax 10 cents a gallon each year for 10 years and voila, you have a fully funded infrastructure program.
(Well, not really, because you’d have to adjust for inflation and figure that people will be buying less gas because mileage is getting better and there are more hybrid and electric cars, etc., etc.)
But over the last 25 years Congress, for whatever reason, has little stomach for raising the gas tax. These days, there seems to be a groundswell of support for such a move, even among conservatives.
The U.S. Chamber of Commerce is pushing a 25-cent increase over five years – 5 cents each year – and indexing the tax to inflation. They say their proposal would generate nearly $400 billion over a decade.
That doesn’t sound awful, if only Congress could be trusted – which, of course, it can’t.
Gas tax revenue goes into a trust fund that’s supposed to be used for highways. But the fund gets used for other stuff unrelated to highways.
Right now, according to government numbers, the trust fund spends about $10 billion more than it takes in each year. (Shocking, eh?)
By law, the Highway Trust Fund is not allowed to run a negative balance, so Congress has to creatively figure out ways to meet its lawful obligation to keep money in there.
And by creative I mean budget gimmicks like deficit transfers.
Meanwhile, federal gas tax money has been used to create hiking trails and erect a Packard car museum in Warren, Ohio.
So is the federal government a good steward of our tax dollars? Everyone can make their own assessment.
Beyond that, there’s the notion of why someone in Wyoming should pay more for gas so somebody in California can have better roads.
Places like Florida and New York would get lots more federal dollars than places like Montana or Idaho – but everybody would pay the same gas tax.
Which brings us to state gas taxes, which range from a high of 52.2 cents per gallon in Pennsylvania to a low of 12.25 cents per gallon in Alaska. (Indiana’s gasoline tax is 28 cents per gallon.)
Other states that extract a lot from their residents by way of gas taxes include: Washington, 49.4 cents; New York, 43.88 cents; California, 41.7 cents; and Florida, 36.8 cents.
But maybe that’s the way it should be. If tons of people decide they want to live in California, California will need more roads. Is it unfair to expect Californians to pay for those roads?
It will be instructional to see how this infrastructure funding thing plays out at the federal level. Will Congress raise the federal gas tax for the first time in a generation?
Time will tell.
But one thing is for sure, it’s always about the money.
I had to chuckle last week when I read about the debate in the Indiana legislature over raising the age to buy cigarettes to 21.
According to the Centers for Disease Control, more than 21 percent of Hoosiers smoke — the 10th highest rate in the 50 states.
Since most people start smoking when they’re young, advocates of the bill said that raising the age limit for buying smokes would reduce the number of smokers and improve the overall health of Indiana residents.
(Indiana doesn’t rank very high when it comes to overall health, either.)
According to the Associated Press, opponents of the bill said it was an infringement on the personal rights of adults. After all, they can vote, join the military or buy a gun at 18.
Bottom line?
The bill failed, but not for any lofty reasons like health or personal freedom.
Seems raising the age limit to buy cigarettes would decrease cig tax revenue by $14 million annually.
"What's more important, revenue or a life?" Rep. Charlie Brown, a Democrat from Gary who sponsored the bill asked the majority Republicans.
He got his answer, didn’t he?
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And while Democrats and Republicans generally agree that America’s roads, railways and bridges need work, there’s little agreement on how to pay for it.
And let’s be honest. That’s what policy always boils down to.
Trump’s plan is for $1.5 trillion in infrastructure improvements over 10 years. But he only ponies up $200 billion of federal money.
The rest is supposed to come from state and local governments and private companies. The theory goes that these people would be incentivized to spend money on projects through grants, loans or lines of credit from the federal government.
So will $200 billion in federal dollars spur the creation of the other $1.3 trillion? Some analysts say it’s possible. Some say it’s a pipe dream.
I’m far from an expert on such matters, but if I had to take a guess, I’d say no, you can’t turn 200 billion federal dollars into $1.5 trillion of infrastructure improvements.
There are plenty of people who say the federal government should raise the gasoline tax to fund the program.
The last time the gas tax was increased significantly was 1993, when it went from 14.1 to 18.3 cents per gallon. In 1997 it was raised another tenth of a cent to 18.4 cents, which is where it is today. (Diesel fuel is taxed at 24.4 cents per gallon.)
In 2015, the government collected $33.66 billion in fuel tax revenue.
For purposes of this column, let’s say that between diesel and gasoline, the tax comes out around 20 cents a gallon. That means that for every penny of federal tax, the government collects approximately $1.683 billion.
So raise the gas tax 10 cents a gallon each year for 10 years and voila, you have a fully funded infrastructure program.
(Well, not really, because you’d have to adjust for inflation and figure that people will be buying less gas because mileage is getting better and there are more hybrid and electric cars, etc., etc.)
But over the last 25 years Congress, for whatever reason, has little stomach for raising the gas tax. These days, there seems to be a groundswell of support for such a move, even among conservatives.
The U.S. Chamber of Commerce is pushing a 25-cent increase over five years – 5 cents each year – and indexing the tax to inflation. They say their proposal would generate nearly $400 billion over a decade.
That doesn’t sound awful, if only Congress could be trusted – which, of course, it can’t.
Gas tax revenue goes into a trust fund that’s supposed to be used for highways. But the fund gets used for other stuff unrelated to highways.
Right now, according to government numbers, the trust fund spends about $10 billion more than it takes in each year. (Shocking, eh?)
By law, the Highway Trust Fund is not allowed to run a negative balance, so Congress has to creatively figure out ways to meet its lawful obligation to keep money in there.
And by creative I mean budget gimmicks like deficit transfers.
Meanwhile, federal gas tax money has been used to create hiking trails and erect a Packard car museum in Warren, Ohio.
So is the federal government a good steward of our tax dollars? Everyone can make their own assessment.
Beyond that, there’s the notion of why someone in Wyoming should pay more for gas so somebody in California can have better roads.
Places like Florida and New York would get lots more federal dollars than places like Montana or Idaho – but everybody would pay the same gas tax.
Which brings us to state gas taxes, which range from a high of 52.2 cents per gallon in Pennsylvania to a low of 12.25 cents per gallon in Alaska. (Indiana’s gasoline tax is 28 cents per gallon.)
Other states that extract a lot from their residents by way of gas taxes include: Washington, 49.4 cents; New York, 43.88 cents; California, 41.7 cents; and Florida, 36.8 cents.
But maybe that’s the way it should be. If tons of people decide they want to live in California, California will need more roads. Is it unfair to expect Californians to pay for those roads?
It will be instructional to see how this infrastructure funding thing plays out at the federal level. Will Congress raise the federal gas tax for the first time in a generation?
Time will tell.
But one thing is for sure, it’s always about the money.
I had to chuckle last week when I read about the debate in the Indiana legislature over raising the age to buy cigarettes to 21.
According to the Centers for Disease Control, more than 21 percent of Hoosiers smoke — the 10th highest rate in the 50 states.
Since most people start smoking when they’re young, advocates of the bill said that raising the age limit for buying smokes would reduce the number of smokers and improve the overall health of Indiana residents.
(Indiana doesn’t rank very high when it comes to overall health, either.)
According to the Associated Press, opponents of the bill said it was an infringement on the personal rights of adults. After all, they can vote, join the military or buy a gun at 18.
Bottom line?
The bill failed, but not for any lofty reasons like health or personal freedom.
Seems raising the age limit to buy cigarettes would decrease cig tax revenue by $14 million annually.
"What's more important, revenue or a life?" Rep. Charlie Brown, a Democrat from Gary who sponsored the bill asked the majority Republicans.
He got his answer, didn’t he?
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