Thursday, December 05, 2013

Gasoline Tax Is Our Friend

December 5, 2013, 7:30 a.m. (And see --> "Gas Tax Critics: A Response," Dec. 10, 2013 <--.)

Think Long and Hard Before Diluting the Gasoline Tax
Nicholas Johnson
Iowa City Press-Citizen
December 5, 2013, p. A7

As children, we used to sing "London Bridge Is Falling Down." That was fantasy. We'd never heard of a bridge falling down.

Now we have.

Why won't Gov. Branstad advocate an increased gas tax?

No one questions the need for safe, smooth roads and bridges.

Few question public ownership and maintenance. It sure beats private ownership by profit-maximizing corporations.

The only remaining issue? How to pay for it? As an earlier [Dec. 2] Press-Citizen editorial explained, the gasoline tax wins that one hands down.

We'll either pay for roads and bridges or we won't have them. But for a gasoline tax to pick up the tab, it must take account of inflation and current needs.

Politicians who run and vote against "government," encourage the notion taxes are evil. Taxes are just another way to buy stuff we need - like roads. Taxes are often the most efficient and equitable way to pay.

Proposed alternatives, such as the mileage tax or using other State funds, are little more than a shell and pea game to enrich the oil and automobile industries.

The gas tax is a "user fee." The more you drive, the more gasoline you buy, the more tax you pay, and the more you contribute to the maintenance of the roads you use.

There are many reasons why the gasoline tax is not creating enough revenue. Mostly it's the failure to adjust for inflation.

But it's also a good news, bad news story. The good news: the price of gas (with its tax) stimulates (1) higher gas mileage cars and trucks, (2) hybrids, and (3) electric vehicles (along with some other alternatives) -- all of which use less gas per mile than cars when the tax was last set.

As a result, we are both emitting fewer greenhouse gases, and less dependent on foreign oil.

The bad news: the less gas we use, the less gas tax revenue, the less money we have for roads and bridges.

So why not abandon, or supplement, the gas tax? Because doing so reduces the marketplace incentives for better gas-mileage vehicles. Raising the tax increases those incentives.

For example, paying tax by the mile (instead of by the gallon) there's no tax incentive not to drive a spiffy Hummer (some models get 9 mpg in city) or inefficient old vehicles. You'll still pay the mileage fee, and more per mile for gas, but no additional gas tax.

Grim reality: we'll either pay for our paved roads or go back to driving on the dirt roads of my youth. Road maintenance costs are more than before. One way or another we're going to pay. That's not the issue. Increasing gas taxes is not an additional outlay that could have been avoided; it's just the best way of paying for it.

My proposal?

Continue to fund road and bridge construction and maintenance with gasoline taxes. Raise the tax rate to whatever's necessary.

Give the more efficient, alternatively-fueled vehicles the gas tax advantages of better gas mileage. Provide what's needed by any new, socially beneficial technology when trying to change culturally embedded habits (such as battery recharging stations for electrics). This is similar to the boost we gave everything from the railroads to the Internet during their early years.

Once the alternative vehicles industries are profitable enough, design any one of a number of possible approaches for collecting a road user fee from them as well.

But, please, think long and hard before abandoning, or diluting, the gasoline tax. Let's not wake up to discover that, "You don't know what you've got until it's gone."
Nicholas Johnson teaches at the University of Iowa College of Law and maintains and

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Note: For an earlier, lengthier, and slightly different take on this subject, see "Paying By The Mile Is A Terrible Idea," September 25, 2013. For the positions of critics of this position see below.

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There are, of course, those who disagree with this approach. The first two comments, below, appear on the Patch reference to the Sept. 25, 2013, blog essay, referenced immediately above. The next four were comments on the Editorial, "Gas Tax Increase StillBest Option Left Standing," Iowa City Press-Citizen, Dec. 1, 2013.

My responses, in italics, follow each.

Johnny Johnson December 03, 2013 at 05:46 PM Hey why not? Energy prices consume a far greater share of income from middle class than the rich. Make those working fools cough up more and skip lunch to pay for it.

Johnny Johnson (no relation) is, of course, correct: as a percentage of their income, the poor and middle class pay more for gasoline (and its tax) than the rich. (And this disparity is exacerbated by the poor often having to rely on older, low gas mileage cars in less good condition, and possibly longer commutes.) But this could also be said about everything else in the marketplace (e.g., food, clothing, automobiles, housing, fines for speeding) -- with the exception of various discounts offered to "seniors" and very young children (categories not directly related to income) and public subsidies for food and housing for the poor. In my opinion, the most effective and easily administered solutions are to raise the minimum wage to "living wage" levels in the private sector, and get closer to full-employment policies by making the government the employer of last resort in the public sector -- rather than to single out the gasoline tax as a single item. -- N.J.

Brian December 04, 2013 at 07:16 PM The State needs to cut costs, not raise revenue. Do the inefficiencies bother anyone else? Look at how many times I-80 has been redone Between Dodge Street & Coral Ridge last 10 years. What about the insane waste of money to replace the barrier between East & West with a "stained faux rock face". That was 1,000,000/mile. Just the labor to haul the existing barrier away required over 100 semi tractor trailers. Did anyone notice the stain faded in ONE WEEK? It wasn't UV stable. The State should be able to fund projects with existing gas tax.

Here again, Brian may be right (I'm not familiar with his facts). Everything possible should be done by those managing projects -- whether private sector or public sector -- to do jobs as efficiently and effectively as possible, at the lowest cost consistent with the necessary quality. Clearly, this is not a problem limited to public projects -- think about the BP Gulf oil rig disaster, the Massey Coal Mine disaster, the millions of cars and other products (including food) that must be recalled. But if we are going to continue to have a highway network that is smooth and safe we are going to have to continue to spend money on it. Trying to insure that money is spent as efficiently as possible is an essential goal; cancelling all highway projects because some are unwise or wasteful is not an option. -- N.J.

[I was one of those who commented on the Press-Citizen's editorial:] Nicholas Johnson · Top Commenter No one questions the need for roads and bridges in sufficiently good condition that cars and trucks can move safely and at reasonable speeds. Few question that public construction, maintenance and funding is preferable to for-profit corporate ownership and operation. The only remaining issue is what is the best formula for raising sufficient revenue -- and most fairly allocating the burden among Americans. As today's editorial explains, the gasoline tax wins that one hands down. For even more discussion of the reasons why, along with additional benefits of this approach, see "Paying By The Mile Is A Terrible Idea; The Gasoline Tax Is Our Friend," December 2 at 7:49am

Mike Thayer · Follow · Top Commenter · Works at Coralville Courier This is intellectually lazy thinking by the PC. It's easy to say, "Raise taxes." But the REAL answer is finding areas in other state government spending where $215 million can be cut and re-allocated to roads/infrastructure. December 2 at 8:49am

Here again, I agree that everything possible should be done to evaluate taxpayer-funded federal, state, county, and city projects. Are they worth doing at all? What's the benefit-cost analysis? Those that have public support, still make sense, and that return multiples of what they cost should probably receive more money than they presently get. Some are probably funded at a more or less appropriate level. Those that have outlived their usefulness should be investigated further to see if they should be closed out. To put the cost of highway maintenance on all Iowa taxpayers -- rather than just those who drive and buy gas -- is, of course, an option, and one that some people in addition to Mike Thayer are advocating. For the reasons laid out in the column that begins this blog essay, I believe the multiple benefits and rationale for funding roads from a gasoline tax is a better option. -- N.J.

Lynn Griebahn Jr. · Top Commenter · University of Iowa Yes! someone needs to be the adult here, democrats NEVER think about the waste in spending, December 2 at 11:21am

As a wise wag once put it, "'Always' and 'never' are two words we should always remember never to use." Some Democrats and Republicans seem to care more about wise use of public money than other Democrats and Republicans -- a bloated defense budget, earmarks and tax breaks for special interests. Members of both parties seem somewhat reluctant to specify which specific programs they would eliminate. Indeed, they are so fond of suggesting that the elimination of "waste, fraud and abuse" will solve our budget challenges (when of course, however desirable, that's not the magic solution) that it's always seemed to me they think and talk about "waste" (in general) rather than "projects value" (in particular) far more than they should. -- N.J.

Michael Hoback · Top Commenter The feds are also considering raising their gas tax using the same plea as Iowa. The DOT has used the same claim of shortfalls, every legislative session for at least the twenty years I have been paying attention. The fact is that if you gave them every tax dollar in the state they would still want more. December 4 at 10:45am

On the assumption this is true, it is a call for oversight and better management -- something I certainly support. The more we can conduct a triage among potential road building and repair projects by engineers on the basis of rational analysis and professional judgment, and the less we can rely on politicians choosing projects on the basis of contractors' campaign contributions and short term construction jobs for their constituents, the better. -- N.J.

The following comment was posted to the online version of my Dec. 5 Press-Citizen column:

Michael Hoback · Top Commenter
Your opinion sounds very reasonable but bitter experience demonstrates that increased taxes only fuels bigger government. December 6 at 3:18pm

And this letter to the editor strikes a similar theme:

Taxpayers Aren't Getting Enough Bang for Their Buck
Steve Hufferd, Iowa City
Iowa City Press-Citizen, Dec. 10, 2013, p. A7

On Dec. 5, while advocating an increase in gasoline taxes, Nicholas Johnson makes the typical liberal error in assuming that increasing taxes will cure all the ills in the infrastructure. He would, I'm sure, say the same regarding taxes to fund education even while taxes spent on education has accelerated even while academic performance per student has plummeted.

We conservatives have no problem with taxes per se. The problem we have is with the plethora of irresponsible abuses of the public coffers. Where is the evidence that the gasoline taxes collected over the past half century has been spent wisely? A bit of transparency would be appreciated and might have a positive effect on the public resistance to tax increases. Of course, transparency could also work against any prospect of tax increases. With the public trust of government officials reaching new lows, it's not the best of times for politicians to be saying, "trust me with an increase in tax dollars."

Tax payers do not feel they are getting sufficient "bang for the buck." There are ways of getting big jobs done with very little. It's called management. The best example of the lack of it has been the current launching of Obamacare.

Steve Hufferd might be surprised to find the degree to which I agree with him.

I don't think that "increasing taxes will cure all the ills in the infrastructure [or] education." I don't recall ever saying that "the gasoline taxes [have] been spent wisely." (As a local school board member I often made the point in meetings, and newspaper columns, that some reforms both cost less and produce better results. As Hufferd puts it, "there are ways of getting big jobs done with very little.")

As a public official, and as a one-time administrative law professor, I have advocated more, not less, transparency in government.

I agree that "trust of government officials [is] reaching new lows" and that "trust me" no longer works.

I certainly share his commitment to better "management" -- and have ever since my term as U.S. Maritime Administrator during the mid-1960s (and throughout my term as a school board member). During President Lyndon Johnson's Administration we actually had a "War on Waste" program that saved taxpayers billions of dollars. (My contribution was working to reduce maritime subsidies.) Johnson symbolized the program by walking around the White House turning off needless lights -- thereby earning the nickname of "Lightbulb Lyndon." (I agree with Hufferd's criticism, and have said, that the rollout of was a classic example of poor management and oversight.)

So where do we part company?

(1) We have transportation needs. Unsafe bridges and deteriorating roads need to be fixed.

(2) There are limited options. (a) Continued crumble. We could continue to let the roads and bridges crumble, and build more detours around them. (b) Private ownership. We could sell them off to for-profit corporations -- with the tolls for driving far exceeding any gasoline taxes. (c) Different taxes. We could keep the roads public, but use different taxes: sales, property, or income -- shifting the entire burden away from the "user fee" and on to everyone. (d) Gas tax. We could continue to pay with the user fee called the gasoline tax -- hopefully, while applying Hufferd's and my focus on triage and "do we really need it," innovative cost-cutting, sound management, oversight, and increased transparency.

(3) Gas tax preference. Of these options, my preference is (d), Gas tax -- for reasons laid out in the Press-Citizen column, "Gasoline Tax Is Our Friend," Dec. 5. (Admittedly, non-drivers also benefit from our road network; thus, while I would not advocate some modest funding from income tax revenue, it would be difficult to argue persuasively against it.)

(4) We're all at fault. No institution (or individual) is free of the kind of inefficencies, waste and abuses Hufferd and I would like to remedy -- whether corporations, the military, schools and universities, hospitals, non-profit organizations, or religious institutions. It is misplaced to suggest that most of the fault, when it comes to government, falls on liberals or conservatives or libertarians or greens. Some are more willing to overlook waste in the military (billions of dollars in Iraq and Afghanistan that can't be accounted for); others less likely to come down on popular social programs. Corporate executives of companies dependent upon government contracts may complain about taxes, while spending millions on lobbyists and campaign contributions to get special tax breaks and other special interest benefits in return. (I've run numbers on the "return on investment" from campaign contributions. It's between 1000-to-one and 2000-to-one; give one million, get back one billion -- in the form of such things as contracts, tax breaks, antitrust exemptions, tariffs and other price supports.)

Elected officials who campaign on reducing taxes -- and their local constituents -- are among the first to squeal when a local defense contractor may lose a lucrative contract because the weapons system it's profiting from isn't wanted by the Pentagon, or just doesn't work.

So I don't think it is accurate, fair, or constructive to try to address these problems by demonizing one political party, or political movement, over another. On that Hufferd and I really do disagree.

Of course we don't want to pay for "bridges to nowhere" (a one-time Republican proposal), and we do want to have efficient and effective management of such necessary maintence projects as we may have, selected under rational systems of priority. Having said that, we're still left with the issue of how to pay for them. For the reasons I've outlined, I continue to believe the gasoline tax is the best way to do it.

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And my son, Sherman, has sent the following comment regarding this blog essay by email:

If you do a follow-up you might touch on 2 related topics:

1) Tolls and HOT lanes (aka "Lexus Lanes").

2) Gas tax refunds/credits for poor and working class folks, as well as those who must drive lower mileage vehicles and/or long distances out of necessity.

WRT #1 -- tolls and Lexus lanes are grossly regressive and, I would say, un-American. Since when do we segregate users of public infrastructure into the "haves" and "have-nots"? Our parks, libraries, and schools are available for everyone to use and enjoy. The same used to be true of our public roads and Interstate highway system. Not any more. Now it's 'pay up or shut up'.

Charging an extra fee or toll to use certain lanes on a public road -- particularly an exorbitant per mile 'HOT lane' charge that is admittedly _designed_ to keep out the 'riff-raff' (aka the 99%) -- is outrageous. Our highways are not some exclusive private dinner club. They should be open for ALL to use. Ordinary folks who cannot afford to pay the fees should not have to sit in traffic for hours and breathe exhaust fumes while the wealthy speed past them in their German luxury sedans. If the infrastructure is inadequate it should be improved. HOT/Lexus lanes are an elitist band-aid, and one that takes pressure off of legislators to actually _do_ something about roads with inadequate capacity. If the rich & powerful can buy their way out of traffic jams then they'll be happy and not press for road improvements.

OT/Lexus lanes are the equivalent of having two (2) sections in public libraries and/or schools. One section of the library for the well-healed who can afford to pay a user fee with shiny new computers and an extensive collection of books, comfy chairs, plenty of staff, etc, and the other just a bare-bones barely adequate room with old slow computers and maybe some box fans instead of A/C in the summer. Or a school split into two sections -- one with some classrooms that have a new computer for every kid, a teacher for every 10 students, and an indoor olympic size swimming pool vs. another section with classes of 30+ and some old textbooks on the other side of the building -- for the unwashed masses, the kids from poor and working class families.

Tolls and Lexus lanes are completely unacceptable. They are immoral and should be eliminated. Raise the gas tax instead.

2) Of course, even the motor fuel tax is regressive. Some people _must_ drive long distances. They aren't out joy riding, they have no choice. Out here in the D.C./Baltimore area (and most other major metro areas) people do not usually choose to live 30-50 miles from where they work -- it is the only way they can afford to live. People do not always have the money to buy a new (or used) car that gets 40 mpg. Maybe a relative gave them an old sedan that gets 18-20 mpg and they can barely afford the maintenance on it. Many farmers and ranchers must drive big pickup trucks and have no choice but to drive long distances. The same with construction workers, etc. You get the idea. It is not right to punish them for situations which are beyond their control.

Everything being equal -- income, required driving distance, vehicles needed -- then this would be easier. If no one really had to drive at all, or, say, no more than 10 miles per day, and everyone could afford an electric car, hybrid, or ultra-high mileage car that would suit their needs, then slamming them with a big fat fuel tax for driving a full-size crew cab dually pickup truck with a huge V-8 gas-sucking engine -- 'just because', for the "image" -- would make perfect sense.

Unfortunately it's not that simple.

Perhaps the gas tax should be set up like our income tax system (only simpler). The IRS recognizes that $50k/year is not the same from one person to the next. Some people have legitimate business expenses that are deductable for good reason. For example, it would not be fair to tax an independent cab driver on the entire amount he/she earns (their gross income), because they have to pay for fuel, maint., repairs, and license fees out of that. Likewise, it does not seem fair to a) have a flat tax (which the gas tax kinda is) and b) not allow any deductions for lower income folks and those who absolutely must drive long distances and/or lower mileage vehicles.

I rest my case. ;-)


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