It's gas prices, stupid

Matthew Hoy
By Matthew Hoy on July 21, 2008

In a political year that should ensure a Democratic Party landslide in the fall, Democrats seem poised to shoot themselves in the foot. Case in point is Reps. James Oberstar and Peter DeFazio's plan for a gas tax hike.

Oberstar, D-Minn., said his committee is working on the next long-term highway bill. He estimated it will take between $450 billion and $500 billion over six years to address safety and congestion issues with highways, bridges and transit systems.

"We'll put all things on the table," Oberstar said, but the gas tax "is the cornerstone. Nothing else will work without the underpinning of the higher user fee gas tax."

At the very least, the gas tax should be indexed to construction cost inflation, DeFazio said.

The nonpartisan National Surface Transportation Policy and Revenue Study Commission concluded in a report this year that the U.S. needs to spend $225 billion annually over the next 50 years to create a highway and transit system capable of sustaining strong economic growth. Current spending, at federal, state and local levels, is about $90 billion a year.

Among other revenue-raising possibilities, the commission recommended gradually increasing the current federal fuel taxes to 40 cents a gallon.

The American Road & Transportation Builders Association is calling for a 10-cent-a-gallon raise and indexing the tax to inflation. With construction costs soaring because of competition for building materials from China and other developing nations, the tax rate would have to be about 29 cents a gallon to achieve the same purchasing power as the 18.4-cent rate imposed in 1993, the association says.

So, they want to raise the gas tax by a dime now -- or maybe 40 cents and index it to inflation, so they should never have to pass another pesky law increasing it themselves, it will rise on its own!

Oh, and get ready to have your car's odometer subject to federal inspection.

Other ideas that will be on the table when lawmakers write a bill next year including more toll roads and public-private partnerships, congestion pricing and user fees where drivers pay a tax based on how many miles they drive.

Remember that these taxes are, by their very nature, regressive -- yet the party of the poor and middle-class apparently just want to become the party of the poor -- by taxing the middle class into the poor house.


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July 2008



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