News reports indicate that Transportation Secretary Elaine Chao is considering a higher gas tax to pay for the $1.5 trillion infrastructure plan. "The President has not declared anything out of bounds, so everything is on the table," Chao said.
And Sen. Tom Carper (D-Delaware) even said that President Donald Trump may support a tax bump up of 25 cents a gallon. The current tax is 18.4 cents a gallon. When state and local levies are included, the tax can reach close to 75 cents a gallon in Pennsylvania, for example, which has the highest state gasoline tax in the country.
What a terrible and counterproductive idea. This tax increase would cost American families about $34 billion per year, one policy analyst told CNBC. And a good chunk of the recent tax cuts for the middle class would be snatched away at the gas pump.
The construction lobby, the road builders and the construction unions have been pining for higher road taxes for two decades. They say that the tax hasn't been hiked since the mid-1990s -- and thus hasn't kept pace with inflation.
That's true. Almost everyone agrees that the current financing structure for good roads and highways is flawed and inefficient. But a federal gas tax hike would contradict the goal of the Trump infrastructure plan, which is to rely more heavily on states, localities and private investment to pay for modernizing our roads and bridges.
Yes, there are some local roads that badly need repair, but sending more money to the feds is a guaranteed way to get that money squandered. What is true is that new road construction hasn't nearly kept pace with the rise in the number of driving miles over the last 30 years (up 50% between 1980 and 2010, with miles continuing to increase for five consecutive years since 2012).
According to the 2015 Urban Mobility Scorecard calculated by INRIX and the Texas A&M Transportation Institute, traffic gridlock costs the typical American rush-hour commuter an estimated 42 hours of lost time each year. This is nearly the equivalent of a lost week each year.
But this isn't because of a lack of road funding or a so-called "highway trust fund shortfall." It is primarily because according to a Heritage Foundation report, at least 25% of fuel tax funding is used for non-highway projects such as mass transit, bike paths and bus service.
This hijacking of gas tax dollars helps explain why we have so many potholes the size of a beach ball -- and why the problem will get worse if the gas tax is raised.
Congress typically raids about $10 billion a year from the highway trust fund to pay for mass transit projects. Motorists largely don't benefit from public transit because, according to a report from the Census Bureau, as recently as 2013, 86% of all workers commuted to work in a private vehicle, either alone or carpooling. Public transit has a minuscule impact on traffic gridlock -- except for a few high-density cities like Washington, D.C., New York, Chicago and San Francisco.
The gas tax is also an outdated tax because of huge gains in fuel efficiency and the increased use of electric cars that don't use gasoline
It's a 20th century solution to 21st century infrastructure needs. In about 25 years, it's plausible that a large number of Americans will have automated cars that will pick them up wherever they are, and whisk them off instantly to where they are going -- door-to-door.
In other words, in a generation, many experts say that mass transit is going to be as obsolete as the rotary phone, and we will be ripping up the tracks, not laying them down. We will have smart cars, smart roads, smart traffic lights and congestion pricing to keep traffic flowing.
Every car will have an EZ pass that will charge drivers for the roads they use and only for the roads they use. Time-consuming toll booths, already on the decline, will be no more. This will allow the private sector to own, operate and maintain our roads with minimal government involvement.
This improved transportation network could add hundreds of billions of dollars to the American GDP. And all this can be done with lower, not higher, gas taxes paid at the pump.
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