Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

"Observe that the 'haves' are those who have freedom, and that it is freedom that the 'have-nots' have not." Ayn Rand

"The virtue involved in helping those one loves is not 'selflessness' or 'sacrifice', but integrity." Ayn Rand

11 January 2015

Why Increasing the Federal Gasoline Tax is Bad

Aside from the fact that Americans are finally catching a break on their expenses in an economy with far too few decent jobs, stagnant wages, more businesses shutting down than started, and increasing food, housing, and tax expenses, there are many other reasons why the federal gas tax should not be increased.

Some say that the highway infrastructure is decaying and more federal money is needed to repair it.  This is actually a false claim.  The Federal Highway Administration says otherwise.  According to it, the condition, safety, and quality of the US road system has been steadily improving.  A 2009 study by the Federal Reserve Bank of Chicago concluded that for twenty years the road system had improved.  It even said that the median road was fully suited for higher speed transportation than the law allowed.

The federal government certainly loves having control of the dispensing of the income from the federal gas tax.  It used to be a favorite means of funding earmarks used as demonstrations of a Congressman's or Senator's ability to send money to his home district or state.  The money was frequently wasted or used inefficiently.  The "bridge to nowhere" was one famous example, but was really only one of many such abuses of the taxpayers.

It has been estimated that increased costs in highway projects due to the federal requirements of Davis-Bacon laws mandating high wages, due to an executive order of Obama diverting many projects to labor union workers while minimizing competitive bidding, greatly increased environmental and other federal requirements, and the siphoning off of taxes to pay for the federal bureaucracy, that 30% of the federal gas tax revenues are wasted.

It is worse than that.  Much additional federal gas tax revenue is still diverted to other transportation policies very much in vogue among Progressive Elitists.  These diversions are the main reason that so many Progressive Elitists want to increase the federal gas tax.  They divert large sums to rail projects, almost all of which lose money in operation.  They also divert money to bike and walking paths, which may make it easier for some Elitists to get their exercise, but which is hardly a purpose consistent with the U.S. Constitution.  Neither for that matter are the money-losing passenger rail and bus systems they like to fund in major metropolitan areas, or in some cases in low density areas as is the case in the massive cost and massive operational loss rapid rail system being built in California.

At least the Interstate Highway system has a cover under the Constitution as a system of "post roads," which were meant to tie a far-flung country together with communications and make it more defensible in a period of our history when that was needed.  Since 2008, spending on the actual road system has not increased.  The increase in spending of the federal gas and diesel taxes has fueled the 38% increase in funding of non-highway projects adored by the anti-road Progressive Elitists.  The present federal fuel taxes are actually adequate to fund road construction and repair for the next 10 years.

Republicans sometimes like the federal gas tax because it is a use tax, while Democrats see it as a sin tax to discourage fossil fuel use consistent with their failed hypothesis of catastrophic man-made global warming.  The 16% of the federal gas tax revenues spent on non-highway purposes are especially unrelated to national needs and should be funded and controlled by local governments, if they should be funded at all.  There is no reason rural people with longer driving distances between points of interest should be funding commuter systems in New York City, where no one owns a car and only pays the federal gas tax indirectly when they take a cab.  There is no reason that rich and local environment-ignorant New Yorkers should be deciding what the environmental requirements of highway projects are in Oklahoma or North Dakota.

And why is it that the fraction of the federal gas tax collected in each state that is returned to projects in that state has varied hugely from state to state over the life of the federal tax?  Some states have been huge winners and some huge losers, with the losing states outnumbering the winning states.  Generally, Pengyu Zhu of Boise State University and Jeffery Brown of Florida State University found in a 2013 paper that the federal fuel tax redistributed money from poorer to wealthier states and from higher transportation need states to lower transportation need states.  The tax distribution is biased against those states with more miles of highway and more use of that highway.

When a project is largely funded by federal money, state and local governments have little incentive to see that the money is spent wisely.  This seemingly free money from the federal government induces the states and local governments to make expensive lobbying efforts to obtain it and adds to our huge special interests problem in government.

The idea that the federal government should increase its control of the U.S. road system and other transportation systems by increasing the federal gas tax, Charles Krauthammer and Senator James Inhofe notwithstanding, is a very bad idea.  Georgia Republican Tom Graves introduced a better idea, the Transportation Empowerment Act, in the House of Representatives in November of 2013 to greatly reduce federal involvement and its highly inefficient meddling in local transportation matters with a greatly reduced federal gas tax.  Senator Mike Lee co-sponsored the bill in the Senate.


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