Big Oil gets a lot of grief over high gas prices — but what
about Big Government?
Motor fuels taxes account for some 22 percent or so of the
current per-gallon cost of gasoline in this country. This is
arguably both regressive (because it hits people with low and
moderate incomes harder than it does the well-heeled) as well as
disproportionate — since the amount of tax is very high relative
to the actual cost of the item being taxed.
We don’t, for example, stack a tax of 50 cents per quart onto
the price tag of milk — because milk is considered a necessity.
But how is gasoline less of a necessity? Maybe we don’t drink it —
but most people have little choice about using a car to get to
work. Public transportation is a realistic option in only a
relative handful of major urban areas. And even then, it’s often
necessary to drive to the train station (as in the case of the
Metro system in Washington, D.C.).
Yet there’s no end to the sticky fingers of the state when it
comes to motor fuels taxes — which are layered like a wedding
cake. First comes the Feds. They hit you up for 18.4 cents on every
gallon of fuel you buy. But that’s just for openers. Next in line
is your state government — which will have its hand out for
another 20 or so cents per gallon. (The amount varies depending on
where you happen to live; some states have considerably higher
taxes than others.) Then there are local taxes — which add another
few cents to the tab. The total exaction can amount to some 60
cents per gallon in places like California and New York.
Do the math.
If the total price of a gallon of unleaded regular is $2.75 and
the tax on that fuel is 60.8 cents per gallon (as in NY), then the
tax rate is on the order of 22 percent. If you spend $50 per week
on gas, that’s about $572 in taxes you’re paying each year. (On top
of federal, state and local income and other taxes.)
This is usurious by any standard. And it’s made all the more
obnoxious given the fact that gas is as much a necessity for the
average person as groceries. Indeed, most people have no choice but
to use their cars (and thus, burn gas) in order to buy
groceries.
But no quarter is given — literally. If anything, the politicos
typically call for more and higher gas taxes. This is supposed to
be an incentive to lower consumption — but if that standard were
applied to milk and cheese, there would be a massive public
uproar.
And yet, no one really complains. “Big Oil” gets all the grief
instead.
Now, this isn’t a defense of (or an apology for) the way oil
companies conduct business. Good, bad - or ugly - it’s entirely
beside the point. What is worth discussing is how come it’s okay
for government to gouge us so ruinously, on a commodity so
essential to our day-to-day lives.
These taxes are necessary — or so the argument runs — in order
to finance new road construction and to pay for the upkeep of
existing roads. The Highway Revenue Act of 1956 created the Highway
Trust Fund, into which motor fuels excise taxes are paid; the money
collected is then distributed by the Feds to each state to pay for
various road/highway projects, etc. (The taxes themselves are
actually collected from the large corporations/distributors, etc.
selling fuel; the money you pay at the pump “reimburses” them for
what they paid the government.)
But this process necessarily involves “administrative costs” —
the various bureaucracies (and bureaucrats) who pull the levers,
stamp the forms and shuffle the paperwork. It’s hard to put a
figure on how much all this costs, but when a federal program is
involved that also involves every state (and every county) in the
entire United States, you can bet it’s considerable.
Also, motor fuels taxes end up going to pay for things that have
nothing to do with building or maintaining roads, such as funding
mass transit projects or the Leaking Underground Storage Tank Trust
Fund. These may be worthy projects, but it’s a con to let people
think they’re paying all these taxes solely in order to fund the
roads they’re driving on.
And then there’s the matter of all the political haggling that
goes on, under which some states end up getting back less than they
paid out. Motorists in, say, Montana end up paying to finance new
roads for New Jersey.
Probably, we could get much more bang for our buck — and lower
motor fuels taxes — if we switched over to some system of “pay as
you go” toll roads. Or at least, cut the federal government out of
it entirely.
There would be minimal overhead, and instead of gaming the funds
through a multi-tiered political process and bureaucracy, money
would be allocated to necessary upkeep and maintenance only. No
more sending money to Washington, with Washington then deciding how
much it will send back and to whom. No more siphoning funds for
projects (make-work or otherwise) that don’t have anything to do
with building new roads and keeping the ones already built in good
order.
But the current setup is not likely to be altered because
there’s next to no outrage. People focus on the supposed
machinations of “Big Oil” — and give Big Government a blank
check.
It doesn’t make much sense, but that’s the way it is.
