The downside of lower gas taxes

You people that argue that gas taxes will be bad for the economy forget 2008 whe oil was at $147 a barrel. Taxes imposed now can be used to direct a change in consumption and lower our dependency on foriegn oil. You have to understand that if we continue to consume the way we do gas will be much higher and we will have no way to stop it. It would be better to pay more taxes now to ourseleves than to put huge oil profits in the hands of communists and dicatators.

It's perfect that the gas tax would have to be hiked in order to maintian revenues. This will reward people that adopt and invest in higher efficiency cars and light trucks and drive the economies of scale in production of such vehicles. With higer fuel taxes there might be an offset to the lowering gas prices that result from lower consumption of oil. This will help to hold up the consumer interest in investment in high efficinecy vehicles. Ultimately, the savings in fuel costs will outweigh the increased fuel taxes. More importantly it will reduce consumption of foriegn oil and slow the erosion of the dollar. Many of which are nations that do not share our interest in world peace and democaracy.

I live in Texas where 2 out of 3 cars get less than 25 mpg. I drive a civic that averages 34mpg. On average I pay about $.0146 per mile where as the idiots driving the big 4X4 trucks to work with one passenger is paying $.032 per mile. My car reduces the affect on the environment, reduces the need to import oil which helps the value of the dollar. One of the biggest things is my car makes others of its size or smaller safer to drive around. The big vehicles make the roads more dangerous for others.

I know I need to pay more because our government wastes so much money, so charge me more. Add a dollar to the price of gas or two. By adding two dollars to the cost of gas I would pay .06$/mile more. I can live with that because the other idiots would pay .133$/mile more.

The other option would be to charge the per mile charge which would be based off the cars millage and emissions tests. Those idiots driving the Hummer at 6 MPG should pay dearly.

“Make decisions that benefit your children as much as yourself”

It seems like all of Fortune's articles are written by the GOP lately… Increasing the gas tax wouldn't hurt anyone with a fuel-efficient vehicle.

This is horrible because most small businesses rely on the tax advantages claiming mileage gives them. If the IRS taxes mileage, then small buisness owners would be left, once again, paying more in taxes.

I love how an article sheds bad light on fuel efficiency. There are alternate methods of revenue.

I think that gas should never fall below $3.50 a gallon. We should set a floor on gas prices and raise tax revenue when oil is cheapest.

Btw – our gas taxes are ridiculously low. And yes corrupt politicians are the cause, b/c they have been taking lavish donations from oil and auto companies for years.

how many more cars will be on the road in 2020? more cars… more gas…

Nice lipstick on a pig argument. Higher taxes are bad for everyone.

Dear Steve from Cols, OH,

David Frantz calculation are not precise but are correct. You could use effective tax rate on 50k only if it were the only 50k he made. But I doubt one would buy a car on all money he/she makes. After all David probably need money for food, house (mortgage or rent), to send kinds to kindergarten, etc.
For the second 50k of his pay the effective federal tax rate is event higher than 25%.
Closer to the topic though, I completely agree with David that the gas tax is not the only tax that government — federal or state — gets from car purchase/use so. it would be oversimplification to say that road construction depends only on gas consumed or miles driven.

All of you have good points, but, anyway you look at it we are going to end up paying somewhere. If the gov't. gets less money because of more fuel efficient vehicles (or solar power), they have to make it up somehow so they can keep spending (or should I say wasting) on pet projects.

Sooner or later something will have to give. Think about Socialism…it's already headed that way…if we make it that far without the country going bankrupt. Whatever the outcome it's not going to be easy. I don't like to be so negative but looking down the road it's not a pretty picture. Things will get better as time passes and the gov't. realizes it has to change, but it's hard for an organization with that much power, just to give it without being forced to. I wouldn't be surprised if your tax free investments (Roth IRA) were to become taxable and the VAT system were introduced (they gotta get money from somewhere).

I don't think the majority of people can adequately prepare themselves (by no fault of their own)for what's to come…nobody really knows what will happen. SO let's just do our best to help each other….now if only our elected officials would do the same.

Vehicles that get better gas mileage are going to be lighter than many current vehicles. Lighter vehicles on the road would mean less wear and tear on the infrastructure (roads and bridges) and increase their overall lifespan. Overall gas taxes will go down with mandated increased gas mileage but so should infrastructure expenses. Maybe not proportionally but infrastructure maintenance expense should be less over the long haul.

"

Here we go with the “one tax fits all” again. The owner of Honda Prius should not have to pay the same tax as the owner of Chevy Suburban. Also, the Prius does not produce the same wear and tear on streets and hiways as the big SUVs. Are they going to remove the tax on gas? .. probably not, it will go up too. It seems that instead of looking at ways of reducing costs, our government is again just looking for more ways to squeeze money out of us.
Posted By Mobile, AL: June 10, 2009 10:42 am "

The Prius should pay the same taxes as a non-hybrid car. It uses the roads in the exact same way and puts the exact same amount of stress on the road as any other car.

I do agree however that SUVs and non-light duty trucks should pay double that of a car since their weight is usually double that of a car.

Is anyone else thinking what I'm thinking? In other words, are we onsidered what other things will happen as a result of higher gas taxes?

If we consider some of the long-term prospects, we would see more than higher gas taxes. More than just hybrids. We'd see a push for alternative energy vehicles. That means fewer dollars being flushed down the toilet (sent to the not-so-friendly Middle East) and more dollars being "recycled" in our economy (assuming the alternative energy source is produced here). That would help reduce the trade deficit and help create more US jobs.

Also, they say that necessity is the mother of invention. If we raise gas taxes, we may fuel the "need" for cheaper domestic alternatives (which might also be less environmentally-taxing – a win-win).

There are probably other (intended/unintended) consequences. What do you guys think?

Also, in response to the argument that increased taxes will slow transportation/goods/commerce, keep in mind that everything gets paid for somehow. I realize that higher gas prices would affect those things, but it will reduce the need to increase income taxes. You're going to get taxed to pay for the things that we need one way or another so we might as well enact new taxes on things we want to eliminate/reduce.

so I pay $0.184 per gallon in federal tax on a gallon of gas and get 24 miles per gallon. If I drive the 24 miles and pay a $.023 per mile charge I pay $0.552? That's only a 50% increase. Sounds like a really good idea, especially for those that live in rual America with no mass transit options.

I think we should just become socialist and use our tax dollars to mass produce fully electric cars. I'm tired of all this .5 mpg improvement at a time.. The technology is there, but you can't just change an industry without applying direct force.. We can continue spending 400+ billion dollars a year on oil and watch interest rates raise 14 times again like in 2004. I guess we can just be a slave for that extra .5 mpg.

I am for a substantial gas tax increase (with an equal reduction in income or other taxes). If we don't do it ourselves, eventually the market will do it for us and I'd rather have the money go to our wasteful government than that of the Russians, Venezuelans, Saudi, or Iranians.
Higher transportation costs won't be all bad, it will encourage more local production. For example, it is senseless that our food travels an average of 1600 miles to get to us.
Also, according to some studies, the cost of a gallon of gasoline to society (counting health, environmental, military, and other unaccounted costs) is as much as $10. Some of those costs should be put back on drivers.

The government isn't trying to help anyone but themselves. That is the rule that all politicians must play by when going into office. Simple fact.

Here we go with the "one tax fits all" again. The owner of Honda Prius should not have to pay the same tax as the owner of Chevy Suburban. Also, the Prius does not produce the same wear and tear on streets and hiways as the big SUVs. Are they going to remove the tax on gas? .. probably not, it will go up too. It seems that instead of looking at ways of reducing costs, our government is again just looking for more ways to squeeze money out of us.

Highways won't build themselves. Gas tax i the simplest thing it doesn't require tracking the whole population via GPS. Lower the gas tax and consumption will grow, oil prices will spike again. You pay to US gov. or Arabs the coice is yours

One thing is totally overlooked here. Here are some tax benefits using some rough calculations.

If you assume the prius uses half the gasoline of other cars then it uses 394 gallons less per year. Assuming a per gallon price of three dollars the prius owner spends 882 dollars less per year on gas. If said owner spends this money on any kind of taxable consumer goods local governments could receive almost 80 dollars in tax revenue assuming a 9% sales tax rate.

Yes, this doesn't help out highways, but it does have an upside that wasn't mentioned at all.

Dear David Frantz,

Not saying that we aren't overtaxed (I believe the issue is the government overspends), but your calculations are incorrect – you are using the marginal tax rate for the whole $50,000 and not the effective tax rate. Effective federal rate on 50k would be about 11.9% or $5950. Interesting, though.

Taxing miles driven rather than gas consumption seems an incredibly stupid idea: it is hard to monitor and it will punish those who plan to invest more in a more fuel efficient vehicle. The best way to encourage energy efficiency is to tax gas heavily; and the best form of tax would be a proportional one, rather than a flat tax per gallon.

The influence of the tax on prices is less than you imagine, as lower consumption would help drive down the price of oil. As well, all countries in western Europe had gas prices ranging from 6 to 9 $/gallon in the last decade and most of them had similar economic trajectories to US (i.e. economic development depended more on other government policies rather than on the price of gas).

Those whose compare the US to Europe have no idea what they are talking about. First, consider the population density. Second, geographical distances.

In addition, people seem to assume that the government has a certain level of efficiency in using tax money. It ain't so. The more you paid, the bigger the waste. The additional fund don't just show up at the same marginal rate as road improvements.

Those who argue that a gas tax increase only impacts SUV drivers are equally naive. Without extensive/inexpensive public transportation networks, a raise in gas tax wreck havoc to average American budgets.

Then there is commerce relying on reasonable transportable costs to move goods around the country. Any increase in transportation costs would be quickly added to the final price of the goods.

Raising gas tax may be able to get more SUV off the roads but does not necessary mean better roads/bridges, which is the goal here.

This is actually a win-win, since the higher mileage requirements mean higher gas taxes – which means a bigger carrot for hybrid owners and a bigger stick for fuel hogs.

Gas taxes should be a combination of mileage and weight of the car since the taxes are supposed to pay for road maintenance. Considering a car that weighs a lot and is on the road the lot will do more damage then a car that is light weight and not driven much it only makes sense.

Hey Folks: You want taxes?

YOU purchase a new car for $ 25,000 Dollars.

Now YOU have to pay about $ 2000 dollars in Sales tax.

You finance the car for another $ 4,000 in finance charges.

YOU have $ 31,000 total in the new car.

For you to CLEAR $ 31,000 dollars you must GROSS about 50,000 dollars.

$ 50,000 GROSS PAY
$ 19,000 Income Taxes*

Net to YOU is $ $ 31,000 dollars.

*The Income Taxes: 25 % Federal tax, 6 % state income tax, 7.5 % Social security tax.

Folks…..That's 38 % Taken from YOUR paycheck.

The Government ( Federal & State) Revenue on the new car purchase:

$ 19,000 Income Tax

$ 2,000 Sale's tax

$ 21,000 Dollars in TAX REVENUE on YOUR $ 25, 000 car purchase!

Hey It gets even WORSE…….

YOUR employer must Contribute ANOTHER 7.5 % in Social security tax on your 50 grand GROSS pay:

That's another $ 3,750.00 dollars in Government REVENUE on YOUR $ 25,000 dollar car purchase!

Now the TOTAL Government REVENUE on YOUR $ 25,000 dollar car purchase is :

$ 24,750.00 DOLLARS

Take note: this is amount of REVENUE the Government made before you even start the engine, put gas in the tank or Insurance.

And with ALL of that money it is STILL not enough our Government is BROKE…… by the way, this example works for EVERYTHING you purchase now.

Has the Big light gone on yet? Still want MORE taxes? Wonder WHY your are SINKING? Cannot get ahead?

The numbers above are not exact but you will find them to be very close!!!!!

Thank you for reading this sad comment.

With the state of disrepair of our roads and bridges, I can see where this money will be sorely missed (or should I say mis-spent again).

it won't matter. the government is blatently inefficient. the more they get, the more they squander. give them more taxes there will be more waste. the whole governemnt has to be changed in order to change the way it functions. my whole life i've heard more, more, more and everytime i look the corruption and inefficency get worse.

Increase gas taxes. It will push people to abandon their SUVs and purchase more fuel efficient vehicles. Tax vehicles by weight – a lighter Hyundai does less damage to the highways than Lexus SUV. Tax luxury vehicles – the fraction of price above $30k should be taxed at 20%.
Why do you think Prius owner should pay the same per mile tax as SUV owner?

NRBovee must be a republican. Spend the same (or more) as a democrat and cut taxes to "pay" for it? How has that worked out for our deficit over the last 8 years? Didn't all those republican pinheads run on a "balanced budget" platform? And just like most current republicans, he offers no alternative to fix the problem, just runs down the current ideas. Thanks for contributing.

I would be for some sort of tax based on a combination of vehicle weight and distance driven (after solving the privacy concerns). Of course by the time the special interests got through "fixing" the bill, only the interests that have no money (you and I) would end up paying this.

The biggest factor contributing to road deterioration is weather. Anyone who says that they shouldn't help pay for the roads because they ride a bike and if everyone road bikes the roads would never need to be repaired is clueless.

Where I live the idea of an increase in fuel taxes comes up anytime a large highway project is proposed. Most people oppose the tax increase and instead say that this new highway should pay for itself through tolls. That's the same thing as a per mile tax. Why shouldn't all roads be toll roads? After all driving on a paved road represents a benefit with an associated cost to provide. The users should be paying for it.

The federal gas tax has not gone up since 1993. Had it kept pace with inflation it would now be 50% higher. Does anyone really believe that the cost to build and maintain roads hasn't gone up in the last 16 years. Sure there is more gas being purchased today resulting in more revenue but there are also considerably more miles of highway to maintain. I get the sense that a lot of Americans believe that being able to drive cheaply is some kind of a birthright. It's like anything else in a capitalistic society. It has to be paid for.

I don't care how much you raise the gas tax, don't track where I drive or how much I drive. It will be the start of limiting the freedom of movement which needs to be identified as a fundamental freedom and enabler of free speech. Plus, why would a state be allowed to tax miles I drove in another state just because of the state I register the vehicle in? There has to be another way. I'd even except more toll roads as an alternative.

You people that want higher gas prices via higher taxes are the reason we are in the finacial jam we find ourself in now. After reading the comments I read one comment that gets it, the guy from Indiana. Commerce is driven by transportation. In essence, everything revolves around the price of oil and gasoline. If the cost of fuel is up 150% because of higher taxes then you will see the cost of the services and products go up. Maybe the cost won't raise 150% but, they will raise considerably higher. They government is already sucking hind tit because nobody is buying gas now therefore nobody is paying into the gas tax fund we have been burdened with.Look at your state government and see how much they relyed on gas taxes. Some of those idiots don't get it and are trying to raise income taxes just to make ends meet. If you raise the cost of something too much, no one will buy it, and the cost of gas is already way over priced so if they raise the taxes in hopes of collecting more, it ain't gonna happen. Look at California, the biggest burden to the United States.

every body misses the main point its not the government we should blame or the oil companies its our selves most americans are selfish and spoiled and people still think this government wont fail obama is trying to make the government continue we will not last if we have higher gas prices it was one of the major factors that sent us and the world into a major financial problem we arent the only ones who suffered from it the only way we can get out of this is if the people act together alot of people are putting hope into obama but they dont like what he is doing that is why we act together we can accomplish anything we can do it all it takes is hope and i will be voiceing it on a higher level we cannot let one person bare a burden to bring us out of this we must act together u probably think this is a joke but its not u are probably thinking im an idiot but im not if u think that then sit by and do nothing this country will tear itself apart if we dont act together

I would move to raise gas taxes by $3.50 per gallon on gas and less on desiel (I don't own one but it impact on transportation are more signifigant). But, I want income tax cut big time (and converted to a simpler tax system). The would help energy independence and would encourage savings and investment and close the trade gap.

Force the federal government to a have a balanced budget. Consumption based taxes are easier and cheaper to collect less fed bean counters.

You have to be Democrats. I always think of Will Rogers when I read what Democrats have to say, because they have never met a tax increase they didn't like.

I've read the article and the above comments and would like to say that it's ludicrous implying that Toyota Prius drivers are making it worse for the construction/maintenance funding because they pay less gas tax.

The government monitoring our mileage via GPS? That's a violation of our rights against illegal searches [key words] and seizures as guaranteed by the Fourth Amendment. The government would have ulterior motives for installing any mileage tracking device on our automobiles.

There are other ways to generate revenue for road/highway construction and maintenance: speeding tickets, parking violations, etc.

Funny to just look at the headlines:
- Oil prices menace any recovery
- The downside of lower gas taxes
Obviously implies that higher oil prices will HARM the recovery while higher taxes will HELP the recovery?!?
If all the gas taxes would be used to build/maintain roads and bridges, there would be enough. But instead a good chunk gets diverted for 'public transport' in big cities. I have no 'public transport' and an 80 mile round-trip commute with a 20-year-old Horizon at 30 – 32 mpg. The guy with the big SUV, and anyone else, want to pay more taxes? Fine! Send your check to the IRS – they'll cash it and the politicians will blow it somewhere.
Maybe paying PREVAILING wages for road construction instead of UNION wages (about 30 – 40% higher) will reduce the cost, too.

For all those in favor of higher gas taxes, may I remind you of one very simple economic principle?

There is no commerce without transportation.

Go ahead, raise the costs of transportation, and see what happens to commerce. How this simple, logical thought process escapes so many is shocking.

Any additional money taken by the government is immediately squandered. The only way to force any measure of fiscal responsibility is to starve the government of cash. They are already shaking us down at every turn. Make money, pay tax. Spend money, pay tax. Invest money, pay tax. Own property, pay tax. Let's just go ahead an implement a breathing tax. Enough is enough. Make do, mother pigs.

And justifying our enslavement by saying that those in other countries are more enslaved is a pretty hollow argument. Any amount of slavery other than none is a bad thing.

I thought with the stimilus money the roads would look like OZ

I drive a big SUV 20,000 miles per year (because I need to) and I'm still in favor of an additional $1.00/gallon gas tax, especially if some other tax is lowered. I'm also in favor of a balanced budget, so cut something like mad or raise people's taxes. (Prefer cut like mad)

A higher gas tax would encourage people to drive less, pollute less, and drive higher mileage cars. We'll also need to import less oil.

I think part of the gas tax should go to subsidize public transportation. We get less cars on the road, which means we need fewer expensive new roads and we start being environmentally responsible.

To me, a higher gas tax makes sense all of the way around.

Take all of the SUVs away and walk the road in dainty slippers they will still break up. I'd be surprised if there is any difference in road wear between a SUV and a Prius.

Better idea – let's look at how much the guys that pave the roads get paid. They're union and always end up working nights/weekends/holidays. Maybe they need to take a paycut?

Your tax rhetoric and your calls for higher taxes are directly contrary, and diametrically opposed, to the spirit of America, to American freedom, and to American liberty.

I kindly suggest that you take your taxing ideas and your anti-American rhetoric to another forum — perhaps a European or Chinese one.

Taxes, like the ones you call for, are a cancer on the American people that rot the country's economic heart and soul from the inside.

How dare your call for America's rot.

I'm happy to see many people suggesting a higher fuel tax. I agree that makes the most sense. It makes more sense than CAFE standards, too, because it is market-based, rather than the govt. imposing rules on business and warping the market. Charge $5-$7/gal for gas, and people will naturally buy more fuel-efficient vehicles. This is known as an efficient market.

Do you really think that lower gas usage will deter the governemnet. They will just raise the taxes to increase the revenues.

I ride a bike to work, and cause essentially no costs for road building or maintenance–am I supposed to pay a mileage tax?

If I switch to a moped or scooter, still with minimal costs, do I pay a mileage tax?

If I give up and drive a big-ass SUV, I cause all kinds of costs. Do I pay the same mileage tax as the bike-rider or scooter-rider?

Get real!! Tax according to the costs imposed. Gas use may not measure imposed costs too well, but it's a lot better than mileage!

Just raise gasoline taxes.

your math does not work. Less gas per mile, yes, but many more cars and trucks that make up a much larger increase in consumption, than the palty savings on efficency.
Then of course, the more cars are driven, the more damage to the roads we drive on.
In Europe, we pay an equivalent of $7.00+ per gallon. That's how schools are funded etc… $4.00 a gallon is nothing.
By the way, 35 miles per gallon is a joke, most German cars have been doing that for many years. Time to wake up.

Perhaps lighter, higher-efficiency vehicle traffic will result in lower required road maintenance costs?

It seems that no one likes the idea of an increased gas tax or a per mile tax. Fine, offer an alternative. I'm not hearing one. Or do people think that road construction and maintenance is free? I know, tax the smoker, the beer drinker, the rich, the guy behind the tree. Just don't tax me.

Use less oil, get the same milage, the difference in price goes to the government via higher gas taxes.
Less money goes to the oil states you dont wanne fund and maybe you can start thinking of not having a trade balance deficit every month and even start lowering the massive debt.
A bonus is that it is good for mother nature.

I would like to know why the roads and bridges are in the decrepit shape their in to begin with. We as Americans have been paying taxes through the nose on everything and getting hosed over and over again. You pay outrageous tolls for many of the roads you travel and for all of the bridges you cross. Where has all this money we've been paying going to. Our road and bridges have irreparable damage and we just lost how many lives with the sad shape the bridges were in up in Minnesota. Where is all of this money". Gee it couldn't be in the pockets of all these corrupt politicians having parties and living the good life and flying all over the country and taking their families on vacations at our expense now could it?
I must be totally mistaken I'm sure.

meddle with the economy even more. Why should people like you dictate how others should live their life? That is basically what you are doing with a gas tax, pretty authoritarian if you ask me. Environmental issues are being used to mask taxes.

Granted, bridge and road funding must come from somewhere. However, to try and argue that the negative outweigh or EVEN match the positives is absurd. Has it ever occurred to anyone to start funding to improve the quality of the bridges and roads built so that they don't REQUIRE multiple annual repairs? It's a well known fact that our nation has some of the most poorly built roads around and require maintenance far more often than other nations roads. This article reads as if one is being a anti American by wanting improved gas mileage standards for the cars we drives. I'm sure the author will respond with something along the lines of simply being subjective, however at a time where gas is again creeping higher and higher, it would seem foolish to try and play devils advocate to something that would directly put money back in the hands of hard working Americans.

I'm not sure what is really fair to the US population but for sure they only understand an impact to thier pocketbooks, hence the need to push enviornmental issues and fix the roads. Don't hide the tax via a mileage solution, we should have had an extral $1 tax on gasoline since 1978!