Cities are getting mighty creative in their efforts to fight rising deficits. No run of the mill income/wage/salary/vocation tax increases here. Philadelphia wants to raise its sales tax; Oakland is taxing marijuana and now DC is considering raising… its gas tax?
DC Council Member Tommy Wells (D) has suggested a gas tax hike of 3.5 cents. The tax on gas has not been raised in the District for nearly 20 years. Apparently, the justification for the tax hike is that gas is priced too low and this will bring it into line with the neighboring state of Maryland.
But, um, psst. Guys, over here: People buy gas in Maryland.
Not so much in DC.
Let’s face it. Nobody lives in DC. Okay, politicians do. But the latest guesstimates of population put the district’s total population at just over a half million. The total population for the “metro area” (read: suburbs of Maryland and Virginia) is over five million. My guess is that those folks aren’t flocking to DC for cheap gas.
Those in favor of the gas tax say that it’s time (maybe) and that additional revenue is needed (clearly). They also say that this is a great way to change “bad energy habits.” According to the Washington Post, “Paying more at the pump will make a new car buyer think twice about buying a gas guzzler; it may induce more drivers to switch to bus or transit.”
Um, nope. Not this tax hike anyway.
I’m all for increased use of transit. I take the bus every chance that I get and I am proud of the fact that, annually, we drive our Subaru Forester far less than the national average. But our behavior is not based on taxes or the cost of gasoline (quite frankly, it has a lot more to do with my limited patience with idiot drivers on the Schuylkill, but that’s another story altogether).
Taxes, like this one, meant to induce a certain kind of behavior are really only effective if they’re significant. A 3.5 cent hike in gas tax is not only statistically insignificant, it will clearly not induce masses of people to buy a different kind of car or to drive fewer miles. Assuming that the average driver logs 15,000 miles per year (that’s the federal average), a 3.5 cent gas tax hike would cost the driver of a 20 MPG car a whopping $26.25 for the year. People spend more than that at Starbucks in a week.
Other arguments for cleaner air and less congestion are (pardon the pun) pipe dreams. Look at those population numbers again. The District’s population sits at about a half million but about a million people find themselves in DC during the week. Those people don’t live in DC. And chances are, those people aren’t buying gas in DC.
So, let’s call a spade a spade: an increase in the gas tax in DC is easy revenue. Nothing more. Next.
Massachusetts has always been a little – we’ll call it different – when it comes to politics. And in some cases, it’s paid off. It’s true that you can drive through the state without being assaulted by billboard after billboard. And the state is, relatively speaking, free of litter and there’s very little in the way of sprawl. Compared to its neighboring states, Massachusetts is downright environmentally friendly. It may be about to go even greener… but going green has a price.
Massachusetts Governor Devan Patrick is considering a so called “Hummer Tax” for residents of the Commonwealth. The tax would mean that those who drive more fuel efficient vehicles would pay less in taxes, clearly providing an incentive to favor those vehicles over larger SUVs. If the controversial measure passes, it would be the first such tax in the nation.
Opponents of the bill say that it is an unfair penalty for a lifestyle choice: driving a bigger car. Proponents of the bill say that the choice is yours to make, but you need to pay for it.
Governor Patrick has also proposed a new gas tax, which would be a 19 cent bump. The tax, in conjunction with the revenue from the “Hummer Tax” would allow the state to overhaul their current transportation system, which proponent claim is in need of a $19 million facelift.
There’s no word yet on whether the bill has public support in the Commonwealth. Vocal opposition has so far only come from – not surprisingly – those who sell large SUVs. But then, the bill is still in the early stages.
Would you be in support of such a bill in your home state?
There has been a lot of discussion lately about increasing the national gas tax. In fact, a proposal to increase the tax, which currently stands at 19 cents per gallon, has been touted as recently as last week. The National Surface Transportation Infrastructure Financing Commission (NSTIFC) has reported that the current infrastructure is dated and needs significant improvements – all of which will cost money that the Treasury doesn’t have.
The NSTIFC has suggested a 10 cent per gallon increase in the federal gas tax to raise revenue – a measure that may actually pass now that gasoline prices have tumbled back down after reaching historic highs in 2008. Time may also be on their side. Congress has not raised the federal gas tax since 1993, more than 15 years ago.
If the feds raise the national gas tax, what will that mean for the states? Will they follow suit? I’m betting yes – with a twist.
Not all of the states are planning a traditional gas tax increase. Oregon leads the nation in a quest for a different kind of tax, a mileage tax. The mileage tax is sort of consumption tax on roads. The idea is that drivers would be taxed on how far they drive rather than how much gas is consumed. Mileage would be calculated using GPS installed in newer cars (older cars would continue to be taxed using the gas tax).
Why change? Almost everyone agrees that the bridges and roads need work. And as cars become more fuel-efficient (we hope) and the price of gas stabilizes (we hope), this means that revenues from the gas tax will not be enough. In other words, those who drive the most miles – and thus use the roads the most – are not necessarily paying the most. Some feel this needs to change.
Oregon isn’t alone. Rhode Island and Idaho are considering a similar tax though based on a self-reporting system rather than the GPS. Chatter about a mileage-based tax has also spread through Colorado, Florida, Minnesota, North Carolina and Pennsylvania.
Congress has given this kind of system some thought, too, though we are clearly years away from seeing anything like this on the national scene.
So is a mileage tax the solution to our infrastructure woes? Tests have gone well in Oregoon. But critics are concerned about potential privacy issues in having government track mileage – and the bigger concern that the tax might eliminate one of the financial incentives for buying a fuel efficient vehicles (though clearly, the gas savings outside of the tax would still be considerable).
What do you think? Keep the gas tax or ditch it for the mileage tax? And if you would keep the gas tax, would you support an increase at the pump if it meant better roads? Any other suggestions?
There has been a lot of talk about which presidential candidate has the best tax plan for “middle class” America. It’s an interesting question because I’m not sure that anyone can actually define “middle class” anymore – my readers seem to feel that it’s all over the place.
Middle class – as it’s widely defined – is generally defined as those families who are in the middle of income brackets. That can be confusing. Based on 2005 Census Bureau reports, 40% of Americans earned less than $36,000 a year (the bottom 20% earn less than $19,000). The next 40% – the so-called middle class – reported betwen $36,000 and $91,705 of earnings. The top 20% of earners, making $91,705 or more, earned 50% of the income reported in the US.
[Kelly's geeky note: From a math perspective, that's pretty interesting: while the richest 20% took in nearly 50% of income, the middle class (representing 40% of Americans) earned a fairly representative proportion of total income (37.5%).]
So there you have it, statistically you are middle class if you earn between $36,000 and $91,705 (adjusted for inflation since 2005) per year. Easy, right?
Not so fast.
There are a lot of factors that pure numbers don’t take into consideration including the size of your family and the cost of living in your geographical location. Lots of folks who make more than $75,000 per year may live comfortably in some areas of the world – but that kind of money won’t take you very far in areas like New York City or San Francisco where housing costs alone can easily reach $1 million for relatively modest homes.
The reality is that almost everyone thinks that they’re middle class, though of course, you can’t be. And realistically, you don’t want to be right now. Here’s why.
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