President Donald Trump continued to talk taxes this week and offered a new twist: he is considering a boost to the U.S. gas tax. Long considered an unpopular move with individual motorists, there hasn’t been a bump in the federal gas tax in more than two decades.
In an interview with Bloomberg, Trump suggested that the idea was floated by the trucking industry. When asked about raising the gas tax, he said he was considering it because “[t]he truckers have said that they want me to do something, as long as that money is earmarked to highways…” He explained that the idea was raised during a meeting with the trucking industry who “would like it, because they say the roads are in such bad condition.”
Infrastructure has been a sticking point in budget discussions because of cost. Trump said about the price tag, “The Democrats want infrastructure, they want a trillion-dollar bill, and I’m totally open to that. We are in agreement there.” He then emphasized, “I think where I’m in most — best agreement with the Democrats are that and trade.”
President Obama had also previously supported increases in infrastructure funding but did not support an increase at the pump. A 2014 survey commissioned by AAA found that just over two-thirds (68%) of Americans supported more spending more on roads, bridges, and mass transit systems; just over half (52%) said they would support an increase. Despite those numbers, efforts to increase the gas tax have not been successful. Measures to boost the tax were introduced by Sen. Chris Murphy (D-CT) in 2014, Rep. Earl Blumenauer (D-OR) in 2013, and in 2010, former Rep. George Voinovich (R-OH) made a big push for a gas tax increase just before his retirement saying that, “just a few cents could help create jobs, improve our infrastructure and better the climate.” All of those proposals failed without even going to a vote.
Instead of a boost to the gas tax, Democrats had largely focused on offsetting costs in the Obama administration by limiting oil and gas company tax breaks. That strategy that will likely not get much support under the current administration.
The federal gas tax, which was initially signed into law by President Herbert Hoover in 1932, was not originally earmarked for highways or roads projects. The penny a gallon gas tax was intended to help close a spending gap in the federal budget. It was so successful (though not terribly popular) that the government raised the gas tax to 1.5 cents per gallon as part of the National Industrial Recovery Act of 1933. By 1941, the federal gas tax was a permanent fixture in the United States.
With more cars on the road, infrastructure – including building and maintaining those roads – became more of a concern in the mid-1950s. With the Highway Revenue Act of 1956, the gas tax increased from two to three cents per gallon. This time, however, revenue from the tax was diverted to a highway trust fund to pay for roads and maintenance. The trust fund, which was modeled after the Social Security trust fund, remains in place to this day.
In 1990, President George H. W. Bush switched gears and designated a portion of the gas tax to be used for something other than roads. He increased the gas tax by five cents per gallon and earmarked half of the increase for deficit reduction. That strategy continued until 1997 when President Clinton again designated gas taxes to the Highway Trust Fund.
(You can read more details on the history of the federal gas tax, including a chart of increases by year, here.)
The federal gas tax has remained steady at 18.4 cents per gallon since the Clinton era. However, drivers in some states are paying more for gas in 2017 due to increases in state gas taxes; in at least four of those states, the increased revenue was earmarked for infrastructure improvements.
In addition to the gas tax, Trump suggested that he was open to negotiation on a number of issues, including those outlined in his tax proposal (you can read more about the tax proposal here). When pressed by Bloomberg’s Jennifer Jacobs on specifics, he said, “Everything’s a starting point.”
You can read the full transcript of the interview here.
