Former GM exec Bob Lutz acknowledged that Americans wouldn’t embrace an increase to the federal gas tax – and he was right. There was a lot of reaction to my piece yesterday on Lutz’s recommendation that the federal gas tax be raised in 25 cent increments until gas prices reached $6 or $7 per gallon at the pump.
As I read through the comments, however, I was struck by the divisive nature of the debate. Clearly, as outlined in your comments, how you feel about the issue is influenced by a number of factors including how much you drive and your income level. I wondered if there might be other issues at play – including how much tax you’re already paying out of pocket.
While the current rate for federal gas tax purposes is 18.4 cents per gallon (24.4 cents per gallon for diesel), a rate that hasn’t changed since 1993, state gas taxes have much more volatility and range. In fact, the difference between the taxes paid at the pump in the state with the highest rate (New York) and those paid in the state with the lowest rate (Alaska) is more than 40 cents per gallon. If the average American drives 13,476 miles per year (as determined by the Federal Highway Administration) and if the average miles per gallon is 22.4 for passenger cars (as determined by the Department of Transportation), the difference in tax paid between states affects drivers by as much as $240.
Not sure where your state falls in that spectrum?
Here are the ten states that pay the most in state gas taxes:
- New York 50.6
- California 48.7
- Hawaii 47.1
- Connecticut 45.0
- Illinois 39.1
- Michigan 38.7
- Indiana 38.0
- North Carolina 37.8
- Washington 37.5
- Florida 35.5
And the ten states that pay the least in state gas taxes:
- Alaska 8.0
- Wyoming 14.0
- New Jersey 14.5
- South Carolina 16.8
- Oklahoma 17.0
- Missouri 17.3
- Mississippi 18.8
- New Mexico 18.9
- Arizona 19.0
- New Hampshire 19.6
(Admit it, you didn’t expect to see New Jersey on the second list!)
These rates are current as of January 1, 2013. The number beside each state represents the total state gas taxes. Note that, for purposes of the list, state gas taxes include excise taxes, environmental fees, storage tank taxes, general sales tax, and other fees or taxes.
The complete list – as determined by the always informative Tax Foundation – is here.
Of course, at the pump, you’ll also tack on that 18.3 cents per gallon federal gas tax. Since the tax is included in the price you actually pay, it looks like this:
$3.49 (what I paid at the pump on yesterday in Pennsylvania) = $.183 in federal gas + $.323 in PA state taxes + 2.984 as the “price” of my gas
Total taxes for my gas in Pennsylvania represented about 15% of the price per gallon. Remember, however, that as the price of gas increases or decreases, the tax rates remain the same since they are generally flat per gallon taxes (if you live in one of the 7 states that impose a partial or full sales tax on gas, the math is a little different). As the price of gas increases, you would pay a smaller percentage as gas tax; conversely, as the price of gas decreases (as if this actually happens anymore), you pay a higher percentage as the gas tax. Make sense?
So now, I want to know:
Would you support a boost in the federal gas tax?
And to see if state gas taxes influence your answer, please leave your state of residency in your comment.
