We have written extensively on our thoughts about fuel taxes; here is a summary: while not fun to pay, it is by far the most efficient way to pay for roads based on use, and as such an increase is a necessary evil. Both political parties disagree, but perhaps nobody is more opposed to an increase than Joe Biden.
Joe Biden’s spokesman Andrew Bates answered a question regarding the tax on gasoline, not diesel. However, it is likely that the same logic applies to diesel taxes as well.
“The President has been clear throughout these negotiations: He is adamantly opposed to raising taxes on people making less than $400,000 a year,” White House spokesman Andrew Bates said. “After the extraordinarily hard times that ordinary Americans endured in 2020 — job losses, shrinking incomes, squeezed budgets — he is simply not going to allow Congress to raise taxes on those who suffered the most.”
It is fair to say that most owner-operators make less than $400,000 each year. Even for the mega-corporations that exceed that number, an increase of diesel prices will often be partially or fully offloaded onto the customer of the shipped goods, meaning an implicit tax increase on the consumer. As such, we think it is fair to say that Biden is just as opposed to an increase in diesel tax as to gasoline tax.
Democrats in the halls of Congress share similar sentiments. “[A gas tax hike is] a Republican thing” said Senator Sherrod Brown of Oregon.
The history of fuel tax increases, however, have been mostly split down the middle. Ronald Reagan did raise the fuel tax in 1983 after a radio address emphasizing its urgency.
But the most recent fuel tax increase was done under the supervision of Bill Clinton in late 1993, so the idea is not inherently political in nature.
Assuming raising fuel taxes is out of the picture, there are a few alternatives that could be employed.
Vehicle Miles Traveled (VMT) Tax
This would entail paying a set amount, usually pennies, for each mile traveled. While it sounds very similar to a fuel tax, experts estimate that the administrative costs to implement such a system would make the program much less efficient than fuel taxes.
One that we have suggested earlier is similar to the fuel tax, as vehicles that are driven more probabilistically need maintenance more often. Unlike the fuel tax, which may cause an increase in revenue from more people driving on better roads, a repair tax would mean that better roads would mean fewer repairs and less money to put back into infrastructure. It would be a difficult balancing act to justify.
To make up for recent shortfalls, the United States government has pulled from the general fund. While this can help solve the infrastructure crisis, it is more difficult to know where the money is coming from. It could be income taxes, money added to the national debt, or anything in between.
Fuel taxes are hardly popular, but it is the best system that federal and state governments have to reinvest directly back into infrastructure based on its use, paid proportionately by those who use it. With the rise of electric vehicles, including trucks, it might also make sense to start implementing a tax on electric charging stations, either by the kilowatt-hour or by the gallon equivalent (33.7 kilowatt-hours).
The costs of dilapidated infrastructure are too large to ignore. Just ask any trucker trying to enter or exit Memphis. Let us know your thoughts about infrastructure taxes in the comments below.
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