By Eric Jaffe, September 25, 2013
Don't let the instinctive uproar over high gas costs fool you: Americans should be paying more to drive. But "more" is a vague and relative word. Exactly how much more would it take to cover the costs of road maintenance and construction in the United States?
The Institute on Taxation and Economic Policy recently crunched some numbers and came up with an answer: $4.66 a month.
A one-paragraph primer in case you're new to the topic. The federal gas tax, which populates the Highway Trust Fund that pays for the major highways most drivers use for their commute, hasn't been raised since 1993. In the past five years Congress has injected at least $53 billion from the general taxpayer fund to cover the shortage. By 2015 the Highway Trust Fund will go broke.
What's to blame for this budget gap? Well, the increased fuel-efficiency of American automobiles accounts for some of the difference. Cars that get more miles to the gallon stop less at the pump and, by extension, deposit less into the Highway Trust Fund. But construction costs, which have increased 335 percent since 1972, have played an even greater role in the problem, says ITEP:
Fuel efficiency’s impact on the gas tax base is often cited as the main reason that gas tax revenues are falling short. In reality, however, the impact of construction cost growth on the gas tax rate has been far more important.Together, fuel-efficiency and construction costs have reduced the value of the gas tax (relative to 1997) by 28 percent, with 22 percent assigned to construction and just 6 percent to better mpg:
These problems wouldn't be problems at all if the gas tax had been indexed to rise with inflation and to keep pace with construction costs. In that scenario, according to ITEP's calculations, the federal gas tax would stand at 29 cents per gallon, roughly a dime higher than it is today. Translate that into wallet form and you get a paltry $4.66 more each month in 2013, or about $56 more for the year:
So we could address much of the highway problem for what many Americans pump into app game cheats each month.
ITEP recommends a number of steps Congress can take to gets the Highway Trust Fund in order. First, obviously, the gas tax should be increased. It should also be configured to rise alongside construction costs and fuel-efficiency improvements. Second, it suggests a "smooth" adjustment period so drivers don't take a major tax hit all at once.
If the government had implemented such a policy back in 1997, it could have generated some $215 billion by now, ITEP figures. Even subtracting for the $53 billion transferred from the general fund, the trust fund would have had an extra $162 billion to improve America's crumbling roads and bridges or fund capital transit costs. Here's ITEP's vision of what the Highway Trust Fund should look like today: