Here is one:
To the Editor:
Thomas L. Friedman’s column hits the nail right on the head. For the last 30 years, since Walter F. Mondale suffered a landslide defeat for having the courage to pledge to raise taxes in order to close the budget deficit, our national leaders have refused to show similar courage in addressing any difficult issue ”” from the need for a gasoline tax to cut our dependence on foreign oil to the need to cut benefits or raise taxes to resolve the crisis in the Social Security system.
The politicians’ lack of courage is regrettable but understandable, since they all want to get elected. What is more regrettable and completely incomprehensible is how the voting public and the media allow our leaders to get away with such cowardice. If we continue to allow the candidates in both parties to tell us only what we want to hear instead of the truth that we need to hear, we will deserve the inept leadership that we will get.
Avi Moskowitz
West Hempstead, N.Y., Nov. 15, 2007
I seem to recall that when the Republicans made noise about fixing Social Security system the Democrats demogogued the issue shamelessly. Something along the lines that it would throw Grandma and Grandpa out on the streets.
Similarly if Mr. Moskowita wants to pay extra taxes he should do so. I find the idea of raising taxes to reduce consumption of a product repugnant. The natural market will do that. At the same time we must recognize that the higher prices could well have a terrible impact on the economy and raise prices of the items that the poor need to survive.
Raising the tax on a necessary commodity should be particularly repugnant to the Democrats who claim to be defenders of the poor. This is a regressive tax on those who need the gas and can least afford to pay. This writer fails to say how the tax will “cut our dependence on foreign oil.” Raising the CAFE standards to include SUVs and allowing extraction from domestic oil sources and the Gulf of Mexico — now those are things that could reduce our dependence on foreign oil.
Democrats don’t care about making things more expensive for the poor because they assume the poor are so uneducated and easily manipulated that they can just blaim the greedy rich (insert “Jews” when appropriate) trusting that the poor will never follow the most basic economic logic to see the gaping flaws in their demoguery.
On the other hand, one could see gasoline taxes as user fees for vehicle owners. All things being equal, the amount of wear and tear on a highway is proportionate to the vehicle/miles driven and the weight/vehicle. So is the number of gallons of fuel that a vehicle uses. Those who drive heavy gas-guzzlers are harder on the roads than Prius owners, and they pay higher gas taxes as well.
Unlike most user fees, however, fuel taxes have not been linked to the actual cost of providing service to users. The federal gasoline tax is not generating enough revenue for the Federal Highway Fund to provide proper maintenance on the existing federal highway network, much less provide for construction of new lane/miles, replacement of old infrastructure, etc. Those tasks are either not getting done, or they must be subsidized from other revenue sources. Ask people in Minneapolis how that has worked out. Things have gotten much worse recently, since the Defense Department has required general tax revenue that used to go for infrastructure. Texas, for example, is looking at billions less in federal highway dollars in the future than we could historically expect.
State fuel taxes in most states are similarly insufficient when seen as a user fee. In Texas, our gas tax is not indexed to the price of fuel, and has declined from about 20% of the cost of a gallon to less than 10%. The legislature has steadfastly refused to raise it, and has actually diverted some of the income to other programs to avoid a general sales tax increase–we have no state income or property taxes. Our state Department of Transportation has essentially called a moratorium on any new projects and may not be able to finish some already underway.
On the local level, growing communities that need more roads have historically relied on local/state/federal partnerships to leverage the money raised by regular city or county taxes and bond issues. Please note that these are not “outside subsidies,” since the local citizens are paying their proportionate share into the federal and state highway funds each time they fill their tank.
Without the state and federal money, local communities are being asked to pay for the full cost of infrastructure just as that cost is rising. Remember that the second-largest expense (after labor) for building and maintaining roads and bridges is petroleum products–fuel to run the equipment and asphalt paving material—and you can see the impact of $3.28/gallon diesel. It is virtually impossible to get local taxpayers to vote for bonds to improve local arterial roads, much less state and federal highways, unless the citizens think that the outsiders who will use the roads will help pay for them. Thanks to inadequate fuel taxes, the sole alternative is to build toll roads instead of freeways.
This is one case where a political decision for “no new taxes” has translated into a case of “much less services.” Pretty soon, we may have no choice about buying a vehicle with off-road capabilities because that will be the only way to get anyplace. At least we won’t be paying much of a penalty in gas taxes!
#4: What is subject of this discussion? Is it how to maintain our infrastructure to insure goods can reach their market and workers can reach their jobs, or to discourage commerce by raising the cost of supplying almost everything in the economy? Your argument is focused on the first while the premise of the letter will ultimately produce the results of the second – Economy be damned!
I think that the major premise of the letter is that the refusal to raise taxes when they are necessary is the result of “political cowardice.” I would suggest it is because voters have made it clear over the past few decades that they would almost invariably prefer cuts in service to rises in taxes… so long as they aren’t a consumer of the service. Working people oppose rises in social security taxes, until they are ready to retire and want secure funding for their own retirement. Drivers oppose gasoline taxes, until they can’t get the funding to keep their own street passible. As a result of this attitude, looming problems don’t get fixed until they reach the status of an imminent crisis. That isn’t the fault of the politicians, but of us voters and taxpayers.
My point was that there are perfectly good, conservative Republican, reasons for a more substantial gas tax. Let us set aside for the moment the fact that the existing rate provides no money for new roads or to fix many old ones. By not treating fuel taxes as a user fee that should recapture a significant share of the costs of providing the road network, we have distorted the free market. The low tax has promoted the use of the road network as a cheaper–because tax-supported–alternative to, for example, railroads that are expected to pay for their own track construction and maintenance. (It is not a coincidence that most railroads got into trouble about the time the Interstate Highway system was built.) All these extra trucks and cars use far more fuel than a proper rail and transit system would, which gets us back to the point about dependence on foreign oil.
As for “raising the cost of supplying almost everything … Economy be damned!” Well… Have you compared the strength of the dollar (with $3.00 gasoline) to the strength of the pound (with £4.32 = $8.87 gasoline) or euro?
#6: At the time OPEC turned all the economic rules of supply and demand and the Phillips Curve into macroeconomic theory confusion, I was all in favor of a gas tax to lower the elastic demand for gasoline and keep the extra revenue here in the US instead of the Middle East. But…. if there is a sudden jolt to the economy which causes a rapid inflation, other tax revenue will go down, lower income people will not be able to make ends meet and people on retirement will see their nest eggs evaporate. Yes, they are the voters that the politicians will fear. Government policy has to ease into these taxes slowly and let the economy adjust. We don’t have short line railroads leading to the back loading docks of each Wal*Mart. I always wondered how many children at the edge of poverty were lost over the brink because of the sudden mandatory removal of lead in the gasoline at a time when gas was in shortage and prices were skyrocketing. Don’t get me wrong, I’m glad that the lead is gone and I hope the highway infrastructure gets fixed. Again, what we need government to do is have a long term policy that eases us into the necessary transitions.
Dale’s reasoning makes a lot of sense, but it overlooks (as does most related commentary) one huge factor. Last I checked, over 90% of the cost of highways is attributable to the need to make the roadbeds capable of supporting long-haul trucks. So despite the trucks’ old practice of displaying signs that “This truck pays $X in road taxes per year” there is a huge, hidden subsidy for trucks. Consider that 15 years ago, highways could cost $70,000,000 Per mile, and you get some idea of what a pitifully small portion of their true share of the cost is paid by trucks.
Bill Matz makes a good point. And Dale, what you write makes me feel even more strongly about the “creative accounting” and lack of accounting going on in the federal budget and in many states. Taxes for road maintenance should go for roads, and not for other “budget necessities.” If fund accounting did the necessary work, we could see how much we are actually collecting for various purposes and how much we are spending for the same. Tying taxes to specific purposes would go a long way towards justifying them or ending them.