Just when it looked as if some common sense regarding the highway funding bill was found in Washington, along comes the Obama administration with its plan to avoid the political risk of raising fuel taxes in an election year, preferring instead to fall back on its favorite tool, class warfare.
Rather than making a logical adjustment to the current fuel tax system, the administration is looking to fundamentally transform the highway funding system through a package of politicized business tax reforms. Among those reforms are efforts to grab a chunk of the cash held overseas by US firms and a “proposal to eliminate loopholes for expenses such as corporate jets.”
While “reforms” such as these are great fodder for the president’s party loyalists, they rarely turn into any serious, long-term sources of revenue. Even worse than the inevitably huge deficits created by such a plan, is the underlying shift away from the predominantly user-fee-based current system.
Under the current system, there is a built-in expectation of a minimum level of highway funding, and at least the pretense of distribution proportional to the revenues contributed by the various states. Abandoning the user-fee arrangement would likely result in a funding system that is 100% political, both in terms of total highway funding levels and how that total is distributed.
Think of Chicago-style political patronage but on a national scale.
At the risk of sounding like a broken record, I’ll restate my support for increasing the current fuel tax to meet today’s highway funding needs, switching the tax rate from a flat amount per gallon to a percentage of the price per gallon, and inflation indexing that rate based on construction costs.
Any increase in fuel taxes will be tough to swallow, but it’s important to note that we’ve already survived much larger increases in fuel prices. By paying less fuel tax per mile now than what we paid two decades ago, we’re not getting the highway maintenance that we’re not paying for.
, Highway Funding