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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Barry Ritholtz: Failure To Increase The Gas Tax Signals American Decline

FYI: A major economic power is showing signs of decline as its once-great system for transporting goods, people and information begins breaking down from overuse and neglect. But instead of making a modest sacrifice by raising fees on those who use the system, government folds in the face of protests from a vociferous and incompetent minority.I


  • I’m not sure why he’s surprised nothing has been done. The Party of No has consistently blocked infrastructure bills:
  • TedTed
    edited March 2019
    @ Lewis The problem goes back way before Trump. If I'm not mistaken the Fed. gas tax hasn't been raised in 25 years. Fuel taxes in the United States. The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. The federal tax was last raised in 1993 and is not indexed to inflation, which increased by a total of 64.6 percent from 1993 until 2015.
  • I know it goes back before Trump. Read the link I provided. Obama and Democrats tried to pass a major infrastructure bill that the GOP blocked.
  • edited March 2019
    Please don't try to confuse Ted by citing facts. He's not into that kind of stuff.
  • edited March 2019
    My question: Is what amount of road use tax does the hybrid and electric vehicle owners pay? And, bicycles are now becoming a popular means of travel on many of the streets where I live with special bicylcle lanes now being incorporated into the road ways. I wonder just how much they pay? Perhaps, our elected need to look at expanding the tax base for road use rather than just raising taxes on the gas and deisel fuel users.

    Plus, our locally elected (where I live) want property taxes to cover a good bit of the expense in developing our local mass transit system over having those that ride cover this burden. And, folks, our city council is now made up of all Democrats. However, the property based bond backed transit funding has thus far failed to gained voter approval to do this. Thus far, most of the voting public (property owners) keeps voting these special tax (bond) packages down. But, somehow ... they seem to be able to find enough money to keep expaning our mass transit system. My thinking is that if the current mass transit system was profitable then there would be no need to turn to the local tax payer through election based voting for property taxed based bond approval. Seems, our local elected want a property tax base funding to subsidized our mass transit system while the majority of the voting public does not.

    Go figure. Currently, the locally elected thoughts are to let the tax base pay for the lion's share of our mass transit system over those that ride pay for it through cost based ridership fees. Government says ... once the mass transit system is built and ridership increases then there will be less burden on property taxed backed transit bonds. So far, the voters are not buying into our local government's thinking. I wonder why the transit bonds are not backed by user fees? Seems, our airport bonds are backed by airport revenue.
  • To my knowledge there isn't a general purpose mass-transit system (buses or trams) in the entire world that entirely pays for itself via the fare box without additional subsidy. Not one. (This excludes special-purpose systems, such as city-to-airport buses.)

    The real question in any particular location is "What mix of taxes / public transit results in a traffic flow that is of benefit to the most commuters in a given area, including less congestion and fewer parking fees for those driving?"

    When an established major transit system shuts down for whatever reason the local voters soon remember why those systems were installed.

    Old_Skeet makes a good point though, regarding the hybrid and electric vehicles and special bicycle lanes (which seem to be taking more and more of the room previously available for vehicles, with questionable logic regarding the efficient use of road space.)
  • OJ - it's a point but I'm not sure it's a good point. I'd call it a minor point. I believe that less than 5% of the vehicles on the road are either hybrid or electric (and do note that hybrid's still require some form of fossil fuel). I'd like to think that what government fails to reap in fuel taxes we reap in the form of cleaner air and lower levels of pollutants.

    Bike lanes, the same reasoning applies except they tend to be even more restricted to heavily populated major cities. Think of it as one less car on the road for each bicyclist you see. Bike lanes are also more likely a form of local demand on a city/county/state level driven by the wants/desires of local residents. As always there are tradeoffs.
  • Well, raising the gas tax will create incentive for more fuel efficient vehicles and public transport, even some may take bicycling to work. There is nothing wrong. If at some point in the time, most of the vehicles switch to energy sources besides fossil fuels than we will have to think about it again but right now I don't see it being a problem with most vehicles still running on gas.
  • edited March 2019
    “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America” .

    How we doing on each of those?

    1. More perfect union

    2. Justice (equal & for all)

    3. Domestic Tranquility

    4. Defense

    5. General Welfare

    6. Liberty

    Public transportation would seem essential to the “General Welfare” category (#5). Probably a “C” grade at best, depending what part of the country you reside in.

    I don’t much care how we raise the money. I lean more toward the income tax as fairer to all. But that’s just me. Tax anything you like.
  • There are (at least) three different questions here.

    1. How to pay for infrastructure (esp. roads). That was the issue raised in the opinion piece. As others have pointed out, hybrid/EV usage is so small that pragmatically it doesn't enter into this discussion.

    2. Fairness/equity. Regardless of how little would be collected from these few vehicle owners, is it fair that they "get away" without paying? This opens up all sorts of questions.

    Should we consider roadways a public resource like schools or police, that we all share responsibility for, regardless of whether or how much we use it? Or should we assess people based on their usage (which includes wear and tear - charge heavy trucks much more)?

    If so, should we look at total costs of use, including the subsidies to oil companies (which benefits the buyers of gasoline but not EV owners), including environmental costs, including gasoline infrastructure costs, etc.? Why stop at road surfaces? Why isn't the post office paying for all its sidewalk usage?

    3. Public policy - What sort of behavior do we want to encourage/discourage? It doesn't make sense to subsidize the purchase of hybrids and then charge owners more (e.g. higher registration fees) because hybrids don't use much gas. Since most people depend on roadways for basic things like getting to work, should we consider roads a public resource but still charge for excessive usage?

    States with fees on hybrid and electric vehicles

  • I'm sure you guys are right about the insignificance of electric and hybrid on a national basis. Here in the SF Bay Area though it seems as if every fourth vehicle is either electric or (especially) hybrid. Lots of hybrids, mostly the Toyotas.
  • edited March 2019
    @Old_Joe & @Mark -

    I appreciate both your points on alternative transportation.

    - As an avid bicyclist let me just toss out the thought that building a mile of 4’ wide paved trail capable of supporting a 40 lb bike + rider has to cost considerably less than constructing a mile of highway capable of bearing the weight of an 80,000 lb semi-truck loaded with cargo.

    - As owner of a hybrid car I’ve learned that Michigan slaps an additional $47 on my annual registration fee because of that. Owners of “all-electric” vehicles pay about $200 per year more, In my case I feel a bit “slighted” because my car operates 100% on fuel purchased at the pump. The hybrid technology simply allows it to utilize that fossil fuel more efficiently.

    The reason I cited the Preamble above is that when we view public transportation (roads, trains, subways, etc.) as part of the “general welfare” than it’s easier to view these things as public necessities. Gets away from the tit-per-tat user fees. I don’t drive an 80,000 truck. But I shop at stores where the goods they transport are sold. My elderly neighbor doesn’t drive as much as she used to - but she depends greatly on outside medical assistance (like health professionals & EMS) to be able to reach her quickly. Also, most of us receive deliveries to our door-steps via UPS and FedX - two providers who also depend on roads. Point us: Roads benefit all of society - albeit each of us in different ways. As a society let us share the cost - for the common welfare.
  • @hank- Some excellent points. Thanks for the perspective.
  • >> for the common welfare

    man, there's a quaint notion
  • Our new Ohio governor proposed an $0.18 per gallon tax to shore up our crumbling infrastructure. The Ohio House said $0.08 was enough, and the state Senate said $0.06. Those may be off a bit, but the numbers are close. Gas prices regularly fluctuate 15 to 30 cents in a 24-hour period, and folks don 't blink an eye. Our legislature simply doesn't have the guts to do what is needed. Some even suggested offsetting any gasoline tax with a corresponding reduction in income taxes. We finally have a governor who is not afraid to increase state spending for areas that have been long neglected, and the legislature run by the same political party sits on their hands.
  • @BobC
    Do you know how much of the I-80/turnpike fee goes to repair of the Ohio portion?
    Just being curious, as to a compare of fees/repairs/maintenance.
    Example; I-75 through Michigan has a lot of traffic in the southeast area, in particular; but there is no offsetting toll for maintenance.
    Thank you.
  • @catch22 Good question! Our previous governor and legislature issued bonds to fund the upkeep of the turnpike. Unfortunately, from what I understand, the $1.5 billion raised from issuing bonds in 2012 has now all been committed to existing projects. But the state sill has to pay the interest on those bonds until they mature sometime in the future. I am not sure about how much of the total fees the turnpike collects go to repairs and maintenance, but the road is well maintained.

    And yes, I know about the I-75 mess in southeast Michigan. We travel that route from Columbus to Stratford, Ontario frequently. Any idea when the south-bound lanes will re-open. Last year, they had totally disappeared, just like northbound the prior year.

  • Hi @BobC
    I/we don't have to travel any of I-75 in the southeast area; but I know the second phase of major rework has already started in the "Troy" area in Oakland county, but this isn't in your travel path.
    When traveling south and headed through or to Ohio; we always opt for US-23 to or from Maumee/turnpike connection. The route to/from Stratford via US-23 would be longer for your trip; but US-23 has had a lot of work already performed and is in decent condition; and I-69 to/from Sarnia is decent as well. I'm sure you take 75 to 94 to Sarnia, yes?
    'Course, there is always a summer project somewhere. MDOT has a very good web site to check for construction projects. Check here. You can change the icons at the left top to on/off with a click to view what you choose. Zoom map with left mouse button.
    Note: Northbound US-23 at I-96 interchange is too busy after 3pm most days and especially on Friday, as many metro Detroit area commuters are getting out of town; especially with summer vacations.
    Overall, driving around Cleveland for us heading east is much different than 75 and 94 near Detroit. One is never really away from too much going on with traffic in this metro Detroit area.
  • edited March 2019

    Good discussion. The photo above is not atypical of some major highways in northern Michigan. Many barrel right through these potholes at 65 mph, seemingly oblivious to the damage being caused to their vehicles - not to mention the safety hazards. The new Democratic Governor has proposed a 45-cent per gallon fuel tax increase staged-in over time. The “other party” which controls the legislature wants instead to fund roads with the general 6% sales tax when it applies to sales of motor vehicle fuel. That money currently goes to fund schools.

    FWIW, I parked my new Accord in the garage 2 months ago and refuse to drive it until our roads are repaired. I have a 15 year old pickup that can better withstand the endless potholes on highways posted 55 mph (but which should be 35 mph). Even with that, I drive circuitous routes to reach destinations - electing the routes that are least devastated. What used to be a 7 mile daily drive has become a 12 mile drive - but at least the roads are somewhat better.

    The really bad news is my pickup gets only one-third the fuel economy of the lighter hybrid automobile (15 mpg vs 45 mpg). Throw in the 50% longer routing and I’m spending 4-5 times the amount on fuel I’d otherwise. A $5 drive becomes a $20-$25 drive.

    Here’s a good article from Car and Driver on the mess:.
  • >> refuse to drive it until our roads are repaired

    I'd never leave the house
  • @hank- Nice pic! :)
  • edited March 2019
    @DavidMoran. Agreed. Same here. @msf Roads ARE a public resource. I think it's a false dichotomy to then suggest that if they're NOT, then heavy (literally) users should owe more for upkeep and maintenance. Big trucks, in particular. Why shouldn't heavy users pay more for using a NECESSARY public resource, due to the extra wear and tear they cause?

    The Northeast deals with the frost and thaw cycle, it's true. But Connecticut clearly CARES for their roads (and therefore everyone's vehicles) much better than Massachusetts. I've had a pothole on I-91 screw up the locking mechanism on my car! It wanted to lock itself and not let us either in or out of it, until we got it fixed. I inquired: will the Commonwealth pay for this repair obviously caused by deliberate lack of upkeep? Answer: NO, unless there is bodily injury.

    Charge extra for people who use hybrids and all-electric vehicles? That's just plain insane. And an indication of the extent that legislatures and Governors are owned by Big Oil. People who are smart enough to use electric vehicles still have to deal with the issue of there not being a sufficient number of re-charging stations. It's still inconvenient. They are paying the price for being SMART and GREEN.
  • edited March 2019

    >> refuse to drive it until our roads are repaired
    I'd never leave the house

    You have no idea how bad ours are. Fortunately, got an old pickup here. But the whole thing sucks. 8.5 Bil for
    “A great big beautiful wall ...” - Not a penny for fixing the roads.
  • Living in Mass., I have the opposite of no idea
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