An infrastructure tax solution
President Trump this week floated the idea of hiking the gas tax to pay for a massive infrastructure program. It’s a smart proposal that all Americans, regardless of political persuasion, should welcome. The American Society of Civil Engineers — a distinguished if not a disinterested group — gave our roads, bridges, tunnels, public transit, dams, airports and more a D+ grade in its every-four-year report card this year. Its estimate of what it would take to fix the problem: $4.5 trillion by 2025.
In addition to having respectable and well-functioning infrastructure, the economic benefits would be huge. Such a program would not only generate good jobs for those building and maintaining the new infrastructure, including many for unskilled laborers, it would enhance productivity for businesses that depend on a reliable supply chain, which is key to the growth of our economy.
Linking a hike in the federal gas tax, which hasn’t been raised for two decades, to a boost in infrastructure spending makes perfect sense. It’s the readiest source of revenue, and the most logical one.
Of course, any proposal to raise a tax will face headwinds in Congress. Republicans are allergic to new federal revenue and massive redistribution. Some Democrats may resist what might be considered a regressive levy.
I’d like to propose a way to raise needed money that would allay some of these concerns, and a strategy on how to spend it. Call it the States’ Rights Gas Plan.
The plan’s main tenet is to have Washington pass an increase in the gasoline tax, a dime a year for five years — but have the federal government keep none of it.
All of the money would remain in the state where it was raised. The states could do what they wanted with the money using current federal engineering standards.
Most states would use it for infrastructure needs. However, if a state felt its own infrastructure funding was acceptable, it could use it for other public needs. If for some reason it felt it was not needed at all, the state could rebate it in any form it liked, such as reduced state income or sales taxes — just not reduced state gas taxes.
States that have recently passed gas tax increases (19 states in the last two years) would get a “bye” until the federal increase reached the level of the state’s own increase. In that way, those states would not be subject to a double hit.
What’s good about this plan? First, there would be no elaborate and inevitably contentious federal formula needed for dividing up the money. What is raised in a state stays in the state.
Second, there would be no increase in the federal bureaucracy. There is talk in Washington of creating an infrastructure bank, or of a carbon tax on businesses. All involve more bureaucracy.
Third, it would raise, in one shot, between $50 billion and $70 billion a year, more than half a trillion over a 10-year period. That would go a long way to getting us the infrastructure we want and need.
Fourth, the full tax wouldn’t kick in for five years. Since most people get a new(er) car every five years, they’ll have the choice of reducing their tax burden by buying a car that gets better gas mileage.
Once passed, of course, the federal government will have to establish a national infrastructure policy.
In this, we must make it our policy to listen to the engineers and planners, not just the politicians, regarding what needs to be done and how to do it. About 70 years ago, America stopped listening to its engineers, the best in the world, and turned over its infrastructure to budget cutters and politicians.
As a result, our infrastructure is not only not the best, but is actually considered Third World. Everything — from roads and bridges, from airports to rail and public transit systems, from water systems to electrical generation facilities, even our internet speeds — is substandard.
Second, we must stop thinking about infrastructure only when there is a recession, or only as a jobs program. Create a constant and consistent concern for the improvement in infrastructure. Everyone depends on a well-functioning and improving infrastructure, every day, not just in a downturn.
Third, we must force all jurisdictions to have a clear plan for the three phases of infrastructure improvement: returning current infrastructure to a state of good repair, providing a plan to continuously maintain it at optimal performance, and developing a strategy for new infrastructure that will grow the economy and make life better for all of us.