The path forward
We don’t need tolls. What we need is a comprehensive means to maintain our roads and bridges from the collected monies in the Highway Trust Fund (HTF). As vehicles are getting better fuel mileage, the revenue to states to maintain and build roads and bridges has significantly decreased. Without more revenue going into the HTF, the worse road conditions will become.
The last time fuel taxes were increased was in 1993. Fuel mileage for cars was averaging around 22 mpg and for semi-trucks between 4.5 and 5.5 mpg. In 2013, the mpg average for the same vehicles was 30 mpg and 6 to 8 mpg, respectively, which in and of itself has reduced the fuel tax revenue to states and the federal government.
We need to build the Highway Trust Fund to the level at which it needs to be. So from my calculations, the federal fuel tax must be increased 10¢ per gallon and then raised a penny per gallon every two years as fuel mileage improves.
A recent report from Moody’s Analytics, an economic analysis and forecasting firm, said investing in infrastructure, repair and expansion is more effective, dollar for dollar, at boosting job growth than many forms of tax cuts. In fact, according to Moody’s, making the Bush tax cuts permanent would reduce every dollar of our gross domestic product revenue by 29¢. Infrastructure spending, on the other hand, would add $1.59 for every dollar spent.
Former Secretary of Transportation Ray LaHood is now co-chairman of Building America’s Future, a bipartisan infrastructure advocacy group. In October, LaHood spoke before the media at the Caterpillar Demonstration & Learning Center in Edwards, IL. He gave reasons why the fuel tax needs to be increased and why Congress needs to pass a comprehensive highway bill. “It should be a six-year bill, and it should include raising the fuel tax by 10¢ a gallon,” he said. “That hike could be put in over several years. But most importantly, the bill should index the fuel tax to inflation.”
Sadly, LaHood indicated that with the current gridlock in Washington, not much is likely to occur over the next two years, while both parties are focused on winning the presidency in 2016.
But investing in our infrastructure still produces benefits. The result of rebuilding and adding roads and bridges does one thing tax cuts can’t do: It increases the number of consumers with income to spend on products and services provided by other businesses. And the more consumers we have purchasing goods and services, the more people have to be hired by a business to cover the needs of those consumers.
Added to this, more people working means more people paying taxes and fewer people on public assistance, thereby reducing government expenditures. Taxes could then be lowered to compensate.
Yet another benefit is that more trucks and truckers will be needed to haul the freight that will fill the shopping baskets of those consumers.
A win-win situation for everyone.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com
