Although the gas tax has served us well in many respects over the many decades of its existence, there are two principal myths associated with it that would be good to dispel so we can craft transportation funding policies on a sound basis.
Myth Number One: The Gas Tax is a "User Fee."
Enthusiasts for lots of road spending, as well as critics of transit, (who tend to be one and the same,) tend to use this term. Robert Poole of the Reason Foundation, and Kenneth Orski of Innovations Briefs regularly do so, although I've noticed that Poole, perhaps in response to my recent questions to him about it, has lately been calling the gas tax a "user tax."
To call the gas tax a user fee is to imply that it is different than other taxes, and is more of a fee for services given, akin to a seller/buyer relationship.
But this is false. First of all, the receipts from the gas tax don't begin to pay for the cost of roads. I'll talk more about that in a moment. Secondly, the gas tax is called a tax because it is one: It's no different from a sales tax on cigarettes, candy, or any other item that the law obliges us to pay.
To qualify as a user fee one must have some choice as to whether or not one pays it. It also must relate directly to a particular service that one can accept or reject, and to the quantities one uses of that service.
When it comes to roads, a toll on a highway or bridge is a true user fee. If one doesn't want to pay to travel on a limited-access expressway or bridge, one can choose a different route. And one pays a fee every time one uses a particular highway or bridge with a toll. You don't pay one toll, and then use the Golden Gate Bridge as many times as you like.
The same is true about paying a fee to enter a national park. For better or worse, (and there are good reasons not to have high fees on national parks), you can choose not use a park if you don't like the fee.
But plenty much everyone in this country, except for a tiny percentage living in New York and a few other cities, have to drive — to our jobs, our schools, and the grocery store. We can't choose not to buy gas any more than we can choose not to buy food.
Plus, once we pay the gas tax, we have no choice about where the money goes. When I fill up my car with gas, I can't choose that the tax money go to repair the potholes on my street, instead of the brand new interchange on the edge of town.
Those inclined to see the gas tax as a user fee miss these distinctions.
Orski said in his Jan. 14th, 2011 edition of his transportation newsletter Innovation Briefs that "Pres. Eisenhower's ambitious plan for the interstate highway system was placed on a sound fiscal basis by being backed by a user fee (aka the gas tax)." But high-speed rail, "burdens the states with continued operating subsidies."
Let's rewrite that sentence correctly. It should say: "President Eisenhower put the Interstate Highway System on a sound fiscal basis by burdening states with a continued operating subsidy for it in the form of the gas tax." (In an exchange of emails, Orski acknowledged that a gas tax was not a true user fee. He said it was the next best thing.)
Robert Poole of the Reason Foundation in his Oct. 10th, 2010 transportation newsletter makes similar mistakes in criticizing taking revenue from the gas tax and using it to fund sidewalks, bike trails, and train lines.
"Well, you can either have user fees (under which users pay and the same users benefit - the principle underlying both the Aviation and Highway Trust Funds)," Poole said. "Or you can have a giant punchbowl with any number of straws for drinking out of it."
Road enthusiasts may not like receipts from the gas tax being used for other purposes, but it is no different than receipts from any sales tax being used for a variety of purposes.
Myth Number Two: The gas tax generates enough money to pay for all or at least most of the costs of roads.
The United States has one of the finest road systems in the world, built over the last 125 years and paid for almost entirely by tax dollars, of which the gas tax revenues are just one small portion. A glance at the federal National Highway Statistics or a variety of other studies will tell you this. The gas tax did not even begin on a federal level until 1932. Congress passed the first "Federal Road Aid Act" in 1916 and granted $75 million in funding, none of it coming from gas taxes, which didn't exist yet.
Much of the money for roads comes out of simply general funds on local and state level.
"Highways do not — and, except for brief periods in our nation's history, never have — paid for themselves through the taxes that highway advocates label "user fees," said a recent report on this issue by US-PIRG.
"Gasoline taxes aren't "user fees" in any meaningful sense of the term. " said the report, entitled "Do Roads Pay For Themselves?". "Highways "pay for themselves" less today than ever. Currently, highway "user fees" pay only about half the cost of building and maintaining the nation's network of highways, roads and streets."
So what are we to learn from the falsity of these two myths?
The biggest lesson is that no mode of transportation — at least I've never found one — pays for itself. All, be it travel by air, sea, road or train, rely on some form of taxation to create essential infrastructure. We would do better to think of transportation as something more akin to public education. It enriches society through its services, and we don't demand it pay for itself directly.
As we move to align our transportation systems with the demands of climate change and other needs, it would behoove us to remember this.