The federal gas tax turns 85 today – pretty respectable for an excise but nothing compared with federal levies on alcohol and tobacco, which first appeared in 1789.
Still, the gas tax is looking less spry than it once did. As the principal source of revenue for the Highway Trust Fund, the gas tax has an important task to accomplish: ensuring that the nation’s infrastructure keeps pace with a growing economy. But it’s no longer getting the job done.
Congress hasn’t raised the gas tax in 24 years. In 1993 lawmakers pegged it at 18.4 cents per gallon. Since then, however, construction costs have increased dramatically, speeding the trust fund’s outflow. At the same time, automobile fuel efficiency has also risen, allowing motorists to drive more miles on less gas – and thereby slowing the trust fund’s inflow.
Squeezed from both sides, the trust fund has been chronically short of revenue during the last decade or so. Last year, faced with yet another “crisis,” Congress cobbled together a five-year patch that relied heavily on budgetary legerdemain. Notably, however, lawmakers declined to take the more obvious route to long-term solvency: raising the gas tax.
Generally speaking, taxes don’t do well when left unattended; they require maintenance and attention, at least once in a while. Left to their own devices, they tend to decay. That’s certainly what happened to the gas tax -- it hasn’t kept pace with changing economic circumstances.
But along the road to gradual inadequacy, the gas tax hit an even bigger speed bump: In 1990 Congress broke the tax when lawmakers raided it for cash. For most of its modern history, the gas tax has been a more or less straightforward user fee— drivers paid for road construction using a tax that was pretty well correlated with road usage.
In 1990, however, Congress changed the deal. As part of a deficit reduction package, lawmakers and President George H.W. Bush agreed to boost the gas tax from 9.1 cents to 14 cents per gallon. And crucially, they used half the new revenue for deficit reduction, not road construction.
The 1990 switch was a turning point in gas tax history. Yes, it’s true that Congress had previously used gas tax revenue to pay for things other than infrastructure. In fact, the first federal gas tax was itself an “emergency” levy designed to cope with sagging revenues in the early years of the Great Depression.
But since Dwight Eisenhower made the gas tax the fiscal foundation of his new interstate highway system, the gas tax has been a road tax. And as a road tax, it was well tolerated. As historian Christopher W. Wells has noted, "The tax was neither onerous nor obvious -- paid a few cents at a time, with the exact amount unadvertised -- and it funded conspicuous, large-scale road construction."
But that was before Congress started meddling with the gas tax. To be sure, the 1990 experiment was short-lived; after another revenue grab in 1993, lawmakers returned the tax to its traditional role. After 1997, it was a road tax again. But the damage was done.
Today, support for higher gas taxes is not completely absent from the political landscape. Some national polls suggest that voters are willing to contemplate an increase if the money is devoted to building better roads. But state-level polls are often less encouraging, and most politicians (at least in Washington) seem convinced that any sort of gas tax increase would be political poison. The politicians may be right – as experts in pandering, they’re pretty good at divining the electorate’s short-term preferences.
But someday, lawmakers will be faced with another trust fund “crisis.” And even sooner, they may have to grapple with President Trump’s much-advertised but still undelivered infrastructure plan.
Either way, the gas tax – or something like it, including a miles-driven tax – deserves serious consideration. After all, it worked for a few decades, and it might work for a couple more.
As long as Congress doesn’t muck it up again.