Let me get this straight: Some Republicans are suggesting a gas tax increase to help pay for President Biden’s huge, costly and largely unnecessary infrastructure boondoggle, and Biden rejects the tax-increase offer because it hurts low- and middle-income Americans.
Isn’t it Republicans who are supposed to hate tax increases and Democrats who love them?
Republicans’ anti-tax line-in-the-sand is what Americans for Tax Reform president and anti-tax warrior Grover Norquist asserts is the “Republican brand.”
And yet a group of Republicans and Democrats negotiating with the Biden administration on the size of his infrastructure plan and its “pay-fors” has floated indexing the federal gas tax—currently set at 18.4 cents per gallon—to inflation. And Texas Republican Senator John Cornyn recently suggested a 25-cent per-mile tax to be imposed on heavy truckers.
In response to Republican gas-tax increase proposals, Biden tweeted, “I’m working hard to find common ground with Republicans when it comes to the American Jobs Plan, but I refuse to raise taxes on Americans making under $400,000 a year to pay for it.”
You know things are upside down when a Democrat is lecturing Republicans about the harm caused by tax increases.
To be fair, not all Republicans are on board with the gas-tax increase. And inflation has clearly whittled away at the value of the 18.4 cents per-gallon federal tax in the 28 years since it was last raised in 1993.
It’s also true that Republicans, and conservatives in general, are more amenable to the notion that users pay taxes on the products and services they consume. And in that regard, some also support a vehicle mileage tax (VMT) that assesses taxes based on miles driven.
But there are real problems with both proposals. As Biden suggests, both taxes are regressive, hitting lower- and middle-income families hardest. And if drivers do gradually transition to electric vehicles—something many Democrats are trying to force on the country—then gasoline tax revenues will decline dramatically.
On the other hand, a VMT, if equally applied to electric and gasoline-powered vehicles, would keep some revenue flowing.
But there is another major concern. Many Democrats and a few Republicans have long supported a hefty federal gas tax—perhaps $1.00 or $2.00 per gallon—to discourage driving and reduce carbon emissions.
While raising the gas tax opens the door to much larger increases in the future, would those higher costs have that much of an environmental impact? Maybe not.
As Nature.com recently reported, “COVID curbed carbon emissions in 2020—but not by much.” And certainly not enough for Republicans to, as ATR’s Norquist might say, risk destroying the Republican band.
The good news is that consumers probably won’t be paying more in federal gasoline taxes—though some states may raise their state gas tax. The bad news is that it took a Democratic president to nix the idea.