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Indexing gas taxes to the price of gas (as converting the tax to a sales tax would do) makes the difference even more stark. Historic gas prices are here:

It appears that retail prices were around 19¢/gallon in the 1930s, when 4-5¢ state gas taxes were in effect around here, plus the 1¢ federal tax; that implies that there was the equivalent of a 41% sales tax on gas during the nation's deepest economic depression ever. An equivalent tax on today's typical DC gas price of $3.60 (of which $0.419 is tax) would result in a $1.30/gallon tax and a "new" gas price of $4.48.

Of course, had gas taxes always been levied at these rates, prices would have been higher earlier, demand would thus be lower today, and the resulting prices would probably also be lower. Strange how that works.

A well-designed policy could even balance out price swings. Several people have suggested setting a target price for gas, with taxes picking up the "extra" whenever prices decline. Similarly, gas taxes could be put on an automatic escalator to allow time for the public to adjust, and "cash for clunkers" style rebates could be given to upgrade fleet fuel economy.

@Jon Morgan: VMT plateaued and declined nationally as well; I haven't looked up numbers specific to the Northeast or to the NCR, but I suspect that the trend was even more marked around here.

by Payton on Sep 7, 2011 8:41 pm • linkreport

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