I like the end where the American kid can't even be a good waiter to the Asians at the table.

by Teyo on Oct 22, 2010 12:31 pm • link • report

@Gas tax. I am not sure where I stand on the gas tax per gallon or as a flat sales tax. Either way as gas prices rise people drive less.

As far as money goes the government does stand to make more of it as gas prices rise. If gas goes back to $4.00 a gallon the stand to make about 0.33. Right now the stand to make about 0.23. More money is needed to improve our roads however.

Most likly nothing will happen since no one wants to raise taxes at the moment, I would be intresed in hearing more debate on this.

by Matt R on Oct 22, 2010 12:37 pm • link • report

Despite the unrealistic parts, (Fenty machine guns the bad teachers?!?) this animation tells a pretty good story of what things are like. Yes, it exaggerates but the lottery with the golden escalator and the trap door to classroom hell are so how it feels. I have been on both the winning and losing side of the DC school lottery.

by leeinDC on Oct 22, 2010 12:45 pm • link • report

I'm struggling to come out with a counter-argument to the gas tax proposal. Simple, revenue neutral at first, but accelerates as gasoline gets expensive (which would help signal people to cut back).

The state tax - which is almost the same as the federal tax in most states -- would remain based on fixed numbers.

Possibly the first intelligent thing I've seen from this Administration.

by charlie on Oct 22, 2010 12:46 pm • link • report

The switch from a per-gallon measure to a percentage measure is nothing but political chicanery to try and avoid the problem of raising taxes.

Everyone knows it needs to be done. Everyone also knows that infrastructure needs a steady and predictable source of revenue. But no one has the guts to pay for it.

by Alex B. on Oct 22, 2010 12:50 pm • link • report

If I were king, I'd increase the gas tax enough to make the price $6 or $7 dollars per gallon, and reduce payroll taxes to make it revenue neutral. But I'm not, and the plan is a non-starter politically. Replacing the per-gallon tax with a percentage-price tax, so that the tax increases with price inflation seems like a reasonable compromise to me.

by jcm on Oct 22, 2010 12:55 pm • link • report

Whatever happened to those GPS dealies that were supposed to tax you based on distance instead of fuel? That way Joe Escalade who commutes from Front Royal to Andrews Air Force Base every day is paying more than the guy who drives in from Crystal City.

by monkeyrotica on Oct 22, 2010 1:19 pm • link • report

So when gas is cheap and people drive more the tax will be less and thus revenue to fix the heavily driven roads being would be lower. But when gas is expensive and people drive less there would be more money to fix the lightly used roads. Unless the revenues somehow stay constant due to higher volume of the lower tax matching the lower volume of the higher tax this plan won't work. Personally, i'd prefer my gas prices not to be overly inflated by a gas tax that's higher when prices are higher and would rather have an increase in the constant tax so it's 20 cents extra when gas is $2 and still 20 cents extra when gas is $4.

by Teyo on Oct 22, 2010 1:33 pm • link • report

@monkeyrotica

See page 15 of this PDF, presented at the last TPB meeting:

The Netherlands is looking at a VMT tax, but administration costs of that tax would be very high:

The Netherlands solicited bids from vendors to implement
a national VMT charge
• Netherlands bids were about $300 per vehicle for initial
equipment and $50 to $100 per year for administration
• US total highway expenditures are about $400 to $500 per
year per vehicle, so the implementation and administrative
costs for VMT charges have to be brought down below the
Netherlands levels to make VMT charges more attractive

by Alex B. on Oct 22, 2010 2:07 pm • link • report

The per-gallon gas tax is supposed to pay for road construction and repair. Road wear and tear is roughly proportional to the miles driven, and the miles driven is proportional to the amount of gas consumed.

Changing it to a sales tax means that road repair must be subsidized, and driving is encouraged, when the price is low. When the price is high, vice-versa. As such, it will accentuate the cost of driving, hence the effect of the price of oil on the economy. However, most people believe that government is there to smooth out, not make worse, the boom-and-bust cycles.

by goldfish on Oct 22, 2010 2:08 pm • link • report

How about a per gallon tax that is indexed to inflation?

by aaa on Oct 22, 2010 2:12 pm • link • report

@aaa: to account for changes in the cost of road maintenance and the steady increase in mileage, the per-gallon gas tax should be adjusted to some sort of a construction cost index (different from inflation; constructions costs jump out of proportion when the economy is booming) and with changes in the total fleet mileage (newer cars get better mileage, but in bust times, people keep their cars longer and consequently the fleet mileage decreases).

by goldfish on Oct 22, 2010 2:20 pm • link • report

Goldfish,

The per-gallon gas tax is supposed to pay for road construction and repair. Road wear and tear is roughly proportional to the miles driven, and the miles driven is proportional to the amount of gas consumed.

No, wear and tear is not proportional to miles driven. The single biggest factor is vehicle weight. The relationship is geometric - it scales to the 4th power. A truck that weighs twice as much does 16x more damage. Suffice it to say that the heavier truck does not pay 16x more in gasoline taxes.

by Alex B. on Oct 22, 2010 2:21 pm • link • report

@Alex B.

So if you had a brand new road and drove a semi on it once you're saying that the damage would be more than driving a car on it a dozen times?

What I am trying to say (and I believe goldfish is on the same page here) is that if gas is cheaper, the rate of driving will increase so not only will more cars drive on the road, more trucks will too. More cars on a road mean more wear and tear on the road. When you have less money to fix that road because the lower prices also lead to reduced tax revenue you end up with a problem.

by Teyo on Oct 22, 2010 2:26 pm • link • report

@teyo, actually that's exactly what he's saying (well, axle weight, but that's close enough).

by Michael Perkins on Oct 22, 2010 2:39 pm • link • report

Keep in mind that to target trucks, there is a diesel tax of 24.4¢/gallon. True, this also targets someone driving a tiny VW Golf TDI, but diesel engines are a tiny fraction of the passenger car fleet in the U.S.

Some states charge the same rate per gallon for diesel, some charge more, and some charge less.

by Eric Fidler on Oct 22, 2010 2:44 pm • link • report

Yes the weight is the most important factor, but I was assuming that the distribution of vehicle weights does not change with incremental changes in price. Of course, this is not true -- everybody knows that when gas was $1.50/gal, people bought more Ford Excursions. So if you add this in, the effect of sales tax is more pronounced.

by goldfish on Oct 22, 2010 2:45 pm • link • report

Holy character encoding, Batman! That should read 24.4¢/gallon.

by Eric Fidler on Oct 22, 2010 2:46 pm • link • report

No, I agree with Goldfish's overall point about the danger of using a sales tax on gasoline to fund transportation improvements - I just wanted to point out that heavy vehicles inflict far more damage on our roads than regular cars do.

by Alex B. on Oct 22, 2010 2:50 pm • link • report

Don't you mean 24.4¢ per gallon?

Also, I think the higher diesel tax is partially based on its higher energy content and typical higher price. Pulling out my MERM, Diesel weighs more per gallon, so it has about 14% more energy (LHV in BTU/gal).

by Michael Perkins on Oct 22, 2010 2:52 pm • link • report

AlexB's point about damage is correct. Although I have to wonder about that. How much does 66 inside the beltway (no trucks) or the GW parkway (also no trucks) cost to maintain vs a comparable stretch of highway?

And a trucker will pay a hell of a lot more in gas tax -- he uses 300 gallons at a time, while I might go through that in a year. There are also taxes on tires and heavy truck use, all of which are considerable.

I think everyone is overestimating the Pigiouvian effects of a percentage based federal gas tax. At $4 a gallon -- before any taxes, about has high as it got -- it would be 34 cents tax for the feds and say 15 cents for the state. is going up, versus 18.5 cents. 10-15 cents more is not going to be a significant barrier. It will, however, bring in more revenue.

by charlie on Oct 22, 2010 2:57 pm • link • report

I came up with an alternate proposal where if the gas price went up and then back down again, the gas tax would ratchet up by a fraction of the decrease.

So if the price of gas went up 50 cents and then back down to the same amount, the gas tax would rise by 5 cents.

Hadn't thought it completely through, maybe it would be based on quarterly delivered prices as reported by EIA or something.

http://www.infosnack.org/2008/10/raise-gas-tax-now.html

by Michael Perkins on Oct 22, 2010 3:04 pm • link • report

@ Alex B.: The Netherlands solicited bids from vendors to implement a national VMT charge

That thing was DOA. Left-wing Dutch politicians have been playing with a gazillion of options for the last 15 years to get more money out of car drivers. Congestion charges, a London-like charge to enter the Randstad, toll only levied during rush hour and this insane thing.

What happens is that when Labour is in the government they make plans, that are never executed when the next government without Labour gets in power. Which happened last week.

The VMT thing was a no-starter. Aside from the everlasting protests about squeezing more money out of drivers (gas is €1.56/L = $8.22/gal today), there was an even louder protest over the intrusion on privacy.

It's funny. There is a general consensus that there needs to be some kind of rush hour charge. Even the Dutch AAA agrees, be it reluctantly. However, Dutch politics is utterly incapable of just picking a freaking system and get it over with.

The new government plans to cut the national budget by 18 billion (highest number ever), while still building more roads than the last government, which was also criticized for building too many roads (and had some issues with EU rules about fine dust caused by the extra high ways).

And then off-topic Dutch news for those who care: The trail against Geert Wilders, our blond islamophobe MP, has to be redone. The court was disbanded because one of the magistrates that ordered the trial tried to influence one of the defense witnesses. Kinda odd, because the public prosecutor had already show his annoyance with the case by asking for acquittal on all points. Welcome to Holland, banana monarchy.

by Jasper on Oct 22, 2010 3:07 pm • link • report

@Mperkins; I've thought of something similar, but don't you want a consistency of funding vs. consistency of pricing?

I'd argue a guaranteed ladder -- every two years raise it 10 cents -- so you know in 10 years the tax will be 50 cents more. No sense in buying that pickup....

And I'm scratching my head on my to oppose this -- perfect is the enemy of the good.

by charlie on Oct 22, 2010 3:10 pm • link • report

Jasper,

The politics of a VMT tax is interesting, but the reason I posted it is because the administration costs for such a tax are ridiculously high - so high that it makes little sense to consider a VMT tax as a viable alternative to the gas tax.

by Alex B. on Oct 22, 2010 3:21 pm • link • report

Personally I'd opt for a mix of both... a flat tax indexed to inflation *and* a sales tax. The flat tax would be reduced but not eliminated entirely & the sales tax would pick up to make it revenue-neutral at the outset. However, this also doesn't address decreasing VMT as well as increasing fuel efficiencies.

Reduced VMT also means a reduction in need for the revenue in the first place, but that realisation lags years beyond when the loss in tax revenue would first be realised, hence the faster loss of revenue could pose a bit more shock.

Increasing fuel efficiencies are a bigger concern... surely a good thing, but it also means less revenue albeit with the same vehicles on the road.

Efforts to do a VMT tax are likely the more long-term solutions, perhaps also with a mixture of VMT, per gallon tax, and percent tax.

I've long pondered about GPS-based VMT taxing and was delighted back when the Dutch started looking into it. It's intriguing in that it could theoretically open up different taxing levels for different types of roads... arterials could be relatively cheap, local roads expensive, core streets pricey, fringe streets less so, etc... but administration costs aside, the politics of deciding each streets' pricing would make for some amusing battles (read: brutally & savagely political without a hint of logical input). Not to mention the privacy lobby with cries of Big Brother, regardless of how justified or paranoid such claims may be within their respective jurisdictions.

by Bossi on Oct 22, 2010 5:15 pm • link • report

I think VMT tax advocates border on concern trolls, personally.

The *only* thing a VMT tax has going for it policy-wise is that it doesn't require the infrastructure or have the perverse development effects that a congestion charge or tolls have.

The *only* thing a VMT tax has going for it politics-wise is that gasoline prices & taxes are psychologically reinforced as 'a huge deal to your finances' by the way we purchase gasoline, when in fact things like depreciation, time wasted commuting, insurance, and maintenance are comparable costs.

In exchange for that you create an enforcement and privacy nightmare unprecedented in American history, administration costs certain to exceed any mild tax collection, you lose the pigovian only-slightly-proportional road maintenance costs of running a large truck instead of a small car, and you either reverse our progress on fuel efficiency or transfer that priority to awkward CAFE or CARB-like efforts.

"But if we switch to hybrids we won't be able to fund our roads because we'll use less gas!" cry the trolls. True, but passing a VMT tax presupposes a lot more legislative competence than simply raising the gas tax slightly. Let's cross that bridge when we've reduced our gasoline usage by half - or even consider putting the onus of maintaining the roads on the high-axle-weight commercial trucks and buses that actually cause damage to our roads.

While the Chinatown buses are certainly using less fuel than they would if everyone drove the NEC, the vastly increased road maintenance costs are hidden in the highway budget. This is a serious advantage that trains & streetcars have over road conveyance that is rarely accounted for.

Based on the simple model road engineers use, a single 35-ton two-axle trash truck causes as much use-related road wear as the next 400,000 Honda Civics that pass by. Usually tractor trailers are considerably less damaging than mid-size trucks because of the number of axles.

by Squalish on Oct 23, 2010 4:36 am • link • report

@ Alex B: The politics of a VMT tax is interesting, but the reason I posted it is because the administration costs for such a tax are ridiculously high - so high that it makes little sense to consider a VMT tax as a viable alternative to the gas tax.

I am not disagreeing. However, the cost is not what killed it. Privacy concerns were. And a change of government (multiple actually).

by Jasper on Oct 23, 2010 6:20 pm • link • report

It's important to clarify that the VMT taxing proposed for the Nederlands was far different than the VMT taxing which has already been demonstrated in other countries as well as several states in the USA. While Dutch proposal offered a potential for greater flexibility, it was also far more invasive than many of the other approaches that have been run thus far.

"The troll goes: moo"

by Bossi on Oct 23, 2010 8:13 pm • link • report