Greater Greater Washington

The federal gas tax isn't covering our needs

A few short decades ago the United States built the Interstate Highway System, one of the greatest public works of all time. It's a good thing we built it when we did, because we couldn't afford it today. We can't afford to build much new transportation infrastructure at all these days, whether road or transit.


Photo by Vicki & Chuck Rogers on Flickr.

Why? It's not as if we're a less wealthy nation now. On the contrary, we're wealthier. The problem is that the gas tax, the primary source of revenue for federal transportation capital investment, has been shrinking every year.

The gas tax isn't indexed to inflation. It was 18.4 cents per gallon years ago when gasoline was less than a dollar per gallon overall, and it remains 18.4 cents per gallon today. Since revenue generated from the gas tax stays the same while the rest of the economy grows, that means the gas tax revenue doesn't have the buying power that it used to.

In fact, when you take inflation into account American drivers are only paying half as much in federal gas taxes as they were in 1975.

That's a double whammy, because not only do we have half the budget we used to, but instead of spending it all on new infrastructure we have to split it on maintenance for all the new roads we've built during that time. So we have less money, and most of what we do have is already spoken for. The leftovers available for new construction are a pittance, relatively speaking.

And that's under the best case scenario from a revenue-generating standpoint.

What happens if Americans drive less, as we've been doing since 2008? Then the revenue starts dropping in real terms, not just inflationary terms. Triple whammy. VDOT's budget in fiscal year 2008 was $4,797,323,761. For fiscal year 2011 it is $3,736,056,514. That's almost a quarter decrease in real terms.

No wonder we can't build the sort of things we used to be able to build. No wonder our infrastructure is crumbling. No wonder China is blowing us away.

The good news is that bipartisan support is building for a hike in the federal gas tax. The president's bipartisan debt reduction commission recommended raising the gas tax by 1 cent per month for 25 months, until it is 43.4 cents per gallon (more than twice its current rate), and then indexing it to inflation after that.

If legislators have the courage to enact such a change they would be doing the country a dramatically important public service.

Of course, that would only be the first step of what would have to be at least a three-step process to really fix our nation's infrastructure for the long term. The second step would be to spend that new cash on multi-modal infrastructure projects that reduce our need to drive long distances for daily needs. Investing in better rail, transit and non-motorized infrastructure would make our country less congested, less polluted, and less reliant on foreign oil.

The third step would be to abandon the gas tax and adopt a new revenue system, since gas tax revenue will become less reliable as multi-modal transport options become more available. With gasoline likely to become more sparse in the future anyway, that's a problem we are likely to face sooner or later regardless of steps one and two.

While it's true that increasing the gas tax may be a band aid (or a first step) rather than a permanent revenue solution on its own, it is also true that it's desperately needed band aid. We simply can't keep up with the infrastructure demands of our economy with such inadequate funding.

Cross-posted at BeyondDC.

Dan Malouff is a professional transportation planner for the Arlington County Department of Transportation. He has a degree in Urban Planning from the University of Colorado, and lives a car-free lifestyle in Northwest Washington. His posts are his own opinions and do not represent the views of his employer in any way. He runs the blog BeyondDC and also contributes to the Washington Post Local Opinions blog. 

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With an increasing number of people commuting with bikes, there needs to be a federal bike tax, as well.

by James on Nov 15, 2010 2:22 pm • linkreport

Oh, and hey, what if people started driving more efficient cars, too? Quadruple whammy.

by Michael Perkins on Nov 15, 2010 2:24 pm • linkreport

Minor detail: Of the 25-cent eventual increase, only 15 cents of it would go to the Highway Trust Fund. The remaining 10 cents would go to the general treasury.

by Tim on Nov 15, 2010 2:28 pm • linkreport

Cue the VMT tax and then the libertarians arguing against it.

by Andrew on Nov 15, 2010 2:36 pm • linkreport

Given that something like 97% of all bicycles are imported into this country, I think we need a massive tarrif to stop dangerous asian countries from taking our dollars and monopolizing the bicycle market.

I imagine 90%+ of GGW readers would support an increase in the gas tax.

However, I'll take some issue on what you want to spend it on. Building " multi-modal infrastructure projects that reduce our need to drive long distances for daily needs" isn't perhaps the best way to spend our money.

The billions being spent on roads as part of a stimulus right now show how much money we need to dump into our existing road systems. It is so smooth on some highways right now I'm in shock. Second, higher gas prices will incentive people to NOT drive 30+ miles to work everyday, or at least create options (EV, hybrid) to make it cheaper. Third, politically, an increased gas tax shouldn't be about moving cars to transit. That is setting up transit as the villan. Use the money to pay down debt.

by charlie on Nov 15, 2010 2:37 pm • linkreport

Thank you for covering this, in plain language! It's a complex issue but one that is very worthy of public debate. Perhaps you can post an update with some recommendations - or references - of alternate revenue streams?

There is also an option being discussed in Congress to switch the gas tax from a flat 18.5 cent tax per gallon to a % (e.g. 5%) of the cost of gas. This means the tax would change from a 'rack tax' to a 'value added tax' (VAT). This would generate more funding for two reasons: when gas prices go up, revenues would increase (though this could be offset by people choosing to drive less) and the proposal would index the VAT to inflation. This isn't a long term solution but it's certainly better than what we have now.

by Allison on Nov 15, 2010 2:38 pm • linkreport

Whenever people propose a vehicle-miles-traveled ("VMT") tax, for some reason, complicated big-brotherish solutions such as GPS devices are always brought up, and people freak out (as I would likely as well).

And yet, I think it's pretty clear that we'll eventually still need some way to gain a usage fee payment from all drivers, whether or not their cars use gasoline, electricity, or natural gas. (I'm also not necessarily ideologically opposed to charging some much much smaller fee for bicycles, but I'm not sure how to do that without licensing them.)

As for cars, why not simplify things by just counting the odometer change on every car from year to year and applying whatever tax rate (based on type of fuel) we want to it?

Many states already have general vehicle inspection or emissions inspections. Couldn't these inspectors just record the odometer change, check it against the computer for fraud, and then report it to the government?

No location tracking. No complicated electronic sensors. In many states, no new inspection infrastructure necessary.

by Joey on Nov 15, 2010 2:46 pm • linkreport

@Joey; given the size of the tax, there would be strong incentives for fraud.

European/Japanese consumers can operate in the $7-$10 range for gasoline. There is lot of ceiling room for gas taxes in the next 50 years, and who knows what it would look like then?

Why ruin a good argument for increasing gas taxes by throwing out an irrelvelant idea on VMT which just raises people's hackles?

by charlie on Nov 15, 2010 2:55 pm • linkreport

@Joey - I'd much prefer to pay some tax each visit to the pump rather than get one massive bill when my odometer's read at the end of the year. And I don't even really drive THAT much.

by Jason on Nov 15, 2010 2:56 pm • linkreport

And yet, I think it's pretty clear that we'll eventually still need some way to gain a usage fee payment from all drivers, whether or not their cars use gasoline, electricity, or natural gas. (I'm also not necessarily ideologically opposed to charging some much much smaller fee for bicycles, but I'm not sure how to do that without licensing them.)

Tax the tires. DONE. Seriously. You can tax electricity. You can tax natgas. And gasoline. You can tax parking spots. You can tax new batteries and refurbished batteries. There are plenty of ways to tax road use without elaborate accounting infrastructure.

by Omri on Nov 15, 2010 3:00 pm • linkreport

Why not make the tax even more to cover for the years of underinvestment, the fact that cars are far more efficient in usage of gas, and that we may have underestimated the costs of cars on roads, environment. At some point, the rise in price would also make it possible to remove many of the subsidies for corn ethanol etc. Simpler, and better reflects costs.

by SJE on Nov 15, 2010 3:04 pm • linkreport

@ Omri; but wait! What about the IT and other companies that want to get paid billions to design and operate a VMT infrastructure? Can't you think about them for a second! Why do something simple when you can do something complex?

by charlie on Nov 15, 2010 3:13 pm • linkreport

One of the advantages to a complex IT based VMT solution is the ability to track routes and time of day, to be able to potentially leverage peak time premiums and the like.

Of course, it would be big-brother-ish, but it would be the best way to manage congestion and net road usage.

by Andrew on Nov 15, 2010 3:25 pm • linkreport

Charlie, I get the point about transit becoming a villain if it seems like gas tax revenues are going to pay for a whole lot of transit, but the concept is an important one. If driving is going to be become more expensive at all, then we need to invest in a whole lot of alternatives for people to have options other than the car. It's not about forcing anyone to do anything, but if driving gets more expensive than someone can manage, then they need to have a cheap train, a regular bus line, and/or streets safe for walking and biking to get around. Gotta diversify the system, and the gas tax should certainly help pay for that, as it does now. (About 20% of transit revenues come from general fund, rest from gas tax.)

by Steve on Nov 15, 2010 3:38 pm • linkreport

"One of the advantages to a complex IT based VMT solution is the ability to track routes and time of day, to be able to potentially leverage peak time premiums and the like.

Of course, it would be big-brother-ish, but it would be the best way to manage congestion and net road usage."

Or you can just put a tax on private parking spots in congested areas, together with market rates on public spots.

by Omri on Nov 15, 2010 3:42 pm • linkreport

Great idea! Too bad it's not going to happen. Even though raising the tax is part of the deficit reduction commission's report, outgoing Speaker Nancy Pelosi described the report as "simply unacceptable". I guess she's upset that the commission recommends reducing various government subsidies and suggests that even middle class people might have to, you know, pay for things we use.

Policy-wise, raising the gas tax makes sense, but politically it's "simply unacceptable".

by Eric Fidler on Nov 15, 2010 3:43 pm • linkreport

The gasoline tax will also take a hit in the coming years as automobile mileage improves and electric cars & plug-in hybrids become commonplace. While in the long run we will need a vehicle miles traveled tax, it will take some years to implement. And will cost serious bucks and a ton of overpriced feasibility studies to do so.

The easiest short term fix is just the raise the damn gas tax, period. Just do it and be done with it. The 1 cent a month approach is more trouble than it is worth because of the hassle of changing all the tax rate settings, stations, and pumps every month. An increase of a nickel every 6 months for the next 3 years for a 30 cent total increase would be easier to implement. Then index the federal gas tax to inflation after that while figuring out a VMT system.

The new federal gas tax revenue should be split 65% for highways, 35% for transit including high speed rail. I would rather see a 60-40 road-transit split, but I suspect even 35% for transit will be a very tough sell to Senators and Congress-critters from rural states and districts. But calling for any increase in the gas tax seems to be treated like touching the third rail on Metro in politics these days.

by AlanF on Nov 15, 2010 3:44 pm • linkreport

Taxing tires has a terrible externality, in discouraging people from replacing their tires less than would be optimal, leading to increased danger and death.

by SJE on Nov 15, 2010 4:05 pm • linkreport

Alan: given that the current split is roughly 85/15, I think you'd be lucky to get a 75/25 roads/transit split from those rural-based Senators/Congressmen.

by Froggie on Nov 15, 2010 4:09 pm • linkreport

A few short decades ago the United States built the Interstate Highway System, one of the greatest public works of all time.

I fixed this line -- here's the corrected version:

A few short decades ago the United States built the Interstate Highway System, one of the greatest crimes against humanity of all time.

Thank you for covering this, in plain language! It's a complex issue but one that is very worthy of public debate.

I disagree that it is a complex issue. As pointed out in the article, the gas tax isn't indexed to inflation -- so, fix it - by indexing it to inflation. That's pretty simple.

Then, bump it up over the next few years until it gets back to where it started, percentage-wise. Done and done. So, the Congressional proposal -- 1-cent increase per month for 25 months and then index -- sounds about right.

I'd prefer to make the gas tax increase monthly in perpetuity. Even at just a penny a month, we'd never really catch up with what the true cost of gas should be - which should be about $200/gallon. I'd almost hesitate to suggest even 2 cents/mo increase tho, because then all the money would end up building a whole bunch of new roads.

And there is really no need to replace the gas tax with some new VMT-type system -- it'd be costly, complex, privacy-invading, etc. etc. etc. Atrios has posted on this forever.

Oh, and hey, what if people started driving more efficient cars, too? Quadruple whammy.

regarding the gas tax, my guess is that 'efficient' cars will be a wash (maybe at best - in part b/c of the Jevons Paradox). and electric-type cars will also be a wash (maybe at best, for similar reasons). either/both efficient/hybrid/electric cars will take 20+ years to make up even 5% of the American auto/motor/truck/bus fleet. due to continued population growth, VMT will continue to go up in America, in perpetuity, maybe starting from this new 'high unemployment' baseline, with another minor factor being that nobody can afford cars anymore. the main factor stopping/slowing VMT (gas-consumption and thus gas tax revenue) growth will be metropolitan auto congestion, which will continue to worsen, until things get so bad that road tolls and decongestion pricing become more popular.

i'm a bit hesitant to just advocate for 'fixing the highway trust fund' or whatever you call it. if it doesn't explicitly shift funding away from cars, then why should we advocate for it? maybe if it explicitly guaranteed funding to fix dangerous roads/bridges, i could get behind it, but it seems we'd be missing an opportunity if all we push for is 'more money'. at this point I guess i can support it, if only to keep driving from continuing to get less expensive and become an even more attractive 'option' than it already is.

by Peter Smith on Nov 15, 2010 4:16 pm • linkreport

We can't afford to build much new transportation infrastructure at all these days, whether road or transit.

Incorrect. We are unwilling to pay taxes to pay for such a system.

It's not as if we're a less wealthy nation now. On the contrary, we're wealthier.

And we've stopped paying taxes. A lot of people never pay taxes, and people keep voting for taxes reductions. Well, is you pay less, you get less. It's not that hard.

The problem is that the gas tax, the primary source of revenue for federal transportation capital investment, has been shrinking every year.

This is an insignificantly small part of a much larger part of the American public believing they are overtaxed, while it is clear that Americans are actually pretty lightly taxed, especially compared to other Western Nations.

It is a serious problem that most taxes in the US are paid by the middle class, and that the rich pay way less tax, and the poor don't pay any tax. Not so much economically, but mostly democratically and morally.

by Jasper on Nov 15, 2010 4:26 pm • linkreport

>> "It is a serious problem that most taxes in the US are paid by the middle class, and that the rich pay way less tax, and the poor don't pay any tax"

I make $105K/yr. After taxes and healthcare I only take home 63% of my salary (really I only take home 57% after 401K). As the single middle class I'm just a ATM machine for government. I'm taxed heavily and have always been ineligible of all the programs/stimulus checks singles making a little less than me or couples earn. If we were actually taxing to invest in infrastructure and education I'd be fully on board. But public schools are woeful and infrastructure spending is paltry. The taxes on the middle class are going towards entitlements and ensuring that some people don't pay taxes at all... too many free riders in our society.

by Jason on Nov 15, 2010 5:03 pm • linkreport

and the poor don't pay any tax.

wrong. the poor pay sales taxes, at least, unless they're in a no-sales-tax area/city/state.

they also pay pseudo-taxes in the form of insanely-high (usurious and should-be-illegal) fees on just about everything, including loan shark-type interest rates for short-term loans, fees on money transfer services, etc. if someone manages to struggle up from poverty/poor to lower-middle-class, they'll be subjected to higher car insurance rates, higher home mortgage interest rates (redlining), etc. the list goes on an on. Thus the phrase (one of many), "You have to be rich to be poor."

and this says nothing of the massive 'reverse taxes'/negative taxes that everyone richer than poor 'pays' -- i.e. subsidies/credit in various forms, like first-time home buyers tax credits, no capital gains (i.e. income) taxes on home sales generating revenue-above-cost of up to $200k, subsidized student loans (thank you, poor people who subsidized my college education by buying Lottery tickets!), etc. etc. etc.

it makes political sense to continue to reward rich people/investors/middle class people (i.e. voters) at the expense of poor people, but that doesn't mean we should do it.

by Peter Smith on Nov 15, 2010 5:08 pm • linkreport

@Jason

You realize that earning $105K puts you easily into the top 15% of households in the country, right?

by MLD on Nov 15, 2010 5:20 pm • linkreport

@ Peter Smith: and the poor don't pay any tax.

wrong. the poor pay sales taxes

Correct. I should have said: The poor don't pay income tax.

But, US sales tax is much lower than the EU VAT which is 15-20% and Canadian sales taxes.

they also pay pseudo-taxes in the form of insanely-high (usurious and should-be-illegal) fees on just about everything

While I agree these fees are legalized robbery, they are no taxes. Not a single cop gets paid by these fees.

@ Jason: I make $105K/yr. After taxes and healthcare I only take home 63% of my salary

As, MLD said: you're in the top 15%.
http://upload.wikimedia.org/wikipedia/commons/6/66/Income-curve-%2410k.png

Also, read here how your tax bill compares to other countries. You are not being taxed much.
http://blog.turbotax.intuit.com/tax-tips/how-america-pays-taxes-vs-other-wealthy-countries/02022010-1843

As an example: here are the income tax brackets for the Dutch:
http://financieel.infonu.nl/belasting/12847-belastingdienst-2008-en-2009-tarieven-inkomstenbelasting.html (in Dutch, but the table is self-explanatory).
The top bracket is 52% and that kicks in over €53k. This is excluding health care, unemployment benefits and social security premiums.

And, remember you too would be paying 15-20% VAT in the EU, and whatever it is in Canada.

(really I only take home 57% after 401K).

I hope your employer matches 10-14% to your 6% retirement fund otherwise you're not saving enough. Furthermore, why is it unfair that you save for your own retirement? Who else should?

In short: you are exactly one of those misinformed Americans who believe that they're over taxed, but are very well off compared to any other western nation.

by Jasper on Nov 15, 2010 5:37 pm • linkreport

As a whole, the Deficit Commission Co-Chairs' proposal would decimate transit because it would "prohibit general fund bailouts of transportation trust funds" (see pg. 17 of their proposal). Although APTA supports the gas tax increase proposal, they add this important caveat: “It is also important to recognize that a small number transportation programs are currently funded with general funds, and those programs meet important needs and should be continued." These annual general fund transfers are $2 - 2.5 billion.

(See the link for the APTA sign-on letter.)

by B on Nov 15, 2010 6:15 pm • linkreport

In short: you are exactly one of those misinformed Americans who believe that they're over taxed, but are very well off compared to any other western nation.

i agree with the main thrust of this argument, but i'd add that while other countries are taxed heavily compared to us, they get some awesome benefits compared to us -- namely, healthcare, but there are others. in America, we pay taxes, but we don't get much for them. sure, we get police and fire, but is that it? (And, if you're a minority, 'police' is not necessarily a benefit.) We get a huge war machine that terrorizes and controls the world to a large extent, and which is used to launch wars-via-credit-card, so our kids are will be even more broke/indebted than even today's kids. pretty sick. again, if you don't give people something for their taxes, they're not going to be overjoyed with paying them. there's a lesson in here somewhere.

there are a bunch of fun lines in that article -- this one is on point:

Europeans have these supports [health care, social services like subsidized day care, nearly-free college tuition, decent mass transit, etc.], but most Americans do not unless you pay a ton out of pocket. Or unless you are a member of Congress, which of course provide European-level support for its members and their families.

Bam. Congress critters get Euro-style healthcare, at least. The rest of America? Not so much.

by Peter Smith on Nov 15, 2010 6:22 pm • linkreport

the poor pay sales taxes
Big whoop, we all pay sales taxes.

you're in the top 15%.
I wasn't birthed into my salary. It took taking education seriously and working my way up the ladder in my career. That stat is bunk anyway. If I was employed in NYC I'd make more, if I was employed in Atlanta I'd make less.

why is it unfair that you save for your own retirement?
I never said anything of the sort.

by Jason on Nov 15, 2010 6:24 pm • linkreport

So Jasper's 5:37PM comment he advocates saving 20% of your income for retirement and for your health insurance and taxes to be over 50% of your income.

So we should pay for our housing, food, clothes, etc and present day expenses with only 30% of our income.

by Jason on Nov 15, 2010 6:43 pm • linkreport

Big whoop, we all pay sales taxes.

yes, it is 'big whoop' as you say.

it's about the ability to pay -- if you have lots of money/disposable income, then paying sales/other taxes might not have a big 'pain factor' for you. if, however, you only make just enough to survive, then you're going to feel a lot of pain from any taxes you pay. that's why we have a somewhat progressive-or-graduated income tax -- i.e. people making under $X/yr don't pay any income tax at all. our whole tax system (including income, sales, etc. taxes/credits/subsidies) is regressive, so i'd be happy with a tax system that was 'flat' or better, progressive.

i.e. Bill Gates wouldn't even feel a $1,000,000 tax. Most of the rest of us would be hurting, tho -- we'd probably end up in debtors' prison.

I wasn't birthed into my salary. It took taking education seriously and working my way up the ladder in my career.

join the club. i and millions of others worked hard, too, etc. etc. blah blah blah. unlike you, however, many of us realize that not everyone is born with the same opportunities. we realize that there are people who work hard, like dish-washers, and then there are people who clickety-clack on keyboards all day and claim to 'work hard' -- people who took education/indoctrination seriously, but don't actually add any value to society with their 'work', and thus, are grossly overpaid. worse, many of the professional/managerial class actually work to destroy economic value, through Wall Street banksterism, political electioneering, corporate lobbying, and to a certain extent, even just participating in and/or standing around and obeying orders while evil stuff happens all around you.

The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it.
-- Albert Einstein (socialist)

by Peter Smith on Nov 15, 2010 7:11 pm • linkreport

The gas tax is an enormously useful tool for raising transportation funding and controlling sprawl. But it must be part of a package of revenue measures that include special taxation districts on property walking distance to transit station, requiring bicycle to register (and pay a fee) with the state DMV, tolling portions of existing highways, and banning unionized labor by transit systems to control costs. Energy taxes on electricty usage will eventually replace the gas tax when the vehicular fleet is converted and will also encourage smaller and more efficient homes and buildings and low cost renewable energy options.

by Cyrus on Nov 15, 2010 7:31 pm • linkreport

@ Peter Smith: in America, we pay taxes, but we don't get much for them.

Almost right: in America, we pay few taxes, but and we don't get much for them.

It's not that surprising.

if you have lots of money/disposable income, then paying sales/other taxes might not have a big 'pain factor' for you..

This is a general argument against taxation. Problem is, roads need to be built to get strawberries from CA to your grocery store. And that needs to be paid for with taxes.

Furthermore, "lots of money/disposable income" is very hard to define. People trying to make ends meet on a minimum wages don't have "lots of money/disposable income", but I can guarantee you that many people making $200k with two kids in college don't feel that they can "lots of money/disposable income" either.

@ Jason: So we should pay for our housing, food, clothes, etc and present day expenses with only 30% of our income.

Nup. I was just illustrating that you're not paying too much taxes. The 15-20% for your retirement comes from retirement 101. Any retirement adviser will tell you so.

by Jasper on Nov 15, 2010 7:38 pm • linkreport

"Furthermore, "lots of money/disposable income" is very hard to define"

Which is why we need to start taxing wealth as well as income.

by charlie on Nov 15, 2010 7:45 pm • linkreport

While I agree these fees are legalized robbery, they are not taxes. Not a single cop gets paid by these fees.

i guess this is true, strictly speaking -- they are not taxes. but presumably these fees keep these businesses 'in business' and these businesses are paying some kind of money to DC -- in the form of various business fees and business taxes, so maybe these poor people user fees do effectively pay for at least one cop's salary?

side note: Wells Fargo and BoA, two bailed-out bankster banks, are the two primary financiers of payday loan companies, so the payday loan scheme is really just another effective way to transfer wealth from the poor and middle classes up to the rich.

This is a general argument against taxation.

i don't understand this.

Problem is, roads need to be built to get strawberries from CA to your grocery store. And that needs to be paid for with taxes.

i'd agree with this, generally speaking. that is, a socialized transportation system is preferable to a privatized one.

Furthermore, "lots of money/disposable income" is very hard to define.

it really doesn't have to be an exact science. we have a poverty line, and that seems to work pretty well, if not flawlessly, so why not have a few other lines for something other than 'poverty'? Obama's new tax regime dings people who make over $200k (or whatever), so there's another line. we have all sorts of cost-of-living indexes available for every city/state/area of the country, and it's already built into at least part of the tax code, like 'per diem' rates. some things actually are difficult -- i don't believe this is one of them.

People trying to make ends meet on a minimum wages don't have "lots of money/disposable income", but I can guarantee you that many people making $200k with two kids in college don't feel that they can "lots of money/disposable income" either.

it's true that there are lots of folks living paycheck to paycheck, and many of them drive BMWs, but if upper middle class folks have to start eating at home a bit more often, then so be it.

by Peter Smith on Nov 15, 2010 8:19 pm • linkreport

In 2010 a 100K income in the Washington DC CBSA (Core Statistical Based Area) is at 70th percentile of households. And among that definition of households are the unemployed and retired. Out of working households a 100K income in the DC area is closer to 60th percentile. Very much middle class for the area. Don't let Jasper and the others slant the deck with stats that lack context and portray like your some fat cat aristocrat because you barely make more than $100K.

BLS even shows that the 90th percentile wage for area elementary school teachers in 102K.

by Paul on Nov 15, 2010 9:34 pm • linkreport

Dan, I agree with the general principles of this post, but I'd change the order.

First, I'd switch to a VMT tax. It makes sense for those who use the roads most to pay the most for them. There is no need for a GPS based big-brother system. It's pretty easy to have a chip that records the number of miles driven and transmits this to the pump (or electrical outlet someday) every time the tank is filled. The tax is then added on to the gas bill. You could even modify it so that the weight of the car changes the tax. I believe this was tried out successfully in Washington state.

Then I'd change the gas tax to one that pays solely for the negative externalities of gasoline use. So that money would fund CMAQ projects, clean water projects, oil spill cleanup etc.. and for whatever part of the Pentagon budget is used to defend our access to cheap oil.

And I'd fund transit taxes out of property taxes. If we fully fund roads with the VMT (instead of only half the cost as is done with the gas tax) that would free up money in local budgets for transit.

by David C on Nov 15, 2010 9:44 pm • linkreport

Don't let Jasper and the others slant the deck with stats that lack context and portray like your some fat cat aristocrat because you barely make more than $100K.

i'm assuming some ambiguity/confusion was introduced when we started talking about/conflating one person's $105k (individual) income with 'household income'.

the wiki page says this:

Household income is not to be confused with family or personal income. Household income is often the combination of two income earners pooling the resources and should therefore not be confused with an individual's earnings.

In other words, if you make $105k anywhere in the country, including DC, you're very comfortably middle-class or higher.

Didn't we just go through a round of this "woe is me, i only make $250k++, how will i eat?!" propaganda with regards to Obama's tax plan? People/families making 'only' $250k are struggling, barely middle class, because they all live on Park Ave in Manhattan and they have a caviar-only diet or something? The power of the conservative media is evidenced by this argument being taken seriously at all, and it still being alive, and it may actually succeed in exacting a political toll on Obama, and could even get him to save the tax cuts for the rich. Well executed, rich people.

by Peter Smith on Nov 15, 2010 9:58 pm • linkreport

@Peter Smith - I'm not conflating the terms. Personal income is the household income in a single person household. The fastest-growing household type in the US since the 1980s has been the single person.

by Paul on Nov 15, 2010 10:25 pm • linkreport

I'm not conflating the terms. Personal income is the household income in a single person household. The fastest-growing household type in the US since the 1980s has been the single person.

So it looks like about half of DC households are are single-person. And somewhere in the 30-50% range in the Metro region are single-person. In any case, it doesn't seem to matter much from what I can tell -- both figures seem about the same ('personal per capita income' and 'median household income') -- somewhere around $57k/yr, at least for DC only.

The original statement said, "I make $105k" (i.e. 'personal income') and then the 'household income' comparisons came. Maybe whoever did that knew those figures were roughly comparable.

And among that definition of households are the unemployed and retired. Out of working households a 100K income in the DC area is closer to 60th percentile. Very much middle class for the area.

i can't quite put my finger on it, but the '60th percentile' figure feels misleading -- at least, if you want to use it to mean 'middle class'. Like, if $105k/yr is middle class, then what is half that, $52.5k/yr? Is that 'poor' or 'lower middle class'? It's like, 'Oh - i live in Palo Alto (Silicon Valley area), and I am worth $10 Million dollars, and I take a salary of whatever I want each year -- but I am only just scraping by here -- i am only middle class here.'

Meanwhile, the Cat Food Commission is getting ready to starve granny and everyone else on fixed incomes.

Just because most of the people around you are rich, that doesn't mean you are 'middle class' -- that means you're in the middle distribution of people who are rich like you. In the case of $105k/yr salary in DC, single-household, that means even though you may not be 'rich', you got 'no worries'.

Rumor has it that DC has the second-highest rate of poverty and/or the most extreme income disparity right next to....you guess it...Mississippi. Awwwwwww! Homeless people camped out in front of the White House. 105k is middle class -- just scraping by! Sweet!

by Peter Smith on Nov 16, 2010 12:14 am • linkreport

Fairfax County's median income is $102,499.

That puts Jason as solidly middle class.

@Peter Smith, your ranting about a perfect socialist world isn't changing anyone's mind.

by mch on Nov 16, 2010 5:10 am • linkreport

@mch:

Jason was originally complaining about the load of income taxes on his pay. About 5-8% of his salary will go to state income taxes (depending on which state/district he lives in), but the remainder is federal income and employment taxes - and those federal tax rates are set with respect to income distributions across the country.

Sure, he may be solidly middle-class in Fairfax County - but Fairfax County is one of the two richest counties in the entire nation. When compared to Americans as a whole, Jason is very well off, and is being taxed accordingly.

by rock_n_rent on Nov 16, 2010 8:58 am • linkreport

@ Peter Smith:i'd agree with this, generally speaking. that is, a socialized transportation system is preferable to a privatized one.

I would not call it socialized. However, in that case, you should vote for higher taxes, because with current taxation levels, the government can not afford a decent transportation system.

if upper middle class folks have to start eating at home a bit more often, then so be it.

You are not taking the problem serious. College tuition can not be offset by ordering a bit less chinese.

Paul: Don't let Jasper and the others slant the deck with stats that lack context and portray like your some fat cat aristocrat because you barely make more than $100K.

I never said anybody was a fat aristocrat cat. I do say that if you're single and make more than $100k, you're well off. The numbers you cited are for families, not for singles. Big difference though.

Also, what rock_n_rent said. At the same time, an apology to Jason. Please don't take my comments personally. That is not my intend. I am just trying to make a general point and you gave a number to work with.

by Jasper on Nov 16, 2010 9:16 am • linkreport

Hard to see a GOP-controlled House approving a gas tax increase any time soon.

by Fritz on Nov 16, 2010 9:42 am • linkreport

@Aaron:
Ad hominem attacks are not tolerated at Greater Greater Washington. It is not appropriate to call Dan or anyone else commenting on this blog a name.

I am deleting your comment, however feel free to re-post it without name-calling or insulting anyone's intelligence.

Thank you for understanding.

by Matt Johnson on Nov 16, 2010 10:19 am • linkreport

Fritz said: Hard to see a GOP-controlled House approving a gas tax increase any time soon.

Agreed. Even for some Dems, it'd be a tough sell.

by Froggie on Nov 16, 2010 10:29 am • linkreport

@aaron:

Yes, gasoline use has increased since 1993: 141 billion gallons in 1993, 175 billion gallons in 2008 (including non-highway uses in both years) - see table MF-221 in 1993 Highway Statistics and table MF-21 in 2008 Highway Statistics at FHWA website. That is a 24% increase. Over the same period, consumer price index increased by 49% (per BLS website).

So, in unadjusted numbers, the federal gasoline tax brought in roughly $26 billion in 1993, and a bit more than $32 billion in 2008. But that $32 billion is worth a bit less than $22 billion in 1993 money, so the purchasing power of federal gasoline taxes has gone down by $4 billion over that time (this of course assumes that the inflation rate for construction costs is similar to consumer price inflation).

by rock_n_rent on Nov 16, 2010 10:56 am • linkreport

Assuming more-efficient (and non-gas-powered) vehicles and higher transit/walk/etc. share, some of this should transition to congestion taxes over time.

by Gavin on Nov 16, 2010 1:18 pm • linkreport

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