Modifying the gas tax

Increasing the federal gas tax is another possible revenue measure that does not receive enough attention.  Currently, the federal tax is 18.4 cents/gallon and states set their gas taxes; Alaska has the lowest overall tax (18.4 cents), California the highest (64.5).

No obvious political divide

The current federal gas tax has not changed since 1993; according to this inflation calculator, $.18 then is equivalent to $.26 today.  So we should clearly have at least an $.08 higher gas tax, and it should henceforth increase at the rate of inflation.

Time for another change

Incidentally, the tax should be raised to more than $.26 per gallon.  I don’t know the optimum level, but the Highway Trust Fund’s looming insolvency means more revenue is necessary just to preserve the status quo.  But the status quo is a pretty crappy situation since it perpetuates are pour-more-concrete-and-paint-the-lines culture.  Though Europe’s gas taxes seem depressingly high, their approach is directionally correct: driving a car has a lot of negative externalities on our health and the environment, and those externalities are currently underpriced.  Increasing the gas tax to fund mass transit, better school physical education, health clinics, &c is an example of a tax which raises revenue while making the market more efficient.