Why the federal gas tax is way too low

The U.S. Highway Trust Fund is nearly broke, and the reason why is simple: the federal gas tax is about 20 years behind the times. The highway fund relies on the federal gas tax as its primary revenue source, and that tax has stood at 18.4 cents per gallon since 1994.

The economically sensible fix would be to index the gas tax to inflation, or even to set it as a percentage of the price of gas. If it were indexed to inflation, the gas tax would stand at about 26 cents per gallon today. If indexed to gasoline prices it would be 35.4 cents per gallon, or a tax of about 10 percent.

gas tax compare

But indexing the gas tax to inflation or the price of gas would essentially set it on auto-pilot, which on some level would mean taking the power to change it out of Congress' hands. As things stand now, politicians can periodically revisit the tax and use the issue to rile up their respective bases. While this might be great for election year fundraising, for everyone not running for office it can amount to yet another headache.

Christopher Ingraham writes about politics, drug policy and all things data. He previously worked at the Brookings Institution and the Pew Research Center.

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