A note on the images I used in this blog post: The first political cartoon is by Mike Luckovitch for the Atlanta Constitution. The image showing income tax rates by country was found at the Christian Science Monitor, and the graph illustrating the gas tax by country—showing 2005 data—is via the Urban Institute. Remember the ridiculous gas tax holiday debate that was espoused by then presidential candidates Hillary Rodham Clinton and John McCain? The two gas tax holiday cartoons were found here and here.

Although Americans enjoy low taxes, taxes aren’t popular, and it’s unfortunate that prudent tax policy is akin to political suicide.

The Tea Party movement’s central message is lower taxes, and this philosophy is the means to achieve their other beliefs in smaller government and fiscal conservatism. However, these ideas might seem prudent, but lower taxes, when taxes are already low in addition to smaller government and less spending, do nothing to remedy some of our most complex and threatening problems.

According to Dennis Cauchon, for the USA TODAY, the “federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950.” In fact, the American taxpayers’ tax burden is less than that of most industrialized countries. More from Mark Trumbull, for the Christian Science Monitor:

But wage and payroll taxes are just part of the picture. Add in sales taxes, capital gains taxes, property taxes, and corporate taxes, and the US sends 28 cents of every dollar of output to the government. That still matches Japan for the lowest ratio of tax revenue to gross domestic product (GDP) among the G-7 nations. France and Italy score highest.

Furthermore, the gas tax that Americans pay is not only historically low, but it’s also the lowest paid when compared to other countries (see the image above or more via GOOD). Via the Washington Post:

By any measure, driving in the United States is cheap. The price of a gallon of regular gasoline averaged about $2.70 during June. That’s up almost a dollar since the depths of the Great Recession in December 2008. But the price has been steady for about a year, and adjusted for inflation it is 66 cents per gallon less than it was in 1980.

Taxes should be viewed as an investment into the infrastructure that the public depends, so raising the gas tax makes sense. For starters, taxes are necessary to maintain the infrastructure and services that the public enjoys. Furthermore, tax breaks should be utilized for projects and behaviors that encourage environmental protection and energy independence (and consequently, prudent climate change policy). These progressive investments—which promote environmental protection and natural resource conservation in addition to a transition into a more carbon-free society that utilizes sustainable clean energy—will produce positive returns for society. Returns might include an increase in health benefits—both in terms of lowering costs for the public and governments and in terms of a healthy citizenry. More on raising the gas tax via the Washington Post:

But a significant factor keeping gas cheap is the erosion of gas taxes. The federal tax of 18.4 cents per gallon has not gone up since 1993 — meanwhile losing a third of its value in real terms. State taxes are about 30 cents per gallon on average, but they, too, have barely risen lately. In real terms, Americans spend just $19 on gas taxes per 1,000 miles driven — half of what they paid in 1975, according to a recent report in USA Today.

We’re driving more miles but paying less for the privilege. Small wonder that alternative-fuel vehicles struggle in economic competition with the internal combustion engine. Or that transportation infrastructure is crumbling across the nation: The congressionally authorized National Surface Transportation Infrastructure Financing Commission reported last year that it would take a dime-a-gallon increase in the federal gas tax just to maintain current highway quality. Increasing the federal tax by 25 cents per gallon would raise $305 billion for highway construction and deficit reduction over the next decade, according to the Congressional Budget Office.

More from the Washington Post:

I would add one important point: An increase in the federal gasoline tax would greatly benefit all modes of surface transportation, including public transportation.

Federal motor fuel taxes support highways, as well as public transportation, bicycle infrastructure and pedestrian improvements. Transit systems across the nation are struggling to find dollars to upgrade and expand aging facilities and infrastructure. More investment for public transportation is urgently needed to improve services for Americans who ride the nation’s buses and trains 35 million times each weekday.

The U.S. Department of Transportation estimates that $30 billion per year of new investment is needed simply to maintain our highways, bridges and transit systems, and that more than $100 billion of new investment is needed to improve conditions and performance. Whether you drive, take a train, ride a bus or walk, everyone benefits if we increase the federal levy on gasoline.

Americans can save money by paying less in gas taxes (though, this thinking is one-dimensional), but overall, Americans may be paying more to cover costly car repairs that result from utilizing crumbling infrastructure. Via the Infrastructurist:

We keep gas taxes low in this country – heck, the federal gas tax hasn’t been raised a cent since 1993 (which, when you consider inflation, means that it’s worth practically nothing — which is why the federal Highway Trust Fund is insolvent). But despite the fact that raising the tax is, well, akin to political suicide, are states’ efforts to keep the tax low actually costing drivers more in the long run?

Karl Sieg, vice president of the American Society of Civil Engineers’ Pittsburgh section,certainly thinks so, and he’s basing this view on the following data: According to multiple estimates, the cost of damage to vehicles from rough roads is around $300 to $400 per year, with some measures going as high as $750. (Remember all those hidden costs of driving? Here they are.)

What do I pay for in a gallon of regular gasoline? Via the U.S. Energy Information Administration:

The national average retail price of a gallon of regular gasoline in May 2010 was $2.84. There are four main components that make up the retail price of a gallon of gasoline: Crude Oil: The cost of crude oil as a share of the retail price varies over time and among regions of the country. In May 2010, refiners paid an average of about $76 per barrel of crude oil, which accounted for about 68% of the national average retail price of a gallon of regular grade gasoline. Refining: Refining costs and profits were 9% of the retail price of gasoline in May 2010. Distribution & Marketing: Distribution, marketing, and retail dealer costs and profits made up roughly 13% of the retail price of gasoline in April 2010. Taxes: Federal, State, and local government taxes (not including county and local taxes) accounted for about 14% of the national average retail price of regular gasoline in May 2010. Federal excise taxes were 18.4 cents per gallon and State excise taxes averaged 22.01 cents per gallon.

However, what are the negative externalities or the true costs of gas? Via the Center for Global Development.

How much does gas really cost?
The answer is different than the one on the pumping station billboard. Let’s try to discern the full cost of our addiction to gasoline: the healthcare costs associated with air and water pollution caused by the nasty compounds released from gasoline, the damage to crops, buildings, and forests, and the tax breaks and subsidies to oil companies. Terry Tamminen (energy advisor to California Republican Governor Arnold Schwarzenegger) tallies these social and environmental costs in his book Lives Per Gallon and comes to the following conclusion:

So there it is, the final Devil’s invoice, the amount we pay to keep the needle from hitting ‘empty’: well over $100 billion each year and perhaps closer to $1 trillion. That comes to as much as $2,700 for every man, woman, and child in the United States every single year. That works out to $1 per gallon and possibly as much as $6 per gallon added to the actual price of every gallon…For that kind of money, we could provide health insurance for the forty-five million Americans who have none and build fifteen hundred new schools in every state in the union.

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