We don’t usually think about the taxes we are paying when filling up at the gas station. We usually focus on the price of a gallon. We even have apps and websites that will alert us to the lowest gallon in our areas. That’s great but what they don’t tell us is how much we are taxed on each pump. Gas taxes are a sneaky, slinky kind of tax that harms the middle and lower classes. Yes, these are the classes that are employed and run small businesses dependent on daily travels. Let’s delve into the true destabilization of the gas tax on our personal and national economics. It may be high time to call legislators with your new knowledge.
Local Impact of Over Taxation on Gas
How much are your gas taxes? We feel sorry for anyone living in Pennsylvania which has the highest tax at just below 59 cents per gallon. That’s a 20.8% tax per gallon (highest in the nation) and the sixth highest average gallon at $2.82. A conundrum tax for a state that ranks 34th in economic strength. If the national tax cut rate for the middle-class was 10-24%, your Penn State gallon just depleted those savings. The grass only looks greener in other states. A gallon of gas in Alabama is the second lowest in the nation, $2.29, at 20.9 cents per gallon with a gas tax only 9.1%, the 11th lowest in the nation. Again, let’s compare the 9.1% to the national tax cut. Alabamans income tax rate decreases to 1% to 15% per household. North Dakota has the 25th highest gas price in the nation, $2.52 per gallon with 23 cents per gallon directed to their 9.1% gas tax rate. The middle state, yes there are only 50 states so the 25th will be the middle, still witnesses a drought on their income tax cut.
Gas Tax Can Fuel A National Spending Crisis
The national effects of the gas taxes are in the billions. According to studies, a 1% national gas tax hike takes 1 billion out of family’s pockets across the US. Small businesses are allowed a 20% tax cut rate. Enter a 10% or higher gas tax and now their tax cut is only 10% or less. Small businesses survive with very small margins, some a few hundred dollars a month keeps them afloat. Especially in smaller cities and towns that have a plethora of Big Box Stores. Gas taxes are not the only answer to save small businesses and citizens
The Solution to Ensure Gas Taxes Hit The Roads
There is no doubt American infrastructure is in dire need of reapir. From collapsing bridges to potholes, our roads need intervention. Gas taxes may be the only solution that politicians can garner but where does that money go? Experts agree that the national Highway Trust Fund will be insolvent by 2021. It’s time that states establish direct enterprise funds for the gas tax. Instead of taxes being diverted to a “general state fund”, enterprise funds must be enacted for every gas tax legislation. These funds must be transparent and presented as part of the overall budget of the state. The enterprise funds will be the main source for all outgoing expenditures and incoming taxation for infrastructure. Several states have borrowed from their road funds ensuring more potholes in funding.
If all politics are local then municipalities across any state should devise a means to ensure infrastructure repair with local funds. Smaller cities, 100,000 or less can enact road taxes which is directly submitted to their own infrastructure enterprise fund. A small town of 400-year round residents in Betterton, MD used technology to obstruct speeders. They could use a tax on purchases in their peak beach season to create funds for repairing their main road and other infrastructure. A pothole problem in Dayton, OH led to an income tax increase which is self-sustaining for infrastructure. In smaller residential areas, roads can be easily repaired due to lower mileage and cars on the roads. Every town or city can create their own solutions yet they must ensure the infrastructure funds are safely guarded.
Vacation Time Is Just Around the Corner
As Americans prepare for their hours long journeys on the roads of America to vacatioon spots, they must take into account higher gas prices. Even though our prices have remained stable, it’s what’s in the price that is most important. When American’s travel through Illinois, remember their gas tax will deplete the new graduated income tax state incentives. Make sure to drive on over to your local politicians to ensure road safety in the future. It’s important to your pocket and your tires.