NCPA - National Center for Policy Analysis


March 26, 2008

For thoughtful fiscal conservatives, taxing motor fuels and vehicles to pay for the roads they traverse is among the least-objectionable forms of taxation in American government.  However, fiscal conservatives should oppose any increase in the federal gas tax, says John Hood, president of the John Locke Foundation.

The system simply compels motorists to send gobs of money to Washington every time they fill up their tanks.  The politicians in Washington then swipe one-quarter of this gas-tax money for non-highway purposes, such as building underutilized transit lines and financing the federal budget deficit.

The remainder is returned to the states, but not in ways helpful to most American drivers, says Hood:

  • Federal highway dollars don't flow back to states in proportion to how much they pay in.
  • Many populous states with major transportation challenges -- such as Texas, Florida, Michigan and North Carolina -- have over the years been net losers.
  • Even if the outflow were more equitable, most states would end up on the losing end of the deal.
  • Federal highway dollars come with strings attached; they force states to pay prevailing union-scale wages, for instance, jacking up the cost of highway construction in many jurisdictions.

The funds are increasingly earmarked for projects that members of Congress like but that don't really reflect statewide transportation priorities.  According to the Tax Foundation, recent federal highway bills have funded:

  • An $8 million parking garage in Harlem.
  • A $3 million film about Alaska's road system.
  • A $2 million visitors center in rural Louisiana.
  • $4 million in grants to automotive museums.

Source: John Hood, "Higher Fuel Taxes Won't Help Anything," Investor Business Daily, March 24, 2008.


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