As I write this, the President is considering issuing an executive order authorizing a ‘gas tax holiday’ to purportedly alleviate the high cost of fuel this year. Gas prices are up more than $2.00/gallon nationally, so I’m not sure there is anything much to be gained by suspending an $0.184/gallon tax.
Sorry, I try not to write about political stuff, but it’s hard to think about personal finance without thinking about taxes. Besides, this proposal is being embraced by politicians on both sides of the aisle. Many states – red & blue – have already announced gas tax holidays.
I’m frustrated with the idea because gas taxes are about the fairest tax out there, in my view. It’s basically a user fee that goes into the Highway Trust Fund, which is used exclusively to repair roads & bridges that motorists use. A $10B hole in the trust fund will do little to fight inflation and leave roads more underfunded than ever. Electric vehicles are already creating small hole in the trust fund.
I estimate that I purchase about 1,700 gallons of gasoline a year. A three-month gas tax holiday is only going to save me about $100 on $2,100 of fuel (4.7%). Given the condition of the interstate near my house (I-94), I’m thinking I might see more than $100 of damage to my vehicles from the cracks, holes, and shoddy patches that don’t get fixed.
Besides, didn’t we just pass a big $1.3T infrastructure bill? How does a $10B gas tax holiday make any sense when they are out spending 65x that much at the same time? It’s such a trivial gesture.
Like most people, I don’t like to pay more taxes than I have to, but skimping on highway repairs are pretty low on my list. These things sound good in a headline, but make you scratch your head when you think about the implications.
What do you think of this proposal?
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