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?
Image Credit: (c) MrFireStation.com
MrFireStation 
Lo and Behold, I agree with you on this one :). The issue I think is insane is the big debate on whether or not our Gov. should send us $1,000 for over taxing us or the GOP idea that they should just lower our taxes. Duh, they should do both. They will do neither, leaving us with the status quo, which is what both parties want in the first place. It’s all just a circus show.
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Chief, I think the President’s proposal is mere political chicanery, designed to mollify voters, of whom a majority disapprove of his performance in office. He wants to be seen as a benefactor. In reality, 18.4¢ is just our cash they are temporarily not taking from us. They are not giving us anything except a sideshow. At least driver votes he’s trying to “buy” cost us less than $10K per college loan forgiven.
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I disagree with the thought of this being a fair tax. These are no longer fair due to the influx of electric cars. Why should electric car drivers get a free pass for wear and tear on roads? Their cars harm roads just as much as any electric car.
I do agree that this holiday idea is a joke and not meaningful, only a way to garner votes.
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Oops, meant that electric cars harm the roads just as much as any gas cars!
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Electric cars actually harm them more. They are heavier than equivalent gasoline powered cars because the batteries are heavy. The high torque of electric motors starting causes Tesla owners to replace their rear tires every 8,000 miles. This torque that is hard on tires will also be hard on roads.
Today’s gasoline powered cars are very clean. If you live near a freeway, the majority of the pollution coming from today’s cars comes from tire wear and brake dust. In another forum frequented by engineers, I saw one calculation that the very heavy new Ford Lightning pickup Truck will produce more tire and brake pollution than it saves in gasoline pollution, assuming the electric charge comes solely from solar.
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The 9K# Hummer will definitely!
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Yes – agree on EVs. I did note that they were causing a shortfall to the highway trust fund. I know the DOT is charged with creating a mileage tracking approach to funding highway maintenance. I’m not sure what the details of that are.
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During 2008, former President Barrack Obama called a gas tax holiday a ‘gimmick’ and noted that the average family will only save $28 during the three months. This is about the first time I can ever remember agreeing with Obama on anything.
That being said, the People’s Republic of California currently charges 53.9 cents per gallon gas tax, and will be increasing it to 56.7 cents per gallon on July 1st. There is another hidden tax on Southern CA fuel because the AQMD requires a special clean air blend that is only produced in California refineries. The combination of the high California gas tax and the special fuel blend keep California gas prices about a buck higher than other nearby states.
California’s roads despite not having the freeze – thaw cycles of Minnesota are not in great shape, because too much money gets diverted to projects that do not fix roads or increase their carrying capacity.
Fuel prices have more than doubled during Biden’s first year and a half in office. It took Jimmy Carter four years to double gasoline prices.
In Biden’s case he is kowtowing to Green New Deal believers who want to sabotage the Oil and Gas industry to drive up prices to force people into electric cars. Biden skills in Electrical Engineering match his skills at bicycle riding.
Here are some inconvenient facts about electric cars.
1) They are very expensive.
2) Batteries require dirty manufacturing mostly in China and are very dirty to dispose of.
3) Batteries are very expensive to replace and need to be replaced around every 8 years or 100,000 miles.
4) The US electric grid is already stressed and would not keep up with demand if everyone magically switched to electric cars.
5) Much electricity generation currently comes from burning fossil fuel.
6) Electric cars are inconvenient on long trips. The WSJ had a recent article where a columnist rented and drove an electric car from New Orleans to Chicago. Her story told how she spent more time charging the car than sleeping. She ran dangerously close to running out of charge several times and had too turn off key systems such as windshield wipers in the rain to make it to the nearest charging station. How would you like to turn off heat when driving in Minnesota in the Winter?
I saw a news story two days ago that Germany’s Green Energy Policies are failing and they are having to fire up coal fired plants again. This is what happens when government tries to force technology adoption that is not ready yet.
There is big one exception to gasoline taxes are fair because everybody helps pay their fair share for the roads. Electric car drivers are driving very heavy cars and are not paying gas taxes.
As a parting comment, if anyone is really worried about man caused global warming, I recommend they study the Roman Empire which coincided with a time of global warming that was warmer than today’s. Olives were being grown in Germany and citrus in the UK. The Vikings colonized Greenland and were forced to abandon it during the 1300s due to global cooling causing crop failure.
The root cause is politicians who are mostly educated in Law and who are famously bad at Math and Sciences making bad economic and technology decisions that attempt to violate the laws of physics and finance. Physics will always wins.
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I hear you on the challenges to convert to EVs. I think many of the issues will be worked through, but it will take time and cannot be pushed by government. In MN, most people don’t realize that we are at the highest risk of rolling blackouts in the country … https://www.americanexperiment.org/why-the-risk-of-blackouts-in-minnesota-continues-to-grow/
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Wow, it is really serious when electricity is lost during the coldest months of the winter in Minnesota. Many Green New Deal types dislike Air Conditioning, without realizing that heating in far northern climates takes a lot more energy.
Ironically, I spent the morning specifying a battery backup for my home internal modem and access points to stop my sons from freaking out every time we lose power, which was 3X last week BTW. Maybe they need to experience a power outage in Wisconsin like the 3 day one in 1975.
I agree with you that government needs to stay out of this. Let inventors and scientists come up with something that is workable. In the meantime, these same people are discounting replacing old technology with higher efficiency technology that is here today. They should be happy about the gains already being made. The USA is the only country that met the goals of the Kyoto treaty despite not signing it, because fracking made the US the Saudi Arabia of natural gas. Switching coal fired electric generation to natural gas cleaned up the air and reduced carbon dioxide emissions.
When electric cars start offering good value and convenience they will win their rightful place in the market.
When I attended the University of Wisconsin – EE/CS school in 1979, they were working on Fusion energy which we were told was five years away from offering clean, cheap, and abundant energy. 43 years later, we are still five years away from having workable Fusion. Can you imagine where we would be today if government had decided that the answer had to be Fusion.
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Chief,
Here is an interesting article about the pollution caused driving a classic car versus a new electric car. People are wrongly looking at just the tailpipe and are not considering the manufacturing and battery waste disposal and are incorrectly concluding the classic car is the bigger polluter.
https://www.yahoo.com/sports/oneil-cruz-is-the-first-6-foot-7-shortstop-youve-ever-seen-he-might-not-be-the-last-213409398.html
As an aside, my middle son studied Marine Biology at Scripps and for years he was harping about CO2 causing the ocean around Australia to become more acidic, which was killing the Great Barrier Reef. It took awhile, but eventually I convinced him that the world’s two biggest polluters; China and India are burning high Sulphur coal which is a much bigger contributor in acidic bodies of water. Remember when the US generated coal and we were hearing about acid rain killing lakes. That went away with scrubbers, converting coal fired electrical generation plants to natural gas, and getting Sulphur out of diesel fuel.
Currently, EV battery manufacturing causes more pollution than a lifetime of driving your classic car. In engineering, things are not as they seem to be to someone who is trying to understand a complex system at a superficial level. This article gives you permission to take your dino powered classic car out for a pleasure cruise this weekend, without feeling guilty. So enjoy.
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Oops .. that’s a baseball article! 😉
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Here is the real article. I was doing a bad job multi-tasking.
https://autos.yahoo.com/classic-cars-greener-electric-vehicles-150000860.html
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Interesting!
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The federal gas tax has little impact on the budget of the average consumer and should remain and be used for road improvements. The trucking industry moans about how much they pay in taxes, but unlike what Krause reports, heavy duty trucks cause most of the damage to roads. Take a look at asphalt roads where trucks often idle, you will see depressions where tires sit, those depressions are due to weight, not vehicle volume. Did you ever notice that bus stops are often built of concrete and not asphalt, same reason.
Yes EV cars burn up rubber, but don’t cause considerable wear and tear to asphalt except on occasional excessively hot days, but young males in fast cars do the same damage. I agree that EV should have a user tax to subsidize road maintenance
I pay little in the way of fuel tax on my hybrid cars which average 35 and 50 mpg as I don’t drive a great deal and I get great mileage. I would not be opposed to a hybrid fee. This is due to my philosophy that users should support infrastructure that they use as opposed to taxing my income and capital gains because of my wealth which is above average
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Agree – we have an acquaintance that works for the MN DOT. He once told me that a single truck does the damage of 60 passenger vehicles to the roadway. They are heavy!
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I agree with your statement on Trucks being bigger contributor to road damage than lighter vehicles. There is a private road nearby my house that I walk my dogs on about everyday. Whenever someone start building a new house on the street, the concrete and other construction related trucks seem to cause a lot of rapid wear.
My main point was that EV’s are currently getting a free ride.
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Agree EV’s get a free ride and with my hybrid, I don’t pay my share either. Now I read that as a California driver my wife and I will get a check to offset my financial challenges due to the price of gas. Get this, our check will exceed our annual fuel costs. We only buy about $30 of gas each month unless we go on a road trip, the last one being 20 months ago.
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Nice – ! If they are dumb enough to give gas money to EV owners, you should be smart enough to take it! I’m sure all energy prices are up, anyway.
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