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Trump Reportedly Still Eyes Gas Tax Hike

Thursday, February 22, 2018

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President Donald J. Trump is still looking into raising the federal gas tax by 25 cents to help fund his $1.5 billion infrastructure plan, according to reports, which may lead to a large dent in tax-break benefits for individuals, while fostering opposition from key GOP donors.

Former Transportation Secretary Ray LaHood noted Wednesday (Feb. 21) that increasing the gas tax was the only way to fund the infrastructure upgrade; the fuel tax is the main source of revenue for the Highway Trust Fund, which has flagged in recent years. GOP donors and billionaire brothers David and Charles Koch are fighting back against the tax hike on multiple fronts, however.

Gas Tax Increase

LaHood told CNBC, in light of Trump’s support of the recent Republican tax package, it was difficult for Republicans in Congress to refuse when the White House got behind an idea.

Yet experts say the increase could wipe out 60 percent of the benefit from the tax breaks recently signed into law for individuals.

Daniel Clifton, Strategas Research head of policy research, told CNBC that the increase in gasoline prices would also be nine times larger than the $4 billion workers are currently receiving from employers as a result of the recent corporate tax cut.

© iStock.com / aydinmutlu

President Donald J. Trump is still looking into raising the federal gas tax by 25 cents to help fund the $1.5 billion infrastructure plan, according to reports, which may lead to a large dent in tax breaks for individuals, while foster opposition from major, key GOP donors.

With government data indicating an annual 20-cent-per-gallon increase in gas prices, the combined 45-cent increase would eat away “$71.6 billion from the $120 billion in individual tax cuts, or 60 percent of the net tax savings for consumers,” said Clifton.

For an average family, a 12-gallon fill-up would cost $3 more with the new tax.

Koch Brother Opposition

GOP donors the Koch brothers have announced their own opposition through the government outreach arm of Koch Industries, a private refining and manufacturing company owned by the pair.

“I urge you to oppose the 25-cent gasoline tax increase to fund infrastructure legislation,” Philip Ellender, president of government and public affairs at Koch Companies Public Sector, told members of Congress.

“Just as many Americans are starting to see more money in their pockets from tax reform, ask yourself: Does the government want to take back a large portion of this tax relief to pay for more government spending?”

Koch-affiliated group Americans for Prosperity and Freedom Partners also released a report that detailed the additional tax burden motorists in each state would shoulder. According to the report, the state of California would be hit the worst by the gas tax increase, shouldering $3.6 billion in additional cost (based on 2016 gasoline consumption for transportation). This breaks down to an increase of $285.98 per household per year.

Tax History

The federal gasoline tax, which was signed into law by President Herbert Hoover in 1932, is 18.4 cents per gallon (24.4 cents per gallon for diesel), and it was last increased in 1993 during the Clinton administration.

Since 1993, revenue from fuel taxes has dropped because of inflation. Meanwhile, the average fuel economy of a passenger vehicle increased by 12 percent, according to the U.S. Department of Transportation, meaning many drivers are spending less on gas and paying less tax at the pump.

States charge their own gasoline taxes, on top of the federal tax. Pennsylvania has the highest gas tax in the nation (52.8 cents per gallon). Alaska (12.25 cents) boasts the lowest.

   

Tagged categories: Funding; Government; Infrastructure; North America; President Trump; Program/Project Management; Taxes

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