I’m not grasping why people think that the tradeoff which Krauthammer wrote about would be regressive in total.
Increasing the gas tax is somewhat regressive, yes, though I wonder how much overall. From observation it sure looks like middle and upper-middle class households nowadays do a lot more driving than poor households. I’d like to seem some real data on that which is more recent than 1991…but no argument that raising the gas tax would impact wealthy households the least as a percentage of household incomes.
Meanwhile though the proposed other side of this tradeoff seems highly progressive. In the first place the wealthiest wage-earning households pay FICA taxes on only a fraction of their incomes whereas low-to-middle wage-earning households pay it on all income. Also it’s at the top end where we have some households having lots of income of which little or none is wages (people living off of investment income); those folks would get no tax benefit here at all. So as a percentage tax benefit it’s the low and middle households that would gain the most from the FICA reduction end of this tradeoff.
And the same applies to employers, who we should remember actually pay half of all FICA taxes. Krauthammer doesn’t specifically address this point but it seems safe to assume that if this idea was ever actually implemented [not that I’m holding my breath], that politically the tax cut would have to be to FICA taxes generally not simply the employee’s half. And while both large and small businesses employ low-to-middle-wage workers, hence receiving some of this tax cut, small businesses do not employ any of the high-end wage-earners which would get proportionately less benefit here. (The local bodega and Target both employ low-wage people but only Target also employs highly-paid executives.) So again proportionate to size, more of the benefit here would flow to small businesses than to large ones.
Also someone brought up self-employed folks. Operating as a self-employed person means paying the self-employment tax, which is simply both sides of the FICA tax rate. So if the tax proceeds of raising the gas tax are used dollar-for-dollar to offset FICA taxes then a self-employed person will get twice as much tax benefit as would a regular wage-earner. Also the most-successful self-employed folks would get proportionately less benefit than would lower-earning self-employed folks. So, again, it would be a progressive tax change.
I’d like to see all the numbers actually worked out but just thinking about it, it seems likely that the tax-benefit side of this would in toto be much more economically progressive than the gas-tax-increase side would be regressive.
BobLibDem. I found an example of a major road -connecting the Eastern Freeway with the Tullamarine Freeway- that was financed without federal funding. $1.5 billion. Sure, it’s in Australia. But they have a federal government.
But if I bet D’Anconia a nickel that he can’t locate a substantial number of contemporary major US road projects without federal funding, will you indemnify me?
I say that we should make a tax on water. There is abundant water and everybody uses it, and the price is low right now, so I submit that a $1 per gallon tax would benefit everybody. Overweight people and athletes would be forced to pay their fair shaire. The revenue could be spent on public works. At the end of the year, every citizen, rich and poor alike could get a $50 dollar rebate, to spend as they choose. What’s not to love?
I guess people don’t remember when gas shot up in price how we were made to pay for it indirectly like baggage fees on planes increased prices / smaller products. Now that gas prices went down have those costs gone away? This tax will be the same. Anyone think that the tax will be lowered once gas prices go up?
This sounds like sarcasm, in case it is, you do realize the cost of most municipals tap water is subsidized right? While fresh water is a finite resource it is so cheap many do waste it causing issues when droughts occur. I agree water should cost more, not sure about the $50 dollar rebate though.
“Major”… virtually every “major” road project. Maybe he’s wrong and maybe “major” is a weasel word here but you are being more than ridiculous acting like he’s made some fantastic or obviously false claim here.
This for instance. My city has a 40 million budget for fucking snow removal. We have a 6 million dolIar pot hole budget. I would hazard a guess that your county had no “major” road work done.
No, he said “virtually every major road project”. In fact I told you this upthread:
No. He said, “virtually every major road project”. Emphasis added this time.
No. Please stop posting false information about claims made by other posters. Or spend some time contemplating pots and kettles: your choice. You’ve posted false claims multiple times now. BobLibDem made an assertion about virtually every major road project. I have quoted him twice now on this very page. CarnalK has also driven the point home.
Ok, I poked around and got a rough picture, if anyone is interested. From a Jan 2011 CBO Issue Brief, Spending and Funding for Highways: [INDENT]In 2007, the public sector spent $146 billion to build, operate, and maintain highways in the United States. About three-quarters of that total was provided by state and local governments. One-quarter was provided by the federal government, primarily through… [/INDENT]
That’s overall. But for major construction, it’s a little different. Pew reports: [INDENT] States rely heavily on the federal government to help pay for major transportation improvements. On a typical highway project, the state will provide a fifth of the funding and the federal government will pick up the rest. [/INDENT] So the Feds are heavily involved in major highway projects, unsurprisingly.
Raise the gas tax. A Little
The Pew report also noted that the Highway Trust Fund is drying up: the gas tax hasn’t been raised since 1993 and inflation has eroded its value. It’s now 18.4 cents. Raise it by a dime, and the Highway Trust Fund would be back in the black.
Of course there are other considerations than strong infrastructure, sound bridges and safe roads. Climate change for example, which Republicans have finally conceded is real. Over at Slate Phil Plait, a former poster here, notes that 9 of the 10 hottest years on record have happened since 2000. I say that if you burn fuel, you should pay for the damages.
HTF funds are used for federal highways. The feds give the money to the states to maintain these roads. That point has never been under contention in this thread. Is that the primary use of these funds, or is there an appreciable flow from the HTF to state and local road work?