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Dr. Eric Schansberg comments on gas taxes and “living wage” laws:

on two of the four items in your comments this week: 1.) FYI, I sent the following letter to the C-J last week; 2.) gas taxes are connected to road use, but from what I understand, they only pick up a small fraction of the cost of road construction, maintenance, and auto emissions. ironically, this is one area where higher taxes (devoted to spending in those categories!) would be more socially efficient...

I hope you and yours are doing well! ;-) eric


 

> Sent: Wednesday, December 04, 2002 2:46 PM
> To: 'cjletter@courier-journal.com'
> Subject: RE: letter to the editor
>
> Perhaps I should be more patient, but I get tired of hearing people clamor for higher minimum wages-- without first arguing for the elimination of taxation on the working poor. For example, a two-parent family of four in Kentucky with an income of $18,104-- the
> poverty line in 2001 for a family that size-- paid $596 in income taxes, the highest rate in the nation. As a native Kentuckian, I'm glad to see that Kentucky is # 1 in something; I just wish that you were # 1 in basketball or education instead. Moreover, as a nation, we impose huge Social Security taxes on the working poor-- 7.65% from the very first dollar earned. For the same family, this works out to $1385 per year. And since workers bear the employers' half of the tax through lower wages-- just as consumers pay the gas taxes imposed on gas stations-- these same workers are out another $1385 per year. Overall, the working poor in Kentucky pay $3366 per year-- nearly $300 per month. Wouldn't it be more equitable and more efficient to quit taking money from people who are working but struggling to get by?
>
> D. Eric Schansberg
> Professor of Economics
> Indiana University Southeast
> 941-2527 (W); 218-0443 (H)

Eric -

It's good to hear from you!  I thought highway construction was funded entirely from gasoline taxes.  Other roads, such as local roads, are funded through property taxes.  Maybe that's how they can say that gasoline taxes only pay for a small part of all road construction, since there are many more local roads than highways.  Light rail is also supposed to be funded largely from gasoline taxes.  Do you know where I can go to get the numbers?

Resa

(Editor’s note:  I have tried to do some research to find out whether the gasoline taxes cover the cost of highway construction and maintenance and found this excellent article:  http://publicpurpose.com/pp-hwyuser$.htm with this chart http://publicpurpose.com/hwy-us$93&c.htm

Also: This chart of highway expenses and user fees shows that user fees exceed expenses, and that a large portion of user fees has been siphoned off for other purposes in the last several years http://publicpurpose.com/hwy-us1921.htm)

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