The Trump administration successfully passed new tax reform laws late last year that have promised Americans substantial income tax cuts in 2018. Now, the president has moved forward to consider infrastructure spending, and a new controversial proposal could set off another round of debate among lawmakers.
The White House reportedly supports consideration of a $0.25 per gallon increase in the gasoline tax, at least according to one Democratic lawmaker who attended a bipartisan meeting discussing funding for the infrastructure deal. With income tax cuts having added to the federal deficit, the infrastructure proposal already seeks to have state and local governments shoulder the bulk of the cost of improvements to highways and other projects.
Adding a gasoline tax has the support of organizations like the U.S. Chamber of Commerce. Opponents argue that states have already added substantial taxes to the current federal $0.184 per gallon excise that make further levies too extreme. In particular, residents of the following five states would see insult added to injury with a federal gas tax increase that in one case would bring total taxes above the $1 per gallon mark.
Pennsylvania pays the highest taxes on gasoline in the nation at $0.771 per gallon, according to figures from the American Petroleum Institute. Of that amount, $0.587 comes from a special state tax that came about from the 2013 passage of a $2.3 billion transportation bill to fund much-needed infrastructure initiatives. The increase took effect in pieces, with the final $0.08 increase coming at the beginning of 2017.
A $0.25 per gallon boost would take the total to $1.021 per gallon. The only good news for gas-powered car drivers? Diesel taxes are even higher, currently at $0.995 per gallon.
California is well known for its high gas prices and high taxes, so it's not surprising to see the state near the top of the gas tax list. Of its $0.7189 per gallon in taxes, $0.417 per gallon comes from the state excise tax, and other state taxes and fees add up to another $0.1179 per gallon.
California residents just took a hit on their gas taxes, with a $0.12 per gallon increase as of Jan. 1. Further increases are likely in the future, including a near doubling of a separate price-based tax of $0.098 per gallon to $0.173 in mid-2019.
Washington State weighs in with a $0.678 per gallon tax on gasoline. A simple state excise tax of $0.494 per gallon is to blame for most of the tax, and it was most recently raised in mid-2016, with a $0.049 per gallon boost for both gasoline and diesel fuel.
The city of Seattle has recently begun a pilot program to see what a per-mile gasoline tax might look like. This addresses concerns that cars with better gasoline mileage aren't paying their fair share to support road improvements, but it also takes away a key incentive for drivers considering more fuel-efficient vehicles.
Hawaii routinely has some of the highest gasoline prices in the nation because of its geographical isolation. The cost of transporting fuel to the islands contributes to the costs, and high taxes only add more of a burden. Current total taxes of $0.6443 per gallon include a $0.17 per gallon state excise tax and $0.2903 per gallon in other taxes and fees.
Various rates apply to different localities within the state. County tax rates get imposed by Maui, Kauai, Honolulu, and Hawaii counties.
5. New York
Finally, New York comes in with a $0.627 per gallon tax. An excise tax of $0.0805 per gallon is fairly modest, but petroleum business taxes of $0.169 per gallon and a state sales tax sends the total state-level taxes and fees up to $0.443 per gallon.
On top of its gasoline tax, New York gets infrastructure-related revenue from its New York State Thruway toll roads and various charges on bridges spanning major rivers like the Hudson. Yet the revenues from those programs still can't support the needs for repair and new construction, as in many states across the nation.
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Gasoline taxes are never popular, but linking them to infrastructure-related spending projects makes intuitive sense and has policy advantages over other types of taxation. It's uncertain whether there's political will to move ahead with a $0.25 per gallon boost to federal taxes, though, and if it does move forward, residents in these five states won't be the only ones complaining about the added cost.