Proposed gas tax hike

[meatpuff]

Originally Posted by Drover

Well I'm not so willing to cast my suspicion aside, and I also don't put much stock in static revenue analyses that ignore the fact that people respond to economic incentives by increasing or decreasing their consumption based on changes in cost. I want to know how much revenue is generated from gasoline taxes including the 6.25% receipt tax (and all of the toll revenues for that matter if you want to throw that into the mix), where it all goes, how they arrived at the $500M figure, and why having the 6th-highest gas taxes in the country on average (varies by county) in addition to tolls just isn't enough. And I'd also like to know what assurances we have that any hike in the gas tax will actually go where they say it will go instead of vanishing into a cosmic vacuum of corruption, incompetence, patronage and waste. Given the governance we've lived under for the last decade-plus, I don't know that any assurance could possibly be adequate.

All points well taken, except one. The economic incentives to increase or decrease gasoline consumption as cost changes are there, but are not very important over all but the very long term. Demand for gasoline is quite inelastic, to as great a degree as perhaps any consumer product. We saw this in that it took gas prices over $4 per gallon in 2008 to finally see year-over-year decreases in the miles people drove (measured monthly). In other words gas prices had to quadruple compared to eight years earlier before it finally dented demand a few percent.

I assume the figures on gas tax, sales tax and toll revenues, and highway-related expenditures are all publicly available, perhaps with a FOIA request, so that you can compare them. Hopefully our newspapers still have the staff and vitality to keep up with this stuff. They'd have a big story if they unconvered vast problems of the type you described.

[oakparkdude]

I may regret advocating this long-term, but one major reason for our financial problems is our abnormally low state income tax (3% flat rate), which should be raised. Of all the states that have an income tax (6 states do not), ours is the lowest rate. This is an awesome deal for those of us who have relatively high income, as it shifts much of the tax burden to more regressive taxes such as sales taxes.

[Drover]

Well I'm not a big fan of taxing productivity, so I'm fine with the 3% income tax. I'm also fine with a sales tax that exempts or substantially exempts basic amenities such as food and clothing. That way the tax is essentially voluntary and you don't have to pay it until such time as you choose and you don't have to pay it unless you can afford to.