A Gas Tax Hike to Pay for Infrastructure?

A Gas Tax Hike to Pay for Infrastructure?

Printer-friendly version
Plus, Dems Democrats push for permanent changes to unemployment system
Friday, April 23, 2021

Bipartisan Group of Lawmakers Floats Gas Tax Hike to Pay for Infrastructure

A bipartisan group of centrist House lawmakers on Friday proposed raising the gas tax as one possible way to pay for a large-scale infrastructure spending package.

In a new report, the 58-member House Problem Solvers Caucus proposes indexing fuel taxes to inflation, highway construction costs, fuel economy standards or some combination of the three. The report also lays out a number of other revenue-raising options, including a tax on vehicle miles traveled (VMT), which would raise revenue from drivers of electric vehicles as well.

Other funding ideas in the report include stepped-up Internal Revenue Service enforcement to cut down on tax avoidance, a national infrastructure bank, annual registration fees for electric vehicles and user fees for freight trucks.

A gas tax hike still looks unlikely:
Congress hasn’t raised the gas tax of 18.4 cents a gallon since 1993 — and it doesn’t appear likely to do so now. A number of key parties in the infrastructure debate, including President Joe Biden, have already come out against the idea, arguing that it would disproportionately hit lower-income Americans.

White House Press Secretary Jen Psaki earlier this month said that even a large increase in the gas tax would only cover a fraction of the infrastructure spending needed and that Biden “does not believe that paying for this historic investment in rebuilding our nation’s infrastructure and creating millions of jobs should be on the backs of Americans.” Biden has pledged not to raise taxes on people making under $400,000 a year and has proposed raising corporate taxes to help pay for his infrastructure proposals.

Sen. Joe Manchin (D-WV) this week told reporters he was opposed to a gas tax hike. "Hell no, don't raise them," he said on Wednesday. "I got people that have to drive a long way to make a living. That just makes it harder on the working person. That's not the way to do it."
Senate Republicans who outlined their own $568 infrastructure plan Thursday also don’t support raising the gas tax.

In an indication of just how sensitive the topic is, the Problem Solvers Caucus itself emphasized Friday that it hadn’t endorsed a gas tax increase, or any particular revenue-raising ideas, and had only laid out some options. Rep. Josh Gottheimer (D-NJ), a leader of the group, added that he personally is against raising the gas tax. “Instead, I support pay-for measures like closing the $1-trillion-a-year tax gap, which goes after tax cheats, and boosting public-private partnerships,” he tweeted.

Democrats Push for Permanent Changes to Unemployment System

The Covid-19 pandemic has exposed serious flaws in the U.S. unemployment insurance system, as states struggled to quickly deliver enhanced benefits to millions of workers who lost their jobs. Now, a group of Democratic lawmakers are asking the White House to push for permanent changes to the system as part of a spending package expected to be announced next week.

The Wall Street Journal’s Andrew Duehren and Andrew Restuccia report:

“In a letter sent to the White House Friday, nearly 40 Democrats said President Biden should propose implementing a series of new federal standards of unemployment insurance programs, which are largely run by states. They proposed increasing the amount of jobless payments, extending the duration of the weekly benefit, expanding the pool of eligible workers, and implementing a system that would more closely tie the payments to economic conditions.”

Democratic Sens. Ron Wyden (OR) and Michael Bennet (CO) last week introduced legislation to raise base jobless benefits, create a permanent aid program for self-employed and gig workers, minimize differences between state programs and tie extended benefits to the unemployment rate.

Number of the Day: 29 Million

The Internal Revenue Service has a backlog of more than 29 million tax returns being held for manual processing, according to a blog post by National Taxpayer Advocate Erin Collins, who explains that the particular challenges of this tax season — including the added complexity caused by the Covid “stimulus checks” and rebate credits — made manual reconciliation of returns necessary and slowed down processing times. The backlog also includes 5.3 million paper returns for 2019 and 2020, 4.7 million individual returns with issues requiring responses from the filers and 11 million business and other returns.

The delayed returns have contributed to a more than 300% increase in the number of calls to IRS helplines, but as of April 10, only 2% of the roughly 70 million calls to the line for assistance with form 1040 have gotten through to a live person.

Collins says that the delays this year “have been largely unavoidable,” but calls for the IRS to be more transparent about the status of refunds.

She adds that providing more money for the agency could also make a difference: “If the IRS had adequate funding for its computer systems, it could provide a robust online account with an ability to update the status of IRS reviews in real time and the anticipated payment date of the refund. Additionally, adequate resources would allow the IRS to upgrade its telephone systems to provide a customer callback feature, so taxpayers don’t have to endure long hold times and low levels of service.”

Send your feedback to yrosenberg@thefiscaltimes.com. Follow us on Twitter: @yuvalrosenberg, @mdrainey and @TheFiscalTimes. And please tell your friends they can sign up here for their own copy of this newsletter.

Views and Analysis