A Gas Tax Hike to Pay for Infrastructure?

By Yuval Rosenberg

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.”

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