Every American Stands to Lose Under Unprecedented Gas Tax Increase

Arlington, VA – Recent proposals to increase federal fuel taxes by as much as 25 cents should raise alarms for every American from California to Connecticut, but according to a report released today by Freedom Partners Chamber of Commerce and Americans for Prosperity, some states would be especially hard hit. If enacted, an unprecedented 25-cent gas tax increase from 18.4 cents per gallon to 43.4 cents to pay for infrastructure would be the largest federal tax increase in history at the pump.

The burden of the gas tax is borne especially by those Americans that drive each day, but its impact is felt throughout the economy as it drives up the cost of transporting goods and services on our nation’s roadways. As Congress and the administration embark on the effort of modernizing and maintaining the nation’s transportation infrastructure, they should first look to undo the many regulatory and permitting barriers making it nearly impossible to complete projects on time or under budget, while also rooting-out billions of dollars of waste and corporate welfare buried in projects of all kinds.

FULL REPORT: What A 25-Cent Federal Gas Tax Increase Would Look Like In Each State

Freedom Partners Senior Policy Adviser Alan Nguyen issued the following statement:

“Hardworking Americans are already paying high prices for gasoline, but for those in states with already high consumption and state gas taxes like Florida, Pennsylvania, Michigan and Ohio, Washington’s unprecedented tax hike at the pump would make paying the bills and staying under budget even harder.

“Asking taxpayers to immediately give back a large share of their recently obtained tax relief would be a betrayal to millions of ordinary Americans who have long struggled to get ahead and undermine the single biggest achievement of the Trump presidency. Raising taxes at the pump is a bad idea that’s been consistently rejected by both parties and the public because it would harm ordinary Americans who deserve relief the most.”

AFP Director of Federal Affairs Mary Kate Hopkins issued the following statement:

“Just a few months ago, Congress provided long-awaited and much-needed relief to American taxpayers through a comprehensive overall of the federal tax code. A gas tax increase would claw back a large portion of that benefit just as individuals and families are starting to see the impact of tax reform in the form of higher wages, more take home pay, and greater job opportunities.

“Instead of asking Americans to pay higher gas taxes, the president and Congress should pursue reforms that prioritize federal transportation infrastructure needs, reduce costly and time-consuming bureaucratic hurdles, and ensure that tax dollars are spent on roads and bridges, not frittered away on unrelated pet projects, red tape, and paperwork.”

The president’s transportation secretary, Elaine Chao, explained that raising the gas tax would have a negative impact on ordinary Americans, many of whom live paycheck-to-paycheck. “The gas tax, like many of the other pay-fors that are being discussed, is not ideal … The gas tax has adverse impact, a very regressive impact on the most vulnerable within our society; those who depend on jobs, who are hourly workers, so these are tough decisions,” Secretary Chao warned.

A State-by-State Look

Table 2 shows the top ten states with the highest percentage increase in total gas tax liability under the 25-cent increase proposal. These rankings were calculated based on the state’s current total gas tax, including state and federal taxes, that are imposed at the pump compared with the total of those taxes under the proposed hike.

States like Pennsylvania and California are well known for their already-high state gas taxes. Under the 25-cent proposed hike, drivers in these states would face even more burdensome prices at the pump. Table 3 highlights the top 10 states with the highest total tax burden per gallon under the proposed hike.

Taken on the whole at the state level, these tax increases would be massive. States with high consumption and high state gas taxes would be hardest hit. Table 4 shows the top ten states with the highest total gas tax burden statewide.

Freedom Partners and AFP sent a letter to the president on January 23 that argued against a gas tax increase saying, “efforts to improve our nation’s infrastructure should focus on maximizing taxpayer dollars by targeting priorities such as roads and bridges, eliminating wasteful spending, removing regulatory barriers that delay projects and drive up costs, and ensuring there is proper oversight and accountability.”

Last week, AFP led a coalition of nearly 30 taxpayer advocate organizations in a letter to Congress asserting opposition to increasing the federal gas tax as part of infrastructure legislation.

Freedom Partners & AFP Guiding Principles: A Smarter and More Efficient Way to Maintain and Modernize Infrastructure