Untangling Transportation Funding – Brookings Institution’s paper on Vehicle Mileage Taxation
(Source : Thanks to Robert Puentes @ The Brookings Institution for sharing this article)
Already, we have had not one—but two—national commissions on the topic, and the U.S. Government Accountability Office (GAO) recently added transportation financing to its annual list of high-risk areas suggested for oversight by the current Congress.
Why the high anxiety?
Put simply: the money flowing out of the federal transportation trust fund (often referred to as the “highway” trust fund) is greater than the money flowing into it. This past September Washington was forced to shift $8 billion from the general fund to cover a shortfall in the transportation account. Estimates for how short the fund will be this summer hover around $9 billion.
Despite the sharp, and perhaps simplistic, rhetoric of late, the origins of the shortfall are the result of multiple trends converging.
For one, the federal gas tax—generating nearly 90 percent of the federal transportation revenue—has not been raised in nearly 20 years, not even to keep pace with inflation. So, as the rate effectively declines, so does the purchasing power of the trust fund. The current 18.4 cent per gallon tax in the U.S. is far less than in European competitor nations.
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