Federal Push for a 12-Cent Gas Tax Boost for Highway Bill

Federal Push for a 12-Cent Gas Tax Boost for Highway Bill

 Sens. Christopher S. Murphy, D-Conn., and Bob Corker, R-Tenn., are proposing a 12-cent increase in the gas tax to pay for a renewal of highway and transit programs, which could run out of funding by the end of the month.

“Reaction on the Democratic side has been positive,” said Murphy, who noted he spoke with Senate Majority Leader Harry Reid, D-Nev., and Senate Finance Chairman Ron Wyden, D-Ore., about the plan.

“I think on our side of the aisle we recognize that it’s time to stop talking theoretically and start talking really in practical terms,” Murphy said, adding that bipartisan support is key to getting the plan through the chamber.

But it’s unclear if a substantial number of the Republican Conference will embrace the idea.

“We will see,” Corker said when asked how his GOP colleagues would react.

One big GOP selling point was that the tax increase would not violate the Americans for Tax Reform pledge if it is paired with a provision making some popular tax breaks that are typically part of the tax extenders package permanent.

According to Corker, the list of tax breaks includes: the research and development tax credit; Section 179 expensing, a tax break encouraging small businesses to by business equipment; the deduction of state and local sale taxes; the deduction of up to $250 in classroom expenses that teachers paid for out of their own pocket; a subsidy for mass transit and benefits given for land donated for conservation purposes.

“If you just took those, we do them each year, but you make them permanent; I don’t think there is anybody that disputes making those permanent, by the way, that alone would generate $189 billion in savings over the next 10 years,” Corker said. “So if the Finance Committee chose to link this … with that … you would not be violating the pledge.”

The 12-cent increase would raise $164 billion over 10 years, Corker said.

Using the tax break extension to offset a gas tax increase would, however, take away the ability to use those same tax breaks to buy down tax rates as part of a future tax reform package.

The White House has threatened to veto permanent tax cut extensions, but it’s not clear if they would oppose them if paired with a gas tax hike.

The White House has not backed a gas tax hike previously and has instead proposed using short term revenue from corporate tax reform to pay for the highway bill.

The two senators hope to build support for the plan over the summer, particularly with the Finance Committee, which will draft the funding plan for the highway bill, and the Environment and Public Works Committee, which oversees transportation policy.

“We haven’t introduced it as formal legislation yet because we acknowledge that ultimately this is going to be passed as part of a package coming out of the Finance Committee and EPW Committee,” Murphy said.

They don’t expect any action until after the elections. In the meantime, they believe Congress will pass a short-term patch to keep transportation programs funded through the end of the year.

“The same thing will happen this summer that’s happened the last [few] times,” Corker said. “That is, that some gimmick will be created to make it look like its being paid for when its actually not.”

Along with raising the federal gasoline and diesel taxes by six cents in each of the next two years for a total of 12 cents, the plan would also index the gas tax to inflation, using the Consumer Price Index to ensure that it remains viable into the future.

The plan would raise enough to provide enough funding to offset current MAP-21 spending levels over the next 10 years and replace all of the buying power the federal gas tax has lost since it was last raised in 1993.

“This modest increase will pay dividends in the long run and I encourage my colleagues to get behind this bipartisan proposal,” Murphy said.

Both Murphy and Corker said they didn’t support a possible House plan to use reforming the postal service to fund the highway bill.

“I think it’s a gimmick,” Murphy said. “The point of our proposal is to try to solve this problem for the long-term.”
“Only in Washington would you take money from one insolvent enterprise to fund another insolvent enterprise,” Corker said.

The senators’ bipartisan proposal was criticized by the conservative Club for Growth.

“This is a $164 billion dollar tax increase, plain and simple. A gas tax hike would be both bad policy and terribly anti-growth,” said Club for Growth President Chris Chocola. “It’s not an example of political courage to avoid reforming a broken system. Instead of standing up to the special interests who feast on the chronically bankrupt Highway Trust Fund year after year, Senator Corker and Senator Murphy have essentially decided that throwing more money into a black hole is a good path forward. It’s not. Rather than perpetuate this failed system, Congress should devolve highway funding to the states and let them fund their own infrastructure needs.”

Steven T. Dennis contributed to this report.

The post Murphy, Corker Call for 12-Cent Gas Tax Boost for Highway Bill appeared first in The World’s Greatest Deliberative Body on rollcall.com.

Tags: