Gas Tax

[Paulus]

So, how is the rate calculated in CA?

2.25% sales tax plus an excise tax which represents the level of a 4.25% sales tax rate in 2010 plus some pre-existing excise taxes (if I've got it right). Restrictions on raising taxes and where fuel taxes went led to the weirdness as part of a budget swap.

 

[Anderson]

That's interesting, because $.36 comes out to around 10% or so of the price of gas in CA.

 

[Alice]

So, how is the rate calculated in CA?

I think the article I linked gives a pretty good summary description. What is interesting is they are lowering the excise tax, which is the part that is dedicated to highways and transit. Sales tax traditionally goes to local governments but currently most gets snatched for the general fund.

 

[cirdan]

So if vehicle miles traveled is permanently down, how much reduction in building and maintenance results from that? Is the cost of highways in any way related to the amount of their use?

One of the problems is that highway projects are not really driven by use, but by political considerations, and also by a backlog. Many highways being built today were actually planned 20 years ago or more. I don't think a blimp in the statistics is going to cause any of these projects to be reconsidered. Things are going to have to get much more drastic until that begins.

 

[Andrew]

Well, hopefully Obama's transportation proposal that he will announce today gets passed!

 

[afigg]

Well, hopefully Obama's transportation proposal that he will announce today gets passed!

However, his proposal is to pay for the shortfall in the Highway Trust Fund and increased transportation spending with a one time boost in $150 billion business taxes from tax reform. The details are sketchy on what the boost would come from. He is not proposing to increase the gasoline tax, but instead punting dealing with the ever growing shortfall in the HTF as his administration has done for the past 5 years.
I expect that is because his political advisors have long concluded that proposing to increase the gas tax would create an uproar on the right, hurt the Dems at the polls, and the Republican controlled House would never go for it. So he is advocating a 4 year gimmicky fix to kick solving the federal transportation funding problem to his successor and whoever controls Congress in 2018. His advisors may be correct, so a one time fix to postpone the funding shortfall until calmer times return to Capitol Hill may be all he can propose.

 

[jis]

This is known as "kicking the can down the road". We have been doing this in New Jersey with the TTF too irrespective of which party the Governor is from and which party holds majority in the legislature, and what promises were made by the gubernatorial candidates to get elected

 

[neroden]

That would be one approach, but it might disprportioantely hurt people in rural areas who

1) need to driver more and further all the time to get to work, shop etc

2) don't have ready access to alternatives such as public transportation

3) benefit disproprtionately little from that revenue as most of the cash goes into big highway projects within or between big cities. Very little gets spent on fixing up little rural roads.

So effectively those who would contribute the most would get back the least.

Actually, a stupendously disproportionately high amount of road money goes to rural roads, compared to the amount they're used. This does include the roads "between" cities, of course, but rural drivers do use those. It would indeed cost rural drivers more, but they're getting more.

The gigantic super-expensive urban elevated/depressed expressway projects do skew the numbers the other way. But most people who've studied it say we shouldn't have those at all; most of Europe has zero urban expressways, with the expressways stopping at the city borders. Knock 'em down; they were a bad idea and are unaffordable.

If our politics go the way they usually do, we will come up with some way to continue subsidizing rural drivers at the expense of cities. Which I guess is OK; someone needs to live on the farms.

The

 

[neroden]

I don't think we're finished with the business model shifts there, either. I could see a situation a decade hence where Amazon (for example) shifts models somewhat and, to meet the quick shipping demands out there in major cities arranges to hot-shot a lot of stuff between (more numerous) centers by rail and then does short-distance distribution by truck.

UPS already does its main deliveries by rail. But it doesn't have enough transload centers. FedEx Ground -- also mostly by rail. The US Postal Service quite stupidly stopped shipping packages by rail some time back just when the private parcel carriers were shifting to rail; it may have to reverse this eventually. I also have to wonder when Amazon will try to cut out the UPS "middleman", and when UPS will try to get vertical integration with the railroads it uses... businesses like these always tend toward monopoly.
I wouldn't be at all surprised to see Amazon setting up direct rail loading at its warehouses and then trying to get trains to run hotter than the standard intermodal. Perhaps at passenger speeds.

 

[afigg]

This is known as "kicking the can down the road". We have been doing this in New Jersey with the TTF too irrespective of which party the Governor is from and which party holds majority in the legislature, and what promises were made by the gubernatorial candidates to get elected

This is what democracies generally do or at least in the US. Wait until the problem is so severe it has to be addressed and costs more to fix than deal with it ahead of time. NJ will probably fix the state transportation fund when it runs out of money and there will be no new shiny projects the politicians can take credit for. VA, MD, and even PA all fixed their transportation funding crisis in 2013, mainly because they had to or else no new shiny projects.
NJ will eventually do so as well, although it clearly won't happen so long as Christie has even the slightest hope of a presidential nomination or until there is a new Governor in NJ.

 

[Anderson]

I don't think we're finished with the business model shifts there, either. I could see a situation a decade hence where Amazon (for example) shifts models somewhat and, to meet the quick shipping demands out there in major cities arranges to hot-shot a lot of stuff between (more numerous) centers by rail and then does short-distance distribution by truck.

UPS already does its main deliveries by rail. But it doesn't have enough transload centers. FedEx Ground -- also mostly by rail. The US Postal Service quite stupidly stopped shipping packages by rail some time back just when the private parcel carriers were shifting to rail; it may have to reverse this eventually. I also have to wonder when Amazon will try to cut out the UPS "middleman", and when UPS will try to get vertical integration with the railroads it uses... businesses like these always tend toward monopoly.
I wouldn't be at all surprised to see Amazon setting up direct rail loading at its warehouses and then trying to get trains to run hotter than the standard intermodal. Perhaps at passenger speeds.

Amazon will cut out UPS when the relative cost of using them exceeds their value as a whipping boy when things go wrong. As things stand right now, the Christmas fiasco was the fault of UPS, not Amazon. As soon as they drop the middleman, they own anything that goes wrong in transit.

 

[RRUserious]

The primary spokesmen for business in politics fail to point out that capital stock, by its nature, wears out and in business is expensed over the lifetime of the capital. Which, however, they don't seem to agree should happen with transportation infrastructure. You hear so much about making government "businesslike". But with infrastructure getting ancient, no ideologue is on this issue. If Washington spoke with one voice on this,, the people might get it. Being anti-Washington doesn't mean being against the road you ride to work.

 

[cirdan]

Amazon will cut out UPS when the relative cost of using them exceeds their value as a whipping boy when things go wrong. As things stand right now, the Christmas fiasco was the fault of UPS, not Amazon. As soon as they drop the middleman, they own anything that goes wrong in transit.

Amazon is a trading company, not a shipping company. There's more to becoming a shipping company than buying a fleet of trucks and hiring the drivers. If it was that easy, UPS, Fedex and co would have gone out of business years ago with startups undermining their prices. UPS for example is worth much more than just its bank accounts and value of inventory. An organisation like that has worth precisely because you can't emulate it very easily.

 

[cirdan]

The primary spokesmen for business in politics fail to point out that capital stock, by its nature, wears out and in business is expensed over the lifetime of the capital. Which, however, they don't seem to agree should happen with transportation infrastructure. You hear so much about making government "businesslike". But with infrastructure getting ancient, no ideologue is on this issue. If Washington spoke with one voice on this,, the people might get it. Being anti-Washington doesn't mean being against the road you ride to work.

Many businesses sadly do have a policy of running their existing infrastructure into the ground while extracting as much money as possible, and then using that money to find new businesses they can run into the ground. So when people start saying, government should be run like a business, we should start asking "what kind of business".

 

[Green Maned Lion]

Government should be run the way a business should be. I can make money today in huge quantity, that's no trick. Just screw everybody half blind and then poke the other eye out. Running a business well for the long haul is the trick. And your right, reinvestment is critical. I make a good profit out of my business- I could live pretty well if I were stupid. But almost all of that profit is reinvested in the business, expanding inventory, breadth of line, market penetration, and so on. Ill cash out when I sell it to one of those idiots who will run it into the ground.

 

[RRUserious]

The primary spokesmen for business in politics fail to point out that capital stock, by its nature, wears out and in business is expensed over the lifetime of the capital. Which, however, they don't seem to agree should happen with transportation infrastructure. You hear so much about making government "businesslike". But with infrastructure getting ancient, no ideologue is on this issue. If Washington spoke with one voice on this,, the people might get it. Being anti-Washington doesn't mean being against the road you ride to work.

Many businesses sadly do have a policy of running their existing infrastructure into the ground while extracting as much money as possible, and then using that money to find new businesses they can run into the ground. So when people start saying, government should be run like a business, we should start asking "what kind of business".

What can I say in response but "indeed!" Could be the type of business is exactly what owns most office holders lately.

 

[beautifulplanet]

Sorry in case this is off-topic:

Does Amtrak pay gas tax on the Diesel used in its equipment?

It seems like US commercial aviation just pays a reduced rate in gas tax. What about Amtrak?

On the following web page, it seems to be indicated that there are no exceptions, then again, it says aviation is excempt:

"Is anyone exempt from the fuel tax?

The IRS defines taxable events for motor fuel, which are specific to the types of fuel. For the majority of motor fuel used in the United States (gasoline and diesel) the only exemptions would be for licensed exporters who are delivering product out of the US, and for dyed diesel and dyed kerosene out of terminals approved by the IRS for such activity."

see here: http://www.fhwa.dot.gov/motorfuel/faqs.htm#q5

"Is jet fuel and aviation gas subject to the fuel tax?

Jet fuel and aviation gas are similar to kerosene and gasoline. These fuels are not only subject to any applicable taxes when used in aircraft, but would also be subject to the fuel taxes when use in vehicles operating on the highway. The amount of tax would be based on the use, not the type of fuel that is used."

http://www.fhwa.dot.gov/motorfuel/faqs.htm#q12

Anyone happen to know what the exact situation is like in the United States?

It is known for some other countries that the railroad companies have to pay the complete fuel tax there (but aviation doesn't)...

 

[PRR 60]

Amtrak is exempt from fuel taxes. Aviation fuel purchased by airlines is subject to a 4.3 cent per gallon federal tax.

 

[jis]

Amtrak is exempt from fuel taxes. Aviation fuel purchased by airlines is subject to a 4.3 cent per gallon federal tax.

Does the aviation fuel tax go into a trust fund of some sort or does it go into general funds?

 

[Ryan]

They are today, yes.

I recall reading Alan say at some point that Amtrak (or their predecessor) having to pay fuel tax in the past - fuel tax that the railroad got no benefit from (in essence they were subsidizing their competition).

Anyone have any details on that?

 

[AlanB]

They are today, yes.

I recall reading Alan say at some point that Amtrak (or their predecessor) having to pay fuel tax in the past - fuel tax that the railroad got no benefit from (in essence they were subsidizing their competition).

Anyone have any details on that?

To my knowledge Amtrak never had to pay the tax. But all freight & prior pax RR's paid a 4.4 cents fuel tax on diesel fuel for many years. Of that, 4.3 cents per gallon went into the Highway Trust Fund up until the Taxpayer Relief Act of 1997 redirected it into the General Fund. There was a move afoot by the RR's to get that tax dropped a few years ago, or at least put into a fund that paid for RR improvements. I'm not sure if they actually got the tax repealed or not; but I do know that it didn't go into a RR trust fund as to my knowledge, none exists.

 

[jis]

It is very educational to see the taxes that are paid for air transport and taxes that are added on to an airline ticket:

http://www.airlines.org/Pages/Government-Imposed-Taxes-on-Air-Transportation.aspx

 

[PRR 60]

Amtrak is exempt from fuel taxes. Aviation fuel purchased by airlines is subject to a 4.3 cent per gallon federal tax.

Does the aviation fuel tax go into a trust fund of some sort or does it go into general funds?

The aviation fuel tax goes into the Airport and Airway Trust Fund. The AATF is also funded from ticket taxes and fees.

There is also an additional 1/10 cent per gallon aviation fuel tax that goes to the Leaking Underground Storage Tank fund (with the provocative acronym of LUST).

 

[PRR 60]

They are today, yes.

I recall reading Alan say at some point that Amtrak (or their predecessor) having to pay fuel tax in the past - fuel tax that the railroad got no benefit from (in essence they were subsidizing their competition).

Anyone have any details on that?

To my knowledge Amtrak never had to pay the tax. But all freight & prior pax RR's paid a 4.4 cents fuel tax on diesel fuel for many years. Of that, 4.3 cents per gallon went into the Highway Trust Fund up until the Taxpayer Relief Act of 1997 redirected it into the General Fund. There was a move afoot by the RR's to get that tax dropped a few years ago, or at least put into a fund that paid for RR improvements. I'm not sure if they actually got the tax repealed or not; but I do know that it didn't go into a RR trust fund as to my knowledge, none exists.

The 4.3 cent per gallon federal tax on fuel used by railroads and inland waterway transportation was phased out under the provisions of the American Jobs Creation Act of 2004.

 

[Anderson]

Amtrak is exempt from fuel taxes. Aviation fuel purchased by airlines is subject to a 4.3 cent per gallon federal tax.

Does the aviation fuel tax go into a trust fund of some sort or does it go into general funds?

The aviation fuel tax goes into the Airport and Airway Trust Fund. The AATF is also funded from ticket taxes and fees.

There is also an additional 1/10 cent per gallon aviation fuel tax that goes to the Leaking Underground Storage Tank fund (with the provocative acronym of LUST).

I wonder...if that were redirected to mass transit, could LUST fund the ****?