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January 20, 2018
California drivers experienced sticker shock at the gas pump on Nov. 1. The state’s gasoline tax rose by 12 cents per gallon that day, bringing the total to 39.8 cents. Along with the federal gas tax of 18.4 cents, Californians now pay 58.2 cents in excise taxes per gallon. Like all other states with sales taxes, California “taxes the tax” by applying the combined local and state sales tax, which ranges from 7.25 to 9.75 percent, on top of the gasoline tax.
The average price of regular unleaded gas is now $3.02 per gallon, meaning that federal and state taxes represent about 20 percent of the retail price. That’s considerably more than gas-station owners’ 2-cents-per-gallon gross profit.
It only gets worse: on July 1, 2019, the state tax will go up another 7.5 cents, bringing the combined state and federal excise tax to 65.7 cents per gallon.
The Justification
What do Californians get in return? From the beginning in 1923, the stated purpose of the gasoline tax was to build and maintain roads. The revenue, along with a “transportation improvement fee” and taxes on diesel fuel, is earmarked for California’s Road Maintenance and Rehabilitation Program, which is equivalent to the highway trust funds of other states and the federal government.
For this reason, the tax on gasoline is called a user fee. It is justified as a way of forcing drivers to pay for the wear and tear they impose on public roads. The more miles people drive, the more gasoline they burn, and the more tax revenue flows into the fund.
But the user-fee justification breaks down for drivers of electric vehicles, who do not pay gas taxes at all, and for the owners of hybrid and other highly fuel-efficient cars and trucks. The decline in gas-tax revenue caused by the shift away from internal-combustion engines is stressing the highway trust funds in many states. So, as of 2017, 17 states charge special fees for electric-car owners to compensate for the lost revenue.
The Side-Step
In reality, motor-fuel taxes have been looking less and less like user fees in California and elsewhere because state legislatures (and the U.S. Congress) periodically raid highway trust funds to pay for unrelated programs. A decade ago, Gov. Arnold Schwarzenegger wanted to use $1.1 billion in Public Transportation Account (money to offset huge shortfalls in general-fund revenue caused by excessive government spending).
The legislature responded by creating the Mass Transportation Fund, allowing $637 million to be moved out of the PTA. From 2007 to 2010, $1.3 billion in transportation funds was spent not to build or repair state roads but to finance other programs that were apparently more politically rewarding (i.e., generated more votes) than fixing bridges and filling potholes.
To forestall such budgetary shenanigans in the future, Californians will vote in June on a state constitutional amendment to prohibit lawmakers from diverting transportation money to other purposes.
No matter how the revenue is spent, though, the burden of the gas tax falls disproportionately on low-income Californians because they spend a larger percentage of their incomes than wealthier people on gas. California’s fee for zero-emissions vehicles, which is paid by upper-income people who can afford to buy Teslas, is a paltry $100.
Although truthfulness is not something we expect from politicians, Sacramento ought to admit that the recent state gas-tax increase is just a convenient and nontransparent way of raising more revenue to feed a chronic overspending habit.
— California’s Soaring Gas Taxes Aren’t Even Going to the Roads originally appeared at Independent Institute and FEE.org.
Rod is one of our nation’s leading minds. He’s smart, original, and very committed—a combination that one rarely finds.
Rod Martin and [former Howard Dean campaign manager] Joe Trippi are America’s two foremost experts on online politics.
Rod Martin is a Reaganite-Thatcherite conservative…[and] a man who has spent much of his life ministering to and working for the benefit of others. I know Rod as an advocate for freedom, a leader who understands the real changes we need in Washington, and who has the drive and ability to make those changes happen.
Rod Martin is the kind of dynamic leader who has the knowledge, ability and experience to lead us successfully into the 21st Century. His vision for America is compelling.
Rod Martin literally wrote the book on excellence. Humble yet brilliant, a man of love and compassion, with penetrating clarity he illuminates the world around us, and we are both stirred and enlightened.
Rod Martin is a born leader and an outstanding political mind. Anyone who takes him on is going to have a serious fight on their hands.
Rod Martin is a man of uncommon vision and character. Ever since I first worked alongside Rod in the early days of PayPal, I’ve been struck by his powerful vision for the future. Rod understands the intersection of technology, politics and culture in a way that few others do.
Rod Martin wears with uncommon grace an uncanny ability to link his vigorous faith to the practical challenges of both the business world and the political arena. Yet the respect he shows for others carries a warmth and modesty that are both too rare among those who are strong advocates of feisty positions.
America badly needs more leaders who really get the future. We need more Rod Martins.
Rod Martin is a modern day philosopher-statesman. He is a capitalist intellectual, a conservative iconoclast, a gentle adversary and a kind prophet. He inspires us towards a fresh national vision built upon the original founding principles.
Rod Martin is not only effective and efficient, but he is also perceptive, wise and gracious. He gets things done. He is a great friend and a great ally.
Rod is one of the sharpest, most gracious men I know, and one of the most gifted political thinkers today. His ability to analyze issues and communicate thoughtful insights on them have earned him the respect of people across the political spectrum.
I am proud to have been Rod Martin’s friend for a quarter century, and I can tell you that he is one of the finest men and most outstanding leaders in our church and in our country today. He has a knack for turning everything he touches to success.
Rod Martin is a cornucopian entrepreneur and eutropic thinker whose influence radiates through an array of companies, institutions, movements and churches. A renaissance American, he is also a prolific friend of freedom and faith around the globe.
If Rod Martin represents the next generation of leaders, America has nothing to worry about.
A leader and a servant, in public life and in private, Rod Martin strides at the top of his profession, and has nowhere to go but up. He is in the truest sense of the word ‘outstanding’.
Rod Martin is undoubtedly one of the most accomplished thought leaders today. He is a wonderful mentor, a humble role model, and a deep inspiration for the next generation of scientific innovators and entrepreneurs.
Rod’s achievements pale beside his character and his brilliance. He sees what others can’t. He leads when others won’t.
Rod Martin is one of America’s finest young minds.
