Why the federal gas tax isn’t covering our needs

A few short decades ago the United States built the Interstate Highway System, one of the greatest public works of all time. It’s a good thing we built it when we did, because we couldn’t afford it today. We can’t afford to build much new transportation infrastructure at all these days, whether road or transit.

Why? It’s not as if we’re a less wealthy nation now. On the contrary, we’re wealthier. The problem is that the gas tax, the primary source of revenue for federal transportation capital investment, has been shrinking every year.

The gas tax isn’t indexed to inflation. It was 18.4 cents per gallon years ago when gasoline was less than a dollar per gallon overall, and it remains 18.4 cents per gallon today. Since revenue generated from the gas tax stays the same while the rest of the economy grows, that means the gas tax revenue doesn’t have the buying power that it used to.

In fact, when you take inflation into account American drivers are only paying half as much in federal gas taxes as they were in 1975.

That’s a double whammy, because not only do we have half the budget we used to, but instead of spending it all on new infrastructure we have to split it on maintenance for all the new roads we’ve built during that time.