As the old saying goes, there are only two certainties in this life: death and taxes. And while most people understand why taxes have to be collected by local, state, and federal authorities, that doesn’t mean we necessarily enjoy the process. As a new presidential administration takes control of the White House, it appears that some tax adjustments may be on the way. Most notably for the gearheads among us, President Biden’s new Transportation Secretary nominee Pete Buttigieg hinted at the possibility of a raised federal gas tax.
Before receiving a cabinet nomination from President Biden, Buttigieg served as the mayor of South Bend, Indiana, before announcing his run for presidency leading up to the 2020 election. While he didn’t receive enough support from constituents to get the Democratic Party’s nomination, Buttigieg received strong bipartisan support during his confirmation hearing in the Senate yesterday. In fact, it was during this hearing that the idea raising the gas tax came up in conversation. Thanks to the team at Automotive News, this is what you need to know.
During the confirmation hearing, Transportation Secretary nominee Pete Buttigieg noted that the government must look at any reasonable source of revenue to help fund the nation’s crumbling infrastructure. Republican Senator Mike Lee then asked Buttigieg if this could result in raising the federal gas tax. The Transportation Secretary nominee responded as such: “It’s possible — certainly many states have taken that step including my own — but it’s not the only approach.”
Following the hearing, a spokesperson for Buttigieg clarified his remarks by stating the following “A variety of options need to be on the table to ensure we can invest in our highways and create jobs, but increasing the gas tax is not among them.”
That said, the cabinet nominee would go on to later state that adjusting the gas tax could be a solution in the short to medium-term. More specifically, he noted that this could be done by bringing that gas tax back in line with current inflation figures.
The federal gas tax hasn’t been adjusted since 1993, and it remains at 18.4-cents-per-gallon. Adjusted to today’s current dollar value, that figure is actually worth just 10.2 cents after inflation. That differential is responsible for several billion dollars in lost revenue right there.
There is no denying the fact that the United States is in major need of an infrastructure overhaul. That said, we aren’t sure that raising the gas tax is the right solution. Pete Buttigieg himself noted that as more and more cars become electric, a gas tax becomes less of a viable means of income.
The truth of the matter is that there is no easy solution here, and seemingly every option will be funded by the taxpayer. You can thank the 16th Amendment for that.