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Monday, August 17, 2015

Highway Trust Fund and Tax Reform

Deficits in the Highway Trust Fund have been "patched" since 2008, mostly with transfers from the General Fund. A recent patch was in PL 114-41 (7/31/15) to cover three months. I remain puzzled why elected officials at least don't adjust the gasoline excise taxes for inflation (the gasoline excise tax most of us pay has been 18.3 or 18.4 cents per gallon since 1993 (see history table from the Tax Foundation). The adjustment could even be transitioned in over a few years to ease the change (the rate today would be 30.2 cents per gallon). I believe the public knows that the costs of maintaining and building roads and assisting public transit go up annually for the costs of inflation, and realize that the key funding source should also be adjusted for inflation.  Oh well.  Note - on 8/6/15, Senator Carper (D-DE) introduced legislation to increase the gasoline excise taxes.

A new proposal from the Senate Finance Committee Tax Reform Working Group on Infrastructure was released in July. It calls for "deemed repatriation" to help the Highway Trust Fund for six years to also give us time for a long-term solution that likely would be a miles traveled tax.  They want to keep some type of match between road usage and paying for them and realize that the gasoline excise tax is deficient in a few ways. Most notably, as we have more cars on the road that don't even use gasoline, there is a disconnect between usage and contributing to maintaining the roads for such usage.

I have a short article in the AICPA Tax Insider (8/13/15) on the working group proposal. The article also has some additional background on the HTF and its problems.

What do you think?

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