By Todd Lassa
More than the gulf between President Biden’s $2.3-trillion American Jobs Plan price tag and Senate Minority Leader Mitch McConnell’s apparent $800-billion “final offer” on infrastructure, the most significant sticking point between the two parties is the question of how to pay for it.
Under the Trump administration, Congressional Republicans got their dream bill, a corporate tax cut from the already low 28% set in the Bush 43 administration to 21%, lowest in the industrialized world, along with personal income tax cuts that weighed heavily in favor of the wealthiest Americans. Tax hikes have been so much a no-no among Republicans since at least the Reagan administration that even Biden’s argument that corporate taxes will be no higher than President George W. Bush’s rate falls on deaf GOP ears.
Republicans and many Democrats, especially from oil-producing states, have long been opposed to hiking another kind of tax; the federal tariff placed on each gallon of gasoline or diesel pumped in the United States. Politicians have been so stubborn in raising the federal gas and diesel taxes that they have remained unchanged, not adjusted for inflation, since October 1, 1993. Gasoline is currently taxed at 18.4-cents per gallon, and diesel fuel at 24.4-cents per gallon. State taxes are added to those numbers; add 8.95-cents per gallon for gas and diesel in Alaska to 53.3-cents per gallon for gas and 74.1-cents per gallon for diesel in Pennsylvania.
Last month, a bipartisan group of 58 members of Congress called the Problem Solvers (half of them Republicans and half of them Democrats) proposed increasing the rate for motor vehicle fuel taxes to pay for expanded infrastructure spending. Specifically, their call is for improvements to roads, bridges, mass transportation, and broadband Internet.
The Problem Solvers call their proposal “Rebuilding America’s Future,” and it’s not as notable for the Biden administration’s dismissal as it is remarkable for being proposed by any elected official to the right of AOC and The Squad.
Rebuilding America’s Future could entail indexing gasoline and diesel taxes to inflation, highway construction costs, fuel efficiency standards, or some combination of the three. The proposal also considers taxing vehicle miles logged to collect taxes on electric vehicles to pay for roads and highways.
Transportation Secretary Pete Buttigieg reportedly had considered proposing a gas tax increase. But after the Problem Solvers’ proposal last month, White House press secretary Jen Psaki said the president “does not believe that paying for this historic investment in rebuilding our nation’s infrastructure and creating millions of jobs should be on the backs of Americans.”
What can the Biden administration offer as a counter-proposal when McConnell and his Senate Republican caucus refuses to budge on the corporate tax? A few short years ago, it would have been nearly impossible to find any Republican or moderate Democrat willing to talk seriously about a gas tax increase. Could President Biden be next to change his mind?