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California is in Desperate Need of a Gas Tax
by Paul Wittenberg
If you haven’t heard, California has an estimated $42B budget deficit. Through the end of 2008, proposals have been made by the Governor, Democrats and Republicans to close this deficit. Without swift action, California will be borrowing significant amounts of money at high interest rates to bridge this gap.
Both the Democrat’s and Governor’s proposals suggest raising the following taxes:
Sales Tax increase by 1.5% (Governor’s proposal)
Sales Tax increase by .75% (Democratic proposal)
New Taxes on some services (Governor’s proposal)
Taking money set aside for propositions 63 and 10 (Governor’s Proposal)
A gas tax increase of $.13/gallon (Democratic proposal)
Increase in your state income tax by 2.5% (Democratic proposal)
Oil Severance tax (Democratic proposal)
The Republicans propose that the entire $42B deficit by handled completely with cuts to the budget.
While I believe that the Democrats went about it the wrong way by calling all of their tax increases a fee, and hence not requiring a 2/3s majority vote, I do give them credit for being creative where it appears creativity will be required for California to get itself out of its budget problems. Their plan called for an increase in the gas tax by $.13. This is not enough if the state is just going to close the remainder of the deficit with increases in the Sales tax and personal income tax.
This brief summary brings you up to speed regarding what has happened through the end of 2008 with respect to closing California’s $40 billion dollar gap.
While I am not a proponent of new taxes, if you make the base assumption that there will need to be a combination of revenues enhancements and budget cuts to close the budget gap, as most rational people would, then you will understand. The federal tax on gas of $.184/gal has not been increased since 1993. This is an equivalent to $.11/gal in today’s dollars. But before I continue with my proposal, I’d like to tell you about who I am.
To make it simple, I am no more than a citizen of California. I am not part of a 5013c, or some alliance for some taxpayer group that has a name that really doesn’t represent what they are really up to. I am literally just a person that though that he had a reasonable idea. I am a high tech executive, management consultant and X-CEO of a technology startup.
Proposal
Both new revenues and budget cuts need to be done smartly, each being well thought through in order to keep California moving forward financially, and at the same time stimulating the states economy. While I will leave it to the law makers to determine where to make cuts, I do have a proposal on where to generate new revenues. If you agree with me that compromises will need to be made, and that some level of tax increases will become law in order to balance the budget, then the question really becomes “What taxes should be raised?”.
My proposal, in brief, is to raise the tax that we pay on each gallon of gas, and avoid raising taxes that don’t benefit California’s long term strategic objectives. The driving force behind this was the original proposal to triple the Vehicle License Fee (VLF), which is an average of $135 per car per year. This is a rough number. While the VLF is no longer part of the budget proposal, a Sales Tax increase is. Either way, if the intent is to get $135 out of the pocket of everyone who owns a car or shops in California, then I think that there is a smarter way to generate this revenue that does not add to the cost of a car or other products and services that we purchase each day. If this exact same $135 is generated from the purchase of gas at the pump, and not from an increased VLF and/or sales taxes, it is still the same $135 out of our wallet/purse. You could immediately jump up and say ‘NO’ to a $.20 increase in taxes on a gallon of gas, but in the end, you are going to pay the exact same $135 per year you would pay under current proposals. But the increase in the gas tax has a number of benefits over an increase in the Sales Tax or VLF, or over almost any other type of tax increase. These benefits are something that we can all get behind. Let me explain a few of these.
By increasing the tax on a gallon of gas, you begin to drive the type of behavior that you want in consumers. Drivers will have an incentive to drive less, and when they are driving, they will have an incentive to drive in a more efficient manner, which can mean sharing a ride, buying a more efficient vehicle, or even not driving all together, but rather taking public transportation. Those that have purchased cars with poor gas mileage ratings will be the ones that are paying a greater portion of your $135 each year. Those who own more efficient vehicles will pay less. As a side benefit, the gas tax works much like a carbon emission tax for those that are burning disproportionate amount of gas. So it turns out that the gas tax is good for environment.
The money raise in a gas tax could be put back into highway and public transportation infrastructure projects, creating thousands of jobs in the state. These projects can include the types of public transportation projects that are required to really allow people to get out of their cars and find there way to their destination via alternative means.
This tax increase also creates a somewhat artificial inflation on the price of gas, but instead of the money from this increase going to the Middle East, we are able to keep these dollars here in the state of California. With a small increase, we can funnel billions of dollars back into the California economy, including the development of electric vehicles. By developing the electric car and associated infrastructure, we improve the California economy and further reduce our dependence on foreign oil.
I would make this same proposal even if we didn’t have a current budget deficit and would suggest reducing our current taxes in order to shift a greater burden to gas. This type of proposal has been support by several people, including Thomas Friedman in a recent NY Time Op-ed.
The United State has the lowest tax on gas of almost all industrialized nations. Within the US, California has the highest gas tax with $.184/gal in federal taxes and $.445 in state taxes for a total of about 63 cents/gal. While this may seem to be excessive, consider Europe where the equivalent tax on gas can average $3.50/gal. The US has the lowest tax rate of all G7 countries, including Canada, and by a significant amount. It is time that we start taking control of our states economy, our long term security, the environment and our future transportation needs. Now is the right time.
Paul Wittenberg is a resident of California. He can be reached at: emusic@pacbell.net.
Comments
Mr. Wittenberg has a good article here and some ideas worthy of merit and futher discussion. I'm glad this one was available to see here.
I do have a little issue with the size of any gas tax increase in general. During the recent gas price surge, many folks took driving as an essential and less of a luxury. The latter includes movies, dinner out, shopping at more remot locations, less vacations (motel rooms, park entrance fees, etc). These industies will suffer, go out of business, be less of a tax revenue source, more of an unemployment burden. Just a less strong economy has hurt these industries. Another simultaneous blow via a too large gas tax hike may cause more to go over the edge.
(Europe is never a good comparison. Their national expenses on defense, health care, etc. plus population dynamics) are nothing like ours.
Posted by: Jay Gould at January 5, 2009 09:52 PM
When the investors and OPEC quit playing fast and lose with the price of a gallon of gas, I would support this proposal. However, when a gallon of gas can go from five dollars a gallon to less than two dollars a gallon in a matter of months, the risk is too great!
Posted by: JL Jordan at January 6, 2009 08:11 AM
When the investors and OPEC quit playing fast and lose with the price of a gallon of gas, I would support this proposal. However, when a gallon of gas can go from five dollars a gallon to less than two dollars a gallon in a matter of months, the risk is too great!
Posted by: JL Jordan at January 6, 2009 08:13 AM
Dear Mr. Paul Wittenberg it seems to me that you may have Ben paid to place this post saying that we need a new gas tax or even a tax increase!
I say why you don’t find out whir all the taxes went!!!
Because there should be a surplus of gas taxes!!
Because of the resent hire than usual Gas prices!
Don’t insult me by telling me that we eliminated the taxes when they went up!!!
They f#^% it up! Take it out of their paychecks Not Mine!
And don’t even suggest taking funds out of are schools!!!!
Just because you can afford to send your kids to privet school dues not mean everyone can!!!!
Posted by: Daniel Morris at January 6, 2009 04:31 PM
Ps I say that if there is anyone out there that can afford it! Sue the state and make them provide a complete audit of exactly where all the money went right down to the bonuses and payrolls of everyone involved with the handling of gas taxes!! And ill bet you will find that most of it was sifted off to a few bank accounts in the hire echelons of management!
Posted by: daniel morris at January 6, 2009 04:53 PM
Nice try but you told everyone who you were when you said it would have the same effect as a carbon tax. That tells me you believe man made co2 causes global warming climate change. The only people who still believe this bs are the associates of the far left point of view or they are just stupid lemmings and have not looked at the science and the hundreds of scientist that have disavowed the UN quasi-science and the proponents that the whole hoax rests on. Either way it makes your proposal just more liberal taxes. A simple review of the history of our liberal legislative representatives tells the story on what they really spend our tax money on. NO MORE TAX HIKES.
CUT SPENDING. Suggestion: Stop using tax money on people who break our laws and are here illegally. Deport them like all the other countries do.
Posted by: freddy at February 12, 2009 02:06 PM
I OPPOSE THE GAS TAX: From what I've learned from a couple of sources, (while radio ads are hounding us to buy cars), taxpayers are subsidizing government cars from city to state levels. We pay for their cars, their gas, the maintenance and the various nuisance fees that go along with it.
----That's why our government couldn't have cared less about the SHEEPLE taxpayers getting royally gouged when the gas approached $5.00 a gallon.
In the meantime, our corrupt government runs amock and doesn't care about this common-sense list that I've sent numerous times: LIST
*ILLEGAL ALIENS
Not considering the massive costs they incurr through FREE: Births, WIC, etc benefits, schooling (including their COMIDAS GRATIS-breakfasts/lunches), the DREAM Act (Gil Cedillo constantly advocating this and then demanding we also give them either free school books or greatly watered down prices as well as cheaper in-state college rates) and he relentlessly pushes for drivers' licenses for illegals.
* SCHOOLS (always whining for more money-when they refuse to fix the obvious).
1. Evict ALL illegal aliens.
2. No FREE COMIDAS GRATIS
3. No DREAM Act (why should illegal aliens get the cheaper in-state rates) while legal citizens moving to another state get sacked with the higher out-of-state rates?
4. Evict all chapters like MEChA/La Raza, etc that advocate AZTLAN/ANAHUAC.
5. Terminate charter schools like Academia Semillos de los Pueblos {Marcos Aguilar} who also hate the stupid white race and advocate AZTLAN/ANAHUAC.
*OCTO-MOM {NADYA SULEMAN}
1. Do NOT give her a penny in public monies (she was already on the public dole with at least 3 of her children)
2. Make the participating hospitals/doctors eat the costs of their Irresponsible in-vitro fertilzation and medical care/births and offspring care after birth.
*CHURCHES/NON PROFITS/FOUNDATIONS:
End the tax-exempt status of ALL participating churches, non-profits/foundations who advocate for the ILLEGAL ALIEN CAUSE.
*BUSINESS/CHAMBERS OF COMMERCE/OIL COMPANIES WHO ADVOCATE IRRESPONSIBLE RUN-AMOCK CORPORATE BEHAVIOR:
1. End ALL tax breaks for ALL corporations and other above-mentioned bodies who either advocate or actually: Offshore, outsource, use all manner of visa holders and illegal aliens.
2. Make oil companies pay "Extraction fees" --without passing it onto the consumers.
2b. Oil costs are rising again (supposedly because there is "maintenance"going on)....Are we getting deliberately screwed again????
3. Tarriff ALL foreign goods.
4. Bring manufacturing back to California.
5. Use E-VERIFY
*REMITTENCE MONEY
HEAVILY tax ALL participating: Banks, businesses and wiring services as well as the money itself.
*ENVIRONMENT:
It's expensive to Chem Trail almost every day in this state (despite all the yammer about the environment). Why do you permit it?
While we keep hearing about the "environment" and carbon taxes, etc, why is Chem Trailing ignored?
I myself have MCS (multiple chemical sensitivity), so I am extremely environmentally minded, but I've also learned about HAARP (High Frequency Active Auroral Research Program)-weather manipulation, weather wars & Chem Trails and it's ludicrous to me that I hear NOTHING from the "environmentalists" about: HAARP, Chem Trailing or MCS. (for that matter), they also don't breathe a word about Depleted Uranium & White Phosphorous or those ill with Agent Orange, Gulf War Syndrome or 9/11 rescuers (including their animals) or the workers and/or residents downwind of 9/11.
CONCLUSION: The corruption is massive in this state (in BOTH parties! It is only common sense to address ALL these issues before you even begin to think about taxing us more..... Great, Obama might give us a "tax break" at the Federal Level while the individual states will soak up those "tax breaks" at the state level...How wonderful of you.
Posted by: Roxan at February 16, 2009 08:39 PM
I support the message here. I don't have narrow vision. People are pointing out really narrow-minded comments about "Octamom" & illegal aliens issues, etc. When an opinion is written, have the courtesy of addressing the article in an objective or encouraging, open-minded way. That said, allow me to offer my 2 cents.
I have a Masters degree in Public Administration from Cal State Bakersfield. I watched, like everyone else did, the collapse, and band-aid supply to many businesses and industries that needed the all-important TARP money. I'm not a proponent of this. BUT, that said, no one can tell me they don't know 1, or 2, or 5 people currently out of work. I was laid off last year for five months. It sucked! I just started working for the state of California at the Employment Development Department as a EPR (Employment Program Rep.). I am a determinations rep for those seeking unemployment benefits (i.e., making sure people don't get money because they were fired instead of laid off or another compelling reason). Trust me, making sure everyone has a little money in their pocket is key to the success of this state. This leads me to my point...
Why do people feel the need to strike down every tax increase as if it were going to kill you? Taxes are very helpful. Tell me, how are those laid off friends of yours doing? I just sent them a tax-provided relief check last week. Think they felt a little better? Tell me, how's that street you always are complaining about? Tough, you don't want to pay taxes to fix that cruddy pothole. Tell me, how did your kids do in school - pretty well? Great, your taxes provided them a good teacher, who won't get raises because of you! Tell me, how's grandma doing? She'd be doing better I bet if you provided a little more tax dollars to help her get the operation she's in desperate need of through Medicaid / Medicare. Tell me, while the state is going through layoffs that YOU gladly provided by voting against some recent minor tax increase, don't you feel better it was 10,000 people who got laid off, or the other 2/3's of the state currently going through furloughs (this affects me and 10's of 1000's of others - you know, it's where we work every day, but don't get paid every other Friday for working that day). OOOOHHHH, I should just be glad I have a job. Yeah, that's right, feeding a family of 4 on $1900 a month living in the Bay area after the 2 furlough days, my retirement I pay into, and the $200 in health insurance I pay...yeah, that was because you don't want an $.18 or $.25 tax hike per gallon. Sorry, I forgot, rather than helping others by helping get everyone out of this stinky situation, you'd rather bitch about the $4-$5 you'd be losing at the pump once every ten days. Enjoy that $5 coffee every other day, though. Tell me how you justify voting against something that would affect you in a better way long term.
BOTTOM LINE
We need taxes. I, for one, would be willing to accept a $1.00 per gallon increase for one year, down to $.50 a gallon the second year, back down to $.18 the final year, and staying put. Think about it...It still won't get to $4.50 like last year, it comes down each year, and by the final year, we'll most likely, even by weak estimates, be better economically. People, it's not easy to swallow...but this recession is something you will never see again in your life! We need to make immediate changes now for the better of you, your friends out of work, your kids in school, and grandma! Like I said, I went to school and studied this stuff. Cutting programs might help a little, but overall, we have too big a state with a 17%-18% unemployment rate (yes, the state tells you 11% - but this is only those that are currently receiving benefits, not those no longer receiving them, fired, or illegals, etc.). Big picture, not small thinking...like me, me, me - it'll hurt me. New tax dollars create new jobs. Fewer people to pay taxes because they are unemployed means less tax dollars. THINK!!!
Posted by: Brian Mumm at May 24, 2009 09:57 AM
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