Monday, April 23, 2007

"I'm not hiding anything" guy hides costs of gas tax 

Remember Senator Steve Murphy?
The proposed 10-cent-a-gallon gasoline-tax increase moving through the Minnesota Legislature could end up being higher than that, maybe more than twice as high.

Tucked away in a big transportation funding bill being fast-tracked to a Senate floor vote today are future increases in Minnesota's gas tax that could push it from 20 cents a gallon to more than 40 cents over 10 years, higher than any state's current bite at the pump.

"I'm not trying to fool anybody," said Sen. Steve Murphy, DFL-Red Wing, sponsor of the measure that would increase funding for roads and transit by $1.5 billion a year once it was fully implemented in the next decade. "There's a lot of taxes in this bill."

He seems to be doing a little more fooling these days, for example the article appearing in this morning's St. Cloud Times, arguing that it's fairer to pay for roads by raising gas taxes rather than by bonding as Governor Pawlenty proposes. First, let's remember what else Senator Murphy wishes to tax to pay for his roads, as written in the StarTribune piece I first linked:

� Higher registration renewal fees on future new car purchases, but no increases on currently owned vehicles.

� A half-cent rise in the general sales tax in the seven-county Twin Cities area, imposed without a voter referendum, plus a $20 excise tax on new vehicle sales in the metro.

� Local-option authority for half-cent sales-tax increases in the rest of Minnesota, subject to voter approval.

� Authority for all 87 counties in the state to impose a $20-per-vehicle annual wheelage tax. Three suburban counties levied the current maximum of $5 per vehicle last year.

The DFL has made a huge amount of noise over tax fairness, and what are they proposing to do. Referring back to the liberal's new Bible -- also known as the Tax Incidence Report -- we find the estimate that 44% of the gas tax is paid for by Minnesota businesses. This either raises prices on consumers, lowers the number of workers they can employ, or dries up business profits so that firms may move out of the state.

Second, the Suits index the report uses -- which is a measure of the progressivity of the tax system -- is -0.253. A negative reading on the Suits index means the tax is regressive. So Senator Kelley's preferred method for paying for roads is to tax the poor more. (The only tax more regressive than a tax on gas is a tax on cigarettes ... whoops!) A $20 wheelage tax is akin to the old poll or head tax -- $20 a car regardless of your income. The .5% sales tax is regressive as well. For a party that screams about making people pay their fair share, this should be criminal.

Last, the tax is neither a guarantee that the state won't borrow money later, and it's a shift of the costs of roads from the next generation to this one. If the roads are really "needed" -- and try defining need for me, Sen. Murphy, with something other than the statement of the people whose jobs depend on getting money to fulfill the "need" -- then our future income would be higher with the roads. Wouldn't it then make more sense for the people who will have higher income to pay off the bonds later rather than reduce the consumption and employment of the people who would pay for the roads now?

I'm not hiding anything -- there's little economic logic in the gas tax, particularly from those who use "the poor" as a shield for spending other people's money.

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