October 18, 2007
New Study: Gas Tax Varies Greatly Among the States, No Longer the Road-Building Fee It Once Was
For more information, contact: Nate Bailey (202) 464-5102, nate@taxfoundation.org
Washington, DC, October 16, 2007 - As the price of oil, and subsequently the price of gasoline, has continued to rise in recent years, many motorists have expressed outrage over the "pain at the pump." A new study released today by the Tax Foundation shows that drivers' ire should be aimed not only at oil and gas producers, but also at the uneven and increasingly unprincipled taxation of gas across the United States.
"Gas taxes were created as a fee to maintain and improve the nation's roads," said study author Jonathan Williams. "Like many taxes, however, the gas tax has hardly remained true to its original purpose. The federal government has continued to increase the gas tax over time, and it has shown an increasing willingness to spend those tax dollars on anything but new or better roads."
The study, No. 56 in the Tax Foundation's Background Paper series, offers a historical analysis of gas taxes in the United States. The paper finds that when gasoline tax revenue was spent on improving roads, motorists were more than willing to pay the levy to obtain greater mobility. The popularity of gas taxes was so widespread among motorists and lawmakers, one historical account stated: "Never before in the history of taxation has a major tax been so generally accepted in so short a period."
However, that has changed over time, especially since the completion of the federal highway system. Since then, portions of the federal gas tax revenues, and portions of gas tax revenues in several states, have gone to fund non-transportation related projects. Such a use, the study argues, violates the very premise of the gas tax as a user fee.
"If the current gas tax is more than is needed to adequately build and maintain roads, the tax should be immediately lowered," said Tax Foundation President Scott Hodge. "Continuing to fund pork-barrel projects on the dime of America's drivers is as un-American as it is economically unprincipled."
Referring to the 2007 Survey of U.S. Attitudes on Taxes and Wealth, Hodge added, "It makes sense that Americans now see the gas tax as one of the most unfair taxes they must pay." (See the full details of the poll online at http://www.taxfoundation.org/publications/show/22331.html.)
The federal gas tax, 18.4 cents per gallon, is combined with state taxes to calculate the total gas tax in each state. As the table below shows, states level significantly different levels of taxation on gasoline.
The 10 Highest and Lowest Gas Tax States (total tax per gallon)
| Top 10: | Bottom 10: |
| 1. California (62.8 cents) 2. Connecticut (62.3 cents) 3. New York (59.3 cents) 4. Illinois (59.0 cents) 5. Michigan (54.6 cents) 6. Washington (54.4 cents) 7. Wisconsin (51.3 cents) 8. Florida (51.0 cents) 9. Hawaii (51.0 cents) 10. Nevada (50.9 cents) | 41. Arizona (37.4 cents) 42. Mississippi (37.2 cents) 43. Kentucky (36.9 cents) 44. New Mexico (36.4 cents) 45. Missouri (36.0 cents) 46. Oklahoma (35.4 cents) 47. South Carolina (35.2 cents) 48. New Jersey (32.9 cents) 49. Wyoming (32.4 cents) 50. Alaska (26.4 cents) |
The full report, Tax Foundation Background Paper No. 56, and the full 50-state rankings, are available online at: http://www.taxfoundation.org/research/show/22669.html.
The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.
