Framing the Dialogue

Taxing Economics

gas taxI should go back sometime over my previous posts to see how many times I’ve mentioned the fact that far too many Americans lack a basic understanding of economics.  You would think by now and knowing this fact that I would somehow be immune to the stupidity and let it go.  It seems that I cannot.

Pennsylvania’s Republican governor, senate and house passed a sweeping transportation bill in 2013.  The first salvo in the P.R. war was what many believe to be a coordinated press conference announcing the NEED for more funding to “fix our bridges and roads.”  They also like to use the phrase “crumbling infrastructure” in those press releases.  So parallel to the announcement the state transportation agency added weight restrictions to hundreds of bridges across the state.  It would seem to most observers that it was unlikely that all of these bridges didn’t all of a sudden, THAT DAY, be deemed deficient.  I don’t doubt the lower weight ratings, but I do question why the state waited to do it on one day.  Did that political stunt put people at risk?

Additional money is needed to take care of existing roads and bridges and most folks agree with that and are willing to pay for it.  The discomfort is knowing that the money will not be used always wisely.  We continually build new stuff when we know that we cannot take care of the old stuff.  It seems like a vicious cycle.  Certainly new stuff is sexier than the old stuff, but people rely on the old stuff.

Back to the economics!  Pennsylvania politicians found a unique way to raise money for transportation funding without hurting taxpayers.  These guys are just freakin brilliant!! (see I gave them two exclamation points)

I am going to finish this post with a series of quotes pulled from an article from my local, conservative newspaper.  You may read the entire article at this link.

“To fund road and bridge fixes across the state, lawmakers agreed in November to pass a $2.3 billion transportation bill that gradually eliminates the cap on the wholesale gasoline taxes.”

“The state Department of Revenue said the bill raised the tax on wholesale gasoline by 9.5 cents per gallon as of Jan. 1 and will go up again next year.”

 “State officials, including PennDOT Secretary Barry Schoch, in stumping for the law, said the tax wouldn’t necessarily be passed on to customers at the pump because the tax was imposed at the wholesale level.”

The key, sleazy word here is “necessarily” and Mr. Schoch had to know that the prices would be passed along to the consumer.  Sure distributers could have taken a 10 cents a gallon hit to their profits or they could just pass it along like any other industry would for a hike in their materials costs.

“My point is it is very difficult in this pricing climate to say how much of the tax change is showing up at every location. Some supermarket and convenience chains offer gas discounts in return for shopping at their stores. Individual companies make decisions about how to price gas. We [politicians] don’t control those decisions and have no say in them,”

Again very sleazy.  The tax on wholesale gas went up 10 cents and the price at the pump went up 10 cents.  Why not just be honest?

“It’s hard to say but I would say it’s likely (the increase) is due to the tax because when you looked at neighboring states that’s not the case,” Podguski said. “As the year goes by the tax may be less noticeable because we expect prices to decrease overall as refineries increase capacity.”

I’ll translate “we’ll get used to the prices.”  The argument about lower prices as refineries increase capacity will still put Pennyslvanians paying 10 cents a gallon more as the taxes won’t ever decrease.

“The price of gas jumped about nine cents per gallon in the first week of 2014, prompting several analysts to conclude that the state’s newly increased wholesale gas tax trickled down to consumers.”

 To be fair to the newspaper this last quote was the first from their article.  Far too often politicians are willing to just raise taxes.  The feds and most state governments have prevailing wage laws that require publicly funded projects over a certain amount pay higher, “prevailing wages” which studies show increase the cost of these projects by at least 25 percent.  These prevailing wages do not by any means a 25 percent improvement in the project.  Any non-union contractor simply raises their employee’s wages for that project.  We don’t get more…we just pay more.

I would have preferred a smaller tax hike that went along with taking steps to reduce costs.



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