About 25% of the nation’s highways, which carry about 85% of all road traffic, are paid for in part by the federal government; the remaining funding for highways comes from state and local governments. Federal spending on highways is funded primarily by taxes on gasoline and diesel fuel, but those and other taxes paid by highway users do not yield enough revenue to support either current federal spending on highways or the higher levels of spending that have been proposed by some observers. Although raising those taxes would bring in a larger amount of revenue, a more fundamental issue would remain: By themselves, fuel taxes cannot provide a strong incentive for people to avoid overusing highways-that is, to forgo trips for which the costs to themselves and others exceed the benefits. This study examines broad alternatives for federal funding of highways, focusing on fuel taxes and on taxes that could be assessed on the basis of the number of miles that vehicles travel.
Solutions:
- Close corporate loopholes in the sales tax
- Close corporate loopholes in the property tax appraisal system
- Create a state public bank to finance infrastructure and transportation
- Replace the franchise tax with a simpler corporate income tax
- Repeal the sales tax holiday
- Reform the rainy day fund
Texas Tribune – At TxDOT, Concerns About Revolving Door Provision
Congressional Budget Office – Alternative Approaches to Funding Highways
Des Moines Register – Taxes, tolls, fees: Alternative ways to pay for roads
Wall Street Journal – In Texas, Toll Roads Proliferate – and a Backlash Builds
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