Virginia Governor McDonnell Goes Off Deep End On Transportation Policy

The top story on the front page of today's Washington Post bears the headline "McDonnell wants to end Va. gas tax" [current VA governor].  This may seem parochial/provincial, but I fear that this unprecedented and completely ridiculous proposal may become some new popular meme among Republicans around the nation.  While the gas tax would be eliminated, the sales tax would be increased, along with many driver related fees, including some on alternative fuel vehicles, although the tax on diesel fuel would be maintained.  I note one possibly good thing is that they might also actually help fund the extension of the Washington metro to Dulles airport.

The argument for this is that the gas tax is supposedly a "dinosaur tax" that has delivered a declining stream of revenue.  Hence it is considered to be a great breakthrough that a GOP governor and a GOP Speaker of the Assembly have come out for a growing possible future source of revenue, an increase in the sales tax, although they are also planning to raid other areas of the budget to help fund transportation, which is a major problem, particularly in Northern Virginia.  As it is, the gas tax rate has not been raised since 1986, and Virginia is now tied for 42nd among states in its gas tax rate.  Obviously some substantial increase in that could be done with little negative effect.

I have three broad objections to this.  Let me label them political-philosophical, economic, and moral.  On the first I think that there is something to be said for the "user pays" approach to public finance.  For many public services I am not enthusiastic, particularly when the users may be poor or the service simply must be supplied.   I am thinking about such things as eduction and health care.  However, funding for highways has applied this principle very widely and successfully in the US, which probably has the best highway system in the world.  All states have gas taxes, and I simply see no rationale for abandoning this principle in this case, except for political cowardice (and indeed Grover Norquist has already denounced this evil proposal because of its tax increase).

On the economic front I am really thinking about the environmental front, or if you will from the standpoint of just plain old neoclassical economics, internalizing externalities, particular air pollution from vehicles, most importantly right now, GHGs such as CO2.  Indeed, ironically, the second story on the top of WaPo's front page was headlined "Nation set record for heat last year."  Yet in the long story on the gas tax there was not a single mention of the environmental issue.  Maybe all of Richmond has fallen under the sway of GOP Attorney General and current gubernatorial candidate, Ken Cuccinelli, who infamously subpoeaned the University of Virginia for all of Michael Mann's emails from when he was on the faculty there in a search for that smoking gun we all know is not there that global warming is, you know, just a hoax.  So, I guess none of these clowns thinks anything about this.  As it is, at other levels people are talking about imposing a carbon tax, which would certainly show up as an increased gas tax, with a possible offset of a cut in income taxes.  But here they are proposing to go the other way: eliminate the gas tax entirely and raise the sales tax.

Which brings us to the moral or normative or fairness issue, particularly income distribution and who is paying for this.  So we are to go from a user pays tax to a sales tax, which are well known to be regressive.  Heck, VA has an income tax.  At least they could have proposed to raise that instead, but no, we have to go for the most regressive approach possible, along with raising fixed fees, which are even more regressive.  But we know what a bunch of Republicans care about that.  Finally, there is the matter of in-state versus out of staters.  Now people driving through the state using its highways will pay for part of their upkeep if they stop to buy gas here.  If this gets adopted, we shall see rich out of staters driving gas-hog vehicles and not paying at all with poor in-staters who do not drive having to cover for them.   All of this is simply and rankly unfair as far as I can see.

Every time I think we have seen the height of stupidity in new proposals, someone comes up with something else that is simply egregiously indefensible.  This is another example, and it is happening right here in my very own state.  Gag.