Obama’s new CAFE Standards as a tax break

Eagle-eyed reader Don C referred me to this nice Op-Ed from the statesman.com Ready for an Obama Tax Break: TxDOT might not be by Ben Wear. The key point:

Hang on first for some math.

Let’s say a Pflugerville physics schoolteacher drives 15,000 miles a year and, by coincidence, has a car that averages right at that 28 mpg existing standard. She would need 536 gallons to do that.

She pays both a state gasoline tax of 20 cents a gallon (which hasn’t increased since 1991) and a federal gasoline tax of 18.4 cents a gallon (locked in since 1993). So her annual tax hit (paid invisibly at the pump) is $107 to the state and almost $99 to the feds. So, about $206 a year.

With a 56 mpg car, her total tax would be $103. Oh, and at $3.40 a gallon (and subtracting the gas taxes), she would save another $800 by buying half as much gasoline.

But here’s the problem, from a statewide perspective. TxDOT, which gets about three-quarters of that state gas tax revenue and about the same percentage of what Texans pay in federal gas taxes (because a quarter of it, unfairly in the eyes of Texas officials, is then distributed to other states), would lose a couple of billion dollars a year. Ouch.

I had to look up Pflugerville.

Finance folks in transport have seen this train coming for some time. The GAO issued a report in 2009 discussing the issue of improved fleet fuel economy on Federal coffers. Most of us have argued we should go with a mileage fee, or usage subscriptions for autos. Both of which could be handled by leases to private companies.