Revisiting the Fuel Tax–Based Transportation Funding System in the United States

Abstract

Increasing concerns are noted over the current transportation funding system based on fuel taxes, but there has been little scholarly literature that evaluates the fuel tax system in a comprehensive manner. As a synthesis, this article reviews the background of fuel taxes designated for transportation and examines issues related to the fuel taxes with four tax-evaluation principles, including economic efficiency, social equity, revenue adequacy, and political and administrative feasibility. Although the analysis does not indicate an absolute denial of fuel taxes as a revenue source to support transportation, it shows that the current transportation funding system based on fuel taxes is no longer sustainable with the rapid erosion of fuel tax base.

Keywords

fuel taxes transportation funding highway user fees tax analysis infrastructure finance

Section 1: Introduction

The current funding system of public roadways in the United States heavily relies upon fuel taxes that are levied by both the federal and state governments. Nevertheless, the fuel tax–based system is losing its revenue-raising capacity with the rapid increase of fuel-efficient vehicles and electronic vehicles in the market. With some recent regulatory changes to further promote fuel efficiency, petroleum consumption in the U.S. transportation sector is expected to decline significantly in the decades ahead, which means that the motor fuel taxes will not be an adequate source of dedicated funding for roadway maintenance and construction (Duncan & Graham, 2013). The fiscal challenges have been widely noted by academics, think tanks, and two bipartisan commissions appointed by the federal government (Forkenbrock & Hanley, 2006; Furchtgott-Roth, 2010; National Surface Transportation Infrastructure Financing Commission, 2009; National Surface Transportation Policy and Revenue Study Commission, 2007; Sorensen et al., 2009; Whitty & Svadlenak, 2009). To provide supplemental transportation funding, scholars and policy makers have been exploring many different options such as higher fuel tax rates, use of a general retail sales taxes, the application of value-capture strategies, or the additional involvement of public finance (Goldman & Wachs, 2003; Halsey, 2013; Wang & Zhao, 2014; Zhao & Levinson, 2012). In recent years, however, a consensus has gradually emerged that the current funding system needs an overhaul. Several national commissions and expert groups have called for replacement of the fuel tax with a road user fee based on the vehicle miles traveled (VMT; commonly referred to as mileage-based user fees, or MBUF; Coyle, Robinson, Zhao, Munnich, & Lari, 2011).

Despite the broad expert interest in MBUF, the implementation has made little progress since a small-scale pilot project was first conducted in Oregon more than a decade ago. Political leaders at the federal and state levels have shied away from an endorsement of road user fees, and many states failed to launch large-scale implementation of MBUF after repeated efforts of similar and related experiments. Duncan and Graham (2013) argued that elected officials may be reluctant to reform the system due to the fear of public opposition. An individual-level survey conducted in 2013 finds that the respondents seem to be complacent with the condition of current roadway system. The public not only resists different proposals of MBUF, with concerns mainly about its administrative costs and privacy issues but they also comparably oppose to financing roads with other alternatives such as higher fuel taxes, sales and income taxes, and tolls (Duncan & Graham, 2013).

Levying a new tax is difficult, even if it is used to replace an old one. To ease the transition to MBUF or other feasible options, it is critical to have a public discourse about the challenges facing the current transportation funding system. Only with a widespread understanding that fuel taxes are no longer a sustainable and effective way to support surface transportation would the public be willing to consider different replacement options including MBUF. This article endeavors to answer the question, “Is the U.S. motor fuel tax–based transportation funding system obsolete?” thus to set the stage for a policy discussion on MBUF and lay the groundwork for an extensive public outreach effort.

Concerns over current fuel taxes are commonly cited from reports of two commissions appointed by the federal government. The National Surface Transportation Policy and Revenue Study Commission (2007) recommended the federal fuel tax rate be increased and indexed to inflation. The National Surface Transportation Infrastructure Financing Commission (2009) stated, “The current federal surface transportation funding structure that relies primarily on taxes imposed on petroleum-derived vehicle fuels is not sustainable in the long term and is likely to erode more quickly than previously thought” (p. 5). Although we found many research reports or opinion pieces on related topics, there has been little scholarly literature that evaluates the fuel tax funding system in a comprehensive manner. Existing scholarly journal articles tend to take a much narrower approach, for example, looking at specific aspects of fuel tax–based funding system such as the amount of carbon emissions that can be reduced by fuel taxes or how fuel taxes affect different income groups. To revisit the fuel tax–based transportation funding system, we discuss the background of the fuel tax system and then examine issues related to fuel taxes with four tax-evaluation principles, which include economic efficiency, social equity, revenue adequacy, and political and administrative feasibility. As the article focuses on the U.S. federal and state surface transportation funding mechanism that is characterized by fuel tax–based trust funds, our discussions center primarily on highway development.

We summarize the evaluation of fuel taxes by assignment scores for each criterion or sub-criterion and conclude with comments in comparison with two alternative transportation revenue options. Regarding economic efficiency and social equity, the fuel taxes receive moderate scores, but their rates are too low compared with an optimal level based on the user-fee principle. The fuel taxes are easy to administer but difficult to raise rates due to political resistance. The critical issue with the fuel taxes is the weak performance regarding revenue adequacy and sustainability. While raising tax rates and indexing them to inflation might mitigate the revenue shortage in the near term, the fuel taxes are no longer sustainable with the rapid erosion of their tax base. Although the analysis does not indicate an absolute denial of fuel taxes as a revenue source to support transportation, it shows that the current fuel tax–based transportation funding system has become obsolete with new advances of technology. In the short term, we recommend the federal and state governments to raise fuel tax rates despite political resistance. In the long term, we echo a growing number of transportation researchers and practitioners to advocate that the United States should move away from the reliance on fuel taxes and move to an alternative system for funding the transportation system.

This article proceeds as follows. The next section provides background on fuel tax–based transportation funding systems in the United States. Section-iii-Literature and Method presents existing literature and describes our methodology. Section-iv-Evaluating the Fuel Tax-Based Transportation Funding System evaluates the fuel tax system along four principles: economic efficiency, social equity, revenue adequacy, and political and administrative feasibility. Finally, Section-v-Conclusions and discussions presents discussion of the evaluation results and our conclusion.

Section 2: Background of the Fuel Tax–Based System

The Federal Government first imposed a tax on gasoline fuel under the Revenue Act of 1932 (Federal Highway Administration, 2008); however, it was not until the creation of the Highway Trust Fund in 1956, when gas tax revenue began to be specifically allocated for transportation (Small, Winston, & Evans, 1989). By this time, several states had already begun to dedicate their gas tax revenue for highway improvements (Patashnik, 2000). The federal Highway Trust Fund was developed to pay for the interstate highway program; however, this was not before other options were considered. Patashnik (2000) noted that Congress considered three alternatives to the fuel tax–funded Highway Trust Fund: tolls, bonds, and general revenues. However, as noted by Patashnik, “But Eisenhower demanded a ‘sound’ interstate program, insisting that ‘highway users’ provide ‘the total dollars necessary for improvements and new construction’” (p. 115). Thus, this newly created fuel tax–based funding system would embrace the user-fee principle that users should pay in proportion to the benefit they received from the services. Furthermore, fees would be set to meet the costs imposed on the system by the users, and thus were an effective transportation user fee.

At the federal level, fuel taxes have been raised several times since the inception of the Highway Trust Fund when they stood at 3 cents per gallon. In 1959, the tax on gasoline and diesel were both raised to 4 cents per gallon. In 1983, both taxes were again raised by 5 cents to 9 cents per gallon. At this time, the Highway Trust Fund was separated into two accounts; with the Highway Account receiving 8 cents per gallon and the newly created Mass Transit Account receiving 1 cent per gallon. The newly created Mass Transit Account would be used to finance capital-related expenditures. In 1984, the gasoline tax was left unchanged while the diesel tax was increased 6 cents to 15 cents per gallon. In 1987, 0.1 cents per gallon were added to both gasoline and diesel taxes and dedicated to the Leaking Underground Storage Tank Trust Fund. In 1990, gasoline and diesel taxes were increased 5 cents to 14.1 and 20.1 cents per gallon, respectively. Half of the 5-cent increase went to the Highway Trust Fund, whereas the other half went for deficit reduction. In 1993, both taxes were raised 4.3 more cents to 18.4 and 24.4 cents per gallon with all of the increase going to deficit reduction. In 1997, the 4.3-cent increase was rededicated to the Highway Trust Fund, and this is where federal fuel taxes remain today. Under current law, the federal tax on gasoline contributes 15.44 cents per gallon to the Highway Account, 2.86 cents per gallon to the Mass Transit Account, and 0.1 cents per gallon to the Leaking Underground Storage Tank Trust Fund. The federal diesel tax contributes 21.44 cents per gallon to the Highway Account, 2.86 cents per gallon to the Mass Transit Account, and 0.1 cents to the Leaking Underground Storage Tank Trust Fund.

Although fuel taxes are not the only revenue source for the Highway Trust Fund, they are by far the largest source of revenue for the Fund. Other sources include excise taxes on tires, trucks, buses, and trailers. In 2012, revenue from federal motor fuel taxes totaled US$34.2 billion, which made up more than 85% of the Highway Trust Fund’s US$ 40.1 billion net income for the year. Federal fuel tax revenue accounts for 33% of the total revenue from all local, state, and federal fuel taxes available for distribution and 30% of the total revenue from all local, state, and federal highway user revenues available for distribution (Federal Highway Administration, 2012).¹ Although federal fuel taxes continue to provide significant revenue to the Highway Trust Fund, in recent years, they have not been sufficient to cover the expenditures of the Fund and their power as a transportation user fee has been questioned. Since 2008, the Highway Trust Fund has received US$41 billion transfer from the general fund and will receive an additional US$12 billion in 2014 to keep the Fund solvent (Puro, 2013).

At the state level, the fuel tax funding system in many ways works much the same as at the federal level with portions of state fuel tax receipts being dedicated or earmarked for state highways, roads, and mass transit. However, states also fund surface transportation improvements through other state transportation user fees such as registration and vehicle sales taxes, as well as general sales taxes and state and local general fund revenues. States also receive some of their transportation funding from the federal Highway Trust Fund. At the same time, several states also use portions of their fuel tax revenue for general, non-highway, and non-transit purposes. According to the most recent Federal Highway Administration Highway Statistics, approximately 10% of all state fuel tax receipts collected in the United States go toward general and non-highway purposes (Federal Highway Administration, 2012).

Although fuel taxes are still the predominant mechanism for funding the surface transportation system in the United States, as currently applied, many transportation professionals have begun to grow skeptical of fuel taxes as an efficient, equitable, and sustainable transportation user fee both at the state and federal level.

Section 3: Literature and Method

Much of the prior work done on the fuel tax system can be found in government reports as opposed to scholarly journal articles. Nonetheless, there are several journal articles that explore a particular issue with regard to fuel taxes or touch on areas related to the fuel tax–based transportation funding system. Several of these journal articles are drawn upon in this study. Winston and Langer (2006) looked at highway spending and congestion costs; Rufolo and Bertini (2003) explored economic issues that arise in substituting road pricing for fuel taxes; Wachs (2003) made the case for raising fuel taxes; Denison and others (Denison & Eger, 2000; Denison, Eger, & Hackbart, 2000) looked at fuel tax evasion; Sterner, Dahl, and Franzén (1992), Sterner (2007), Hsing (1994), and several others have explored price elasticity for gasoline and how increases in fuel taxes could reduce gasoline consumption and CO₂ emissions; and countless more look at any number of aspects related to our fuel tax–based system.

Although these journal articles focus narrowly on certain aspects of the fuel tax–based system, several government reports have provided broad overviews of fuel taxes. Most notably are reports from the National Surface Transportation Infrastructure Financing Commission (2009) and the National Surface Transportation Policy and Revenue Study Commission (2007). Several reports regarding the transportation system and transportation funding mechanisms have drawn from these two congressional reports. What appears to be missing from the literature, however, is a journal article that concisely and thoroughly explores all aspects of the fuel tax–based system along traditional public finance principles.

In this synthesis, we evaluate the fuel tax–based transportation funding system in accordance with the generally accepted criteria of taxation. Public finance scholars refer to these criteria in slightly different terms (Mikesell, 2011; Musgrave & Musgrave, 1989); however, the basic ideas are in common that the evaluation of a tax should consider its economic effect, fairness, ability to generate sufficient revenue, and its feasibility. Denison and Facer (2005) examined the coordination among states to administrate the fuel tax in the context of tax criteria. They used the following terms for the criteria—adequate revenue, fairness and equity, easy and economical to administer, economic neutrality and accountability. For the purpose of this study, we categorize the criteria in four categories: (a) economic efficiency, (b) social equity, (c) revenue adequacy and sustainability, and (d) political and administrative feasibility. Table 1 presents these criteria with sub-criteria and sample questions to facilitate the evaluation. With this evaluation framework, we hope to identify the deficiency of the current transportation funding system and to pave the way for policy discussions in search for alternative transportation funding mechanisms. Although we do not directly compare fuel taxes with MBUF or other transportation revenue options, in the concluding section, we summarize features of fuel taxes with reference to other revenue options.

Table 1.

Evaluation Criteria for the Current System of Fuel Taxes.

Criteria	Sub-criteria	Sample questions
Economic efficiency	Demand side	How do current fuel tax rates affect the behavior of transportation users?
Economic efficiency	Supply side	How do current fuel tax rates affect the incentives to invest in public transportation system?
Social equity	Benefit received	Does fuel tax payment align with the benefits received from the public transportation system?
Social equity	Ability to pay	Is fuel tax system regressive or progressive for different income groups?
Revenue adequacy and sustainability	Revenue adequacy	Does the current fuel tax system raise sufficient revenues to fund the public transportation system?
Revenue adequacy and sustainability	Revenue sustainability	Can the current fuel tax system adapt to the increasing demand of public transportation and the advancement of fuel efficiency technology and alternative fuels?
Political/administrative feasibility	Political feasibility	What is the public opinion toward the fuel taxes?
		Are the fuel taxes visible to the public?
		Would the fuel taxes incur any tax exportation?
		Do fuel taxes ensure drivers’ privacy and provide system security?
	Administrative feasibility	Is the cost of implementation, operation, and enforcement low?
	Administrative feasibility	Is it difficult for users to pay the fuel taxes?

Section 4: Evaluating the Fuel Tax–Based Transportation Funding System

Economic Efficiency

For a funding mechanism to lead to efficient use of the transportation system, it should follow the basic microeconomic principle—marginal cost equals to marginal benefit. In other words, the payment (fuel-based tax) should reflect the marginal cost that users impose on the society. As stated by Small et al. (1989), “The best way to economize . . . is to apply a user charge equal to the actual cost each user imposes on society through his effect on the road’s condition and on the speed that other users can travel” (p. 9). The costs encompass both internal costs, such as road construction and maintenance, and external costs, such as pollution and congestion effects. Parry, Walls, and Harrington (2007) discussed two alternatives to estimate the efficient level of fuel taxes. One considers that optimal fuel tax shall consist of components of both Pigouvian tax, which is used to correct negative externalities, and Ramsey tax, which is inverse to the price elasticity of demand of the good. Using a set of estimated parameters of own price gasoline demand elasticity, external costs, and fuel economy/fuel price relation and applying the Pigouvian tax formula, Parry and Small (2005) estimated that the Pigouvian tax in the United States would be US$1.11 per gallon. They estimated the Ramsey components to be 17 cents per gallon.

The other alternative argued by Newbery (2005) considers fuel tax consisting of road user charge and externality correcting components such as congestions. Small et al. (1989) stated, “Charges associated with scarce durability, which causes road wear (that is, pavement deterioration), should reflect a vehicle’s contribution to this wear” (p. 10). In other words, part of user fees should go toward recovering the costs they impose on the deterioration of the roads they use. According to Newbery’s (2005) estimation, the optimal fuel tax for United Kingdom is more than US$2 per gallon. Considering the congestion cost is higher in United Kingdom than that in the United States (Parry & Small, 2005), Newbery’s estimation of the optimal fuel tax for the United States will be lower than US$2 per gallon but definitely higher than the current fuel tax rates. According to a report—Paying Our Way: A New Framework for Transportation Finance (National Surface Transportation Infrastructure Financing Commission, 2009)—the average user pays about 3 cents per VMT (1.9 cents per km) in user fees at all levels of government, but a driver on a congested highway imposes costs of 10 to 29 cents per vehicle mile (6.2 to 18 cents per km) traveled. Clearly, the current fuel tax rate is too low to equal the marginal costs that surface transportation has imposed to the society. All taxes affect the behavior of both consumers and suppliers. Next, we will analyze how fuel taxes lead to behavioral responses from both the demand side (users of public transportation system) and the supply side (investors of public transportation system).

Demand-side responses

The inability of the fuel tax system to price congestion is one of the contributing factors in our nation’s growing congestion problem. Annual delay per auto commuter rose from 19 hr in 1982 to 52 hr in 2014 in the nation’s 15 largest urban areas (Texas Transportation Institute, 2012). This growing rate of congestion imposes real costs to users and the economy as a whole. Using value of travel time (estimated at US$16.79 per hour of person travel and US$86.81 per hour of truck time) and excess fuel consumption (estimated using state average cost per gallon), the Texas Transportation Institute (2012) estimated the total cost of congestion in the nation’s urban areas for 2011 at approximately US$121 billion. In addition to individual users, businesses are also hurt by congestion. In part because of rising congestion, the logistic costs for American businesses rose to 10% of GDP in 2006 (National Surface Transportation Policy and Revenue Study Commission, 2007).

In addition, fuel tax serves as a blunt instrument to deal with congestion problem. The congestion occurs when the number of vehicles on the road increases and slows down the traffic (Parry et al., 2007). “Clearly a fuel tax, which raises driving costs for all regions at all times of day, is a very blunt instrument for alleviating traffic congestion, which is highly specific to rush periods in urban areas” (Parry et al., 2007, p. 379).

As the fuel tax rates are lower than the marginal costs, it sends poor price signals to users regarding the trade-off between using autos and trucks versus using transit or freight rail. Lewis (2008) noted that it should come as no surprise that while our roadways are congested, there is little use of public transit. If fuel taxes reflected true costs, including congestion and environmental costs, it is likely that, over time, some users would shift to transit and freight rail. As Wachs (2003) pointed out, raising the gas tax sends price signals to motorists to use the transportation system more efficiently as it encourages motorists to switch to public transit to save money. Furthermore, while our highway system is experiencing growing levels of congestion, our freight rail system remains relatively uncongested. In 2006, 88% of the freight rail corridors were operating at below practical capacity (National Surface Transportation Policy and Revenue Study Commission, 2007). It should be noted, however, that transit, like the highway system, is underpriced, and thus, transit costs are not fully covered either.

In addition to sending price signals that lead users to shift away from peak period travel, and auto and truck trips to shift to transit and freight rail, respectively, a properly set tax could help reduce the number of less-than-full truckload and empty trips. Robinson (2008) indicated that the introduction of heavy vehicle tolling in Germany, which priced trucks per-kilometer of use of the Autobahn, more closely reflect full internal costs as these tolls are in addition to fuel taxes. Tolling of trucks resulted in about a 20% reduction in the number of empty truck trips. The pricing of trucks was based on maximum rated gross vehicle weight, which meant that empty trucks were charged the same rate per kilometer as fully loaded trucks. This gave rise to load consolidation brokers and led to greater efficiency in truck operation.

Once again, the inability of the fuel tax system to price roads to reflect the true costs imposed by users leads to inefficiencies. Long-distance commuters do not have to pay their full cost of travel, which is a built-in incentive to locate to more distant locations to take advantage of lower home prices and higher acreage, which, in turn, contributes to urban sprawl. According to the national census, from 1970 to 2000, central city density declined by approximately 35% (Langer & Winston, 2008). The trend remains in recent years. A census report of pattern of population change between 2000 and 2010 indicates, “people in larger metro areas often lived farther from city hall” (Wilson, Plane, Mackun, Fischetti, & Goworowska, 2012). It should come as no surprise that during this period, the ability of the fuel tax system to recover the full costs imposed by drivers was significantly eroded.

Considering the fuel tax as a Pigouvian tax to correct the negative externality of pollution, fuel taxes have some effect in reducing petroleum-based fuel consumption and greenhouse gas emissions. One could argue that the polluters-pay principle is in effect as drivers with lower fuel efficiency vehicles do pay more in fuel taxes per vehicle mile. Also, it is possible that increases in fuel taxes may encourage some motorists to purchase more fuel-efficient vehicles and tune their vehicles to get better gas mileage (Wachs, 2003). Hsing (1994) found that the 4.3 cents per gallon (1.1 cents per L) increase was expected to reduce gasoline consumption by 2.0%, which amounted to 53.4 million barrels of oil per year.

While, in the short run, fuel tax increases are likely to have modest effects on fuel consumption, the price elasticity of fuel in the long run is much more significant (Sterner, 2007). Analysts have suggested that the price elasticity for fuel in the United States in the short run is around −0.18, whereas in the long run, it is closer to −1.0 (Sterner et al., 1992). The meta-analysis using Seemingly Unrelated Regression (SUR) approach by Brons, Nijkamp, Pels, and Rietveld (2008) shows that the elasticity of gasoline demand is −0.34 in the short run and −0.84 in the long run. They decompose it into the price elasticity of fuel efficiency, mileage, and car ownership. The estimation of the decomposition shows that price change response is more to fuel efficiency and mileage driven than car ownership. Sterner (2007) estimates that if, for a long period of time, the United States would have applied the tax policy of the European nations with the highest tax on fuel, then U.S. gasoline consumption would have been reduced by approximately 57%. Furthermore, the reduction in CO₂, if all the Organisation for Economic Co-Operation and Development (OECD) countries applied the highest fuel tax rates found in Europe, is estimated to be 8.5 billion tons over a decade (Sterner, 2007).

The fuel tax system promotes less-polluting fuels insofar as it raises the price of petroleum-based fuels, thus creating an incentive to develop and use alternative fuels. The Transportation Research Board (2006) noted, “[S]ubsidies in the form of waivers of excise taxes have been a popular way to promote alternative energy development (e.g., the fuel tax subsidy granted to gasohol)” (p. 14). While one could argue over the degree to which gasohol is a less-polluting fuel than gasoline, the argument that fuel taxes promote the use of less-polluting fuels could be extended to other fuels. As long as there is a tax on petroleum-based fuel, there will be an incentive to develop and use other forms of fuel.

Supply-side responses

Small et al. (1989) explained that, in addition to leading to a more efficient use of transportation capacity by users, an advantage of marginal-cost user charges is that “[T]he resulting revenues provide a tangible signal to public officials as to whether additional investments to provide more or better services are likely to be worthwhile” (p. 9). Thus, by properly pricing the usage of roads during the peak time, public officials and investors are able to get a more accurate picture of the demand for more or better service.

As indicated previously, the fuel tax system does a poor job of accurately pricing the costs of highway use and leads to inefficient overuse of the capacity. Because of this, it also fails to convey price signals to help direct investment to the most worthwhile projects. Underpayment may result in underinvestment in transportation, as the fuel tax system does not raise sufficient funds for economically justifiable projects. Underpayment by users, and the resulting unconstrained demand, may also lead to overproduction in some instances. As stated by Lewis (2008), “Because the absence of congestion pricing encourages peak period demand that would not otherwise arise, the need for highway investment is increased accordingly . . . the federal taxpayer should not be burdened by investment costs that are not economically justified” (p. 30). Thus, lack of congestion pricing can lead not only to excessive congestion but also to excessive highway investment. A study by Winston and Langer (2006) estimated that US$1 of government spending on highways reduced road users’ congestion costs by only 11 cents. From this finding, the study went on to estimate that states would have to spend nearly US$350 billion annually to eliminate congestion costs. These costs, including the need for some expensive road expansions, could largely be reduced if the demand during peak-use periods were reduced.

A study by Boarnet (1997), which estimated county-level production functions, found that while there was strong evidence that congestion reduction can affect county output, there was weaker evidence that street and highway capital stock increases were productive. In their findings and recommendations, the National Surface Transportation Infrastructure Financing Commission (2009) concluded that greater use of pricing mechanisms such as a mileage-based pricing may lead to more efficient investment and reduce the need for additional capacity that may otherwise be built, by shifting demand to off-peak hours and to other transportation modes.

Social Equity

Equity is another principle to consider while evaluating a tax. There are two equity standards: the benefit-received principle and the ability-to-pay principle (Mikesell, 2011). In the United States, the motor fuel tax system was originally created as a user fee, and thus we focus the majority of our analysis on the benefit-received principle. Nonetheless, we will also consider “ability to pay” (vertical equity) in our analysis.

Benefit received

In this section, we begin our analysis with an evaluation of how closely motor fuel taxes, as user fees, adhere to the benefit-received principle. It is important that we remind ourselves what we mean by user fees and benefit-received principle. These are fees collected from those who use a particular service, as opposed to fees collected from the public-at-large. User fees apply to activities that generally provide special benefits to identifiable recipients or beneficiaries, and fees generally vary in proportion to degree of use. The benefit-received principle applies to the quasi-market arrangement that only individuals who receive benefit from a public service pays for the service and the payment share should equal to the benefit share. It is costly to build and maintain the transportation system. The fuel taxes are the payments for using the transportation system. The discussion of whether the fuel taxes adhere to the benefit-received principle from the perspective whether the marginal burden of fuel tax payments aligns with the marginal cost of maintaining the system.

In recent years, the connection between the amount of driving on the roadway and the amount of fuel consumed (and hence fuel taxes paid) has been weakened by the increasing fuel efficiency and the introduction of alternative fuel vehicles. Increasing fuel efficiencies have allowed users with more fuel-efficient vehicles to pay less in taxes per VMT. Furthermore, the introduction of alternative fuel vehicles makes it possible for some users to pay very little or no fuel taxes. The Environmental Protection Agency (2013) reported that 3.1% of the model year 2012 fleet are hybrids. Although plug-in hybrids and electrical vehicles still make up a small minority of all drivers, they nonetheless represent a significant violation of the user-pays-and-benefits principle as a substantial part of their propulsion is powered by electricity, and thus not subject to fuel taxes.

Besides the distance traveled on the roadway, the weight of the vehicle also contributes to the roadway maintenance cost. Wachs (2003) suggested that fuel taxes fare relatively well in recovering maintenance costs: Heavier vehicles pay more in fuel taxes because they are less fuel efficient. However, Small et al. (1989) noted that structural damage to roads is caused mostly by trucks and buses; it is not total weight but weight per axle that is important. (It should be added, however, that total weight is relevant when assessing structural damage to bridges.)

According to the Federal Highway Administration’s (1997) Cost Allocation Study, updated in 2000, the equity ratio (ratio of tax and fee payments by type of vehicle and highway costs imposed by those vehicles) is 0.53 for heavier single-unit trucks (over 25,000 pounds [11,340 kg]) and 0.48 for the heaviest combination trucks (over 80,000 pounds [36,287 kg]). Even for the bread-and-butter five-axle combination units (50,000-80,000 pounds [22,680-36,287 kg]) the equity ratio is 0.83 (Federal Highway Administration, 2000). This means that, while it is true that heavy trucks pay higher transportation taxes and fees than light vehicles, they, in turn, impose substantially higher costs than are recovered through their payments.

The benefit-received principle for fuel taxes is further eroded by the extent that groups of users do not pay their fair share of fuel taxes. This comes in the form of exemptions and outright evasion. Federal law exempts users such as state government, non-profit educational organizations, and emergency vehicles from having to pay fuel taxes (National Surface Transportation Infrastructure Financing Commission, 2009). Subsidies were also provided for users of gasohol until 2012 (National Research Council, 2007).² In terms of evasion, there are several forms including bootlegging across state lines, diluting the blend, and “daisy chains” (creating a dummy corporation and a fraudulent and complex trail of paperwork; Denison et al., 2000). The National Surface Transportation Infrastructure Financing Commission (2009) noted that evasion remains a problem, even though progress has been made in recent years through legislative changes and increased enforcement. Total fuel tax evasion at the state and federal level may exceed US$1 billion annually or 3.5% of total federal motor fuel tax revenue.

Ability to pay

We conclude our discussion of social equity with an analysis of users’ ability to pay (vertical equity). Vertical equity can be defined as, “Distributing tax burdens fairly across people with different abilities to pay” (Rosen, 2005, p. 576). It is important to note that there is often a trade-off between the benefit-received principle and vertical equity. As mentioned before, since 1983, a portion of federal fuel tax revenues have been spent on mass transit projects. Currently, 2.86 cents of the 18.4 cents federal gas tax goes to the mass transit account. In 2004, highway user fees collected at all levels of government, of which fuel taxes are the main component, transferred US$11 billion to transit projects, which amounted to approximately 10% of total user fee revenue collected at all levels of government (Transportation Research Board, 2006). Thus, individuals who cannot afford to drive, or for other reasons elect not to drive, are still granted access and mobility through mass transit that is funded, in part, by fuel taxes.

Although fuel taxes may aid in providing mobility to disadvantaged groups, fuel taxes, like most consumption taxes, are regressive. The National Surface Transportation Infrastructure Financing Commission (2009) concluded that fuel taxes were “highly regressive,” and more regressive than a general sales tax. The Commission also indicates that higher income groups are more likely to shift to more fuel-efficient vehicles, and thus pay less in fuel taxes. Whitty and Svadlenak (2009) built off the Commission’s assertion that higher income groups are more likely to buy fuel-efficient vehicles and state that, as new vehicles become more fuel efficient, the stratification between what owners of old vehicles and new vehicles pay may become greater without a justification based on road use. Backing the Commission’s claim that fuel taxes are highly regressive are estimates found in a Tax Foundation report by Williams (2007). While Americans earning less than US$40,000 pay between 0.8% and 1.6% of their income in gas taxes, those earning over US$100,000 pay between 0.25% and 0.45% of theirs (Williams, 2007).

Revenue Adequacy and Sustainability

A viable fuel tax system needs to raise sufficient revenues to serve its purpose—to sufficiently fund the public road system in the United States. To assess the fuel tax system aligning with the revenue adequacy principle, one needs not only to consider whether it meets the current funding requirement but also whether it can adapt to the change of the public transportation system over time.

Revenue adequacy

As previously stated, the Highway Trust Fund has necessitated billions of dollars in transfers from the federal general fund to keep it solvent (Puro, 2013). These infusions, while significant, only tell part of the story. The National Surface Transportation Infrastructure Financing Commission (2009) provided estimates of average annual capital needs and gap from 2008 to 2035 and stated,

Without changes to current policy, it is estimated that revenues raised by all levels of government for capital investment will total only about one-third of the roughly $200 billion necessary each year to maintain and improve the nation’s highways and transit systems. (p. 3)

It should come as no surprise to many Americans that we have large gaps in financing our transportation system, despite our relatively large tax base. In 2007, there were approximately 205 million licensed drivers in the United States, which represented approximately 68% of the population (Federal Highway Administration, 2009). While this is a sizable tax base, current fuel tax rates are below the rate needed to raise sufficient revenue. To get an idea of the United States’s relatively low fuel tax rates, it is useful to compare our rates with those of other industrialized nations. While Americans currently pay on average US$0.40 per gallon in federal, state, and local fuel taxes, Japanese pay approximately US$2.47 per gallon and the Dutch pay US$5.42 per gallon.³

Revenue sustainability

Not only is the fuel tax system inadequate for generating sufficient revenue but it is also unsustainable in the long run. A proper user fee should ensure that revenues are self-sustaining and predictable regardless of changes in external factors. Inflation, changes in the price of fuel and in fuel efficiency, and the introduction of alternative fuels, all lead to revenue sustainability problems. The National Surface Transportation Infrastructure Financing Commission (2009) noted,

The current . . . funding structure that relies primarily on taxes imposed on petroleum-derived vehicle fuels is not sustainable in the long term and is likely to erode more quickly than previously thought. This is due in large measure to a drive for greater fuel efficiency, alternative fuels, and new vehicle technology. (p. 7)

In 1975, the average fleet fuel economy was 13.1 miles per gallon (mpg; 5.6 km/L); by 2013, it was 24 mpg (10.2 km/L), an 83% improvement. This significant improvement has caused users on the whole to pay less per VMT (Environmental Protection Agency, 2013). The increase in fuel efficiency is a large reason why today’s overall user fee, taking into account taxes and fees at all level of government, estimated at 3 cents per mile (1.9 cents per km; National Surface Transportation Infrastructure Financing Commission, 2007), is well below the six cents per mile (3.8 cents per km) user fee of the 1960s adjusted for inflation (Morris, 2006).

The trend of increasing fuel efficiency for the overall fleet is expected to continue as average fuel economy for new vehicles accelerates. The Energy Information Administration (2014) estimated that average fuel efficiency for all light-duty vehicles on the road will grow from 21.5 mpg (9.1 km/L) in 2012 to 37.2 mpg (15.8 km/L) by 2040. A report of the National Surface Transportation Infrastructure Financing Commission (2009) found that the current federal surface transportation funding structure, which relies heavily on motor fuel taxes, is not sustainable and is likely to erode more quickly than previously thought due, in large part, to a drive for greater fuel efficiency caused both by heightened concerns over global climate change and by an effort to reduce dependence on foreign energy sources.³ The commission went on to state that fuel taxes and other user fees account for less than 60% of total transportation system revenue (federal, state, and local), which clearly shows that users do not bear the full cost of their travel.

The fuel tax system fails to perform as an adequate and sustainable revenue source, in part, because it is not indexed to inflation. Although the federal gas tax has been raised many times since its inception, it has not kept pace with inflation. In fact, although the federal gas tax has more than doubled since 1983, its purchasing power remains at approximately 1983 levels (National Surface Transportation Policy and Revenue Study Commission, 2007). This Commission suggests that since 1993, the federal gas tax rate has decreased by 40% when compared with the Producer Price Index for Highway and Street Construction. The corrosive effect of inflation on revenue could be eliminated by indexing fuel taxes to inflation. In its findings and conclusions, the National Surface Transportation Policy and Revenue Commission (2007) noted that a limitation of the fuel tax is that it is not currently able to react to increasing construction costs and adds that this could be remedied by indexing it to the Consumer Price Index or a targeted measure such as the Producer Price Index for Highway and Street Construction.

Small et al. (1989) stated, “The fuel tax has not always proven a reliable source of revenue; since 1973 receipts have fluctuated along with economic conditions and fuel prices” (p. 6). Most notably, fuel tax revenue dwindled during the 1970s, in part, due to the energy crisis (Patashnik, 2000). While price spikes tend to cause a reduction in the amount of fuel consumed and thus fuel tax revenue raised, they also lead to a drive for more fuel-efficient vehicles, thus further reducing the sustainability of fuel taxes. Some analysts have estimated that the average gallons of fuel consumed per vehicle mile by the light-duty fleet could fall by 20% if new regulations or large and sustained fuel price increases drive fuel economy improvements (Transportation Research Board, 2006).

The Environmental Protection Agency (2013) noted that fuel efficiencies have been improving since 2005. Several analysts expect this trend to continue and accelerate. Although this is a positive trend for the environment, it also means lower fuel tax revenues. As users consume less fuel, they pay less in fuel taxes per VMT. Between 1980 and the present, VMT has grown by approximately 100% whereas fuel consumption has grown by about 50% (Sorensen et al., 2009). This is bad news for transportation funding: As demand for road capacity increases and as road damage grows with VMT, revenues needed to address capacity and maintenance needs continuously decline.

Political and Administrative Feasibility

Political feasibility

Because the fuel tax system already is in place, we focus not on whether it is politically feasible to implement fuel taxes but rather on the feasibility of future fuel tax increases. As described in the revenue sustainability section, because of fuel efficiency improvements and the effects of inflation, the real value of revenue collected from fuel taxes has been declining. Thus, if we want to maintain and improve the transportation system, it is important to consider whether it is politically feasible to raise fuel taxes. In the past 4 years, only six states increased their fuel tax rate. The greatest increase was in Wyoming, which raised its gasoline excise tax rate from 13 cents per gallon to 23 cents in 2013. The increases in other states were modest, which were on average less than 5 cents per gallon.⁴ Small et al. (1989) noted, “(D)espite the occasionally severe erosion of real revenues, states have found it politically difficult to raise gasoline taxes” (p. 6). Their assertion that the states have found it politically difficult to raise gasoline taxes can be extended to the federal level, where taxes on gasoline and diesel have not been increased since 1993, despite shortfalls in highway funding. Wachs (2003) asked, “Why is it assumed to be a political liability to raise fuel taxes by a few pennies when fuel prices routinely change by more than that several times every year” (p. 237).

Fuel taxes initially had great public support. In discussing the popularity of state gasoline taxes in the 1930s, Williams (2007) stated, “Gasoline taxes met with little public resistance and in fact became quite popular with the general public. Citizens saw the benefit principle in action, as gas taxes served mostly as user fees, generating revenue for more and better roads” (p. 4). As we documented in the equity section, however, fuel taxes have since moved away from the benefit-received principle and, with this shift, their popularity has dwindled. The 2009 Harris Interactive (2009) poll found that at the state and local level, respondents found the gas tax to be the least fair tax when compared with state income taxes, retail sales taxes, motor vehicle taxes, local property taxes, and taxes on cigarettes, beer, and wine, with only 7% of respondents finding the gas tax “very fair.” At the federal level, the only tax respondents found more unfair than the gas tax was the estate tax, with only 7% of respondents finding the federal gas tax “very fair.” It should be noted, other taxes were also not seen as “very fair,” and taxes of any kind are generally unpopular.

This weakening of public opinion for fuel taxes has coincided with less political support as well. As stated by Sorensen et al. (2009),

With rising anti-tax sentiment among the populace, elected officials have become wary of this politically unpopular task, and the frequency and magnitude of the recent fuel tax increases has been grossly insufficient to maintain comparable purchasing power in terms of real revenue per mile of travel. (p. 2)

As noted before, the federal tax on gasoline and diesel has not been significantly raised since 1993. Thus, it would appear that future attempts to raise fuel taxes may be politically difficult, especially if these increases do not adhere to the user-pays-and-benefits principle.

Political feasibility is typically evaluated by also looking at the tax visibility to taxpayers, the potential for tax exportation, and general political support and public opinion. In our analysis, we also include driver’s privacy and system security, as these issues have been raised when comparing fuel taxes with transportation funding alternatives such as distance-based fees.

Broadly speaking, tax visibility can be defined as the extent to which users are aware of a tax. The popularity of a tax with the public tends to decrease as the tax becomes more visible. When the visibility of a tax is low, it may be tempting for government to increase the tax. Visibility should not be confused with transparency: the extent to which taxpayers know the actual costs they incur as a result of the tax. The National Surface Transportation Infrastructure Financing Commission (2009) noted, “system users are typically unaware of how much they pay in fuel taxes (as distinct from the price of gasoline), such that daily swings in price mask the tax component” (p. 7). As mentioned before, a study prepared for Minnesota Department of Transportation by Fichtner and Riggleman (2007) found that, in general, participants were unaware of what they paid in gas tax. Thus, it would appear that fuel taxes are visible to the extent that users know that they are paying them; however, fuel taxes are not transparent and most users do not know precisely how much they pay. How this translates into the political feasibility of raising fuel taxes is somewhat unclear.

Tax exportation pertains to the potential for nonresidents to pay a tax. Tax exportation increases the popularity of a tax for residents, as residents are able to benefit from revenues derived from taxes paid by others. For the most part, fuel taxes in the United States do not benefit from tax exportation. While foreign tourists and shippers traveling in the United States by auto or truck do pay fuel taxes when they refuel, this is an insignificant portion of total federal fuel tax revenues.

For a user fee system to be politically feasible, the system must ensure drivers’ privacy and provide system security. Ensuring drivers’ privacy entails taking measures so that information collected, kept, and disseminated is limited to the level needed to administer the user fee system and ensure data confidentially. Ensuring system security entails making sure the system is designed with security features to protect it from unauthorized access and improper or illegal use. Little has been written on driver’s privacy and system security as it pertains to the fuel tax system. This is likely because the simplicity of the fuel tax system minimizes any sort of risk to drivers’ privacy or overall system’s security. Furthermore, drivers are not the legal payers of the tax. Fuel taxes are built into the price that drivers pay at the pump and, thus, unlike VMT fees, do not involve the need for any device being installed in vehicles or for driver data to be collected, stored, and sent to remote billing locations.

Administrative feasibility

Administrative feasibility includes the costs of implementation, operation, enforcement, and compliance costs. The fuel tax system has relatively low implementation costs. In listing the attributes that make fuel taxes attractive sources for funding transportation, the National Surface Transportation Policy and Revenue Study Commission (2007) noted, “low administrative and compliance costs” as well as “ease of implementation.”

The fuel tax system also has relatively low operation and enforcement costs. Martin Wachs (2003) notes fuel taxes’ low collection costs and that they are relatively fraud proof, as one of his 12 reasons for why gasoline taxes should be raised. Wachs stated,

Governments have a responsibility to be concerned about the cost of collecting revenues and . . . evasion . . . the fuel tax is unusually efficient in this regard. Whereas traditional manual toll collection, for example, incurs costs that range from 20% to 25% of the revenue produced, the cost of administering the fuel tax is typically only 1% or 2% of the revenue. (p. 239)

Others have estimated the cost to administer and enforce the federal motor fuel taxes to be as low as 0.2% of gross receipts (Peters & Kramer, 2003).

Finally, when evaluating the administrative feasibility of a tax, we consider how difficult it is for the public to pay the tax. Unlike the federal income tax, which costs non-business taxpayers on average 10.7 hr of time and US$129 per year in record keeping, tax planning, form-completion and submission, and other activities (Internal Revenue Service, 2009), fuel taxes have very low compliance costs for the general public. As fuel taxes are collected from wholesalers and passed on to drivers when they refuel, there is no need for the general driving public to keep records of the fuel taxes they pay or complete and submit any forms documenting their payments (unless it concerns documenting work-related mileage for tax purposes).

Section 5: Conclusion and Discussion

We summarize the evaluation of fuel taxes with a scorecard shown in Table 2. The performance of fuel taxes against each sub-criterion is graded as weak, moderate, or strong, in comparison with two alternative transportation revenue options, including MBUF and the use of general revenues.

Table 2.

Evaluation Scorecard for Current Fuel Taxes.

Criteria	Sub-criteria	Performance
Economic efficiency	Demand side	Moderate
Economic efficiency	Supply side	Moderate
Social equity	Benefit received	Moderate
Social equity	Ability to pay	Moderate
Revenue adequacy and sustainability	Revenue adequacy	Moderate
Revenue adequacy and sustainability	Revenue sustainability	Weak
Political/administrative feasibility	Political feasibility	Weak
Political/administrative feasibility	Administrative feasibility	Strong

Economic efficiency concerns about the extent to which fuel taxes may provide proper price signal to affect the behavior of transportation users (demand side) or the incentives of transportation investors (supply side). Fuel taxes score “Moderate” in both regards. Fuel taxes with optimal rates could serve as a good Pigouvian tax to correct negative externalities. However, as fuel tax rates are low, vehicle operators tend to overuse the roadway system, exacerbating congestion and contributing to urban sprawl. In addition, low fuel tax rates also lead to inefficient investments on transportation system. The underpricing of fuel taxes may result in underinvestment on the most worthwhile projects due to the lack of sufficient transportation funding, whereas the inability of fuel taxes to price congestion leads to overuse of roadways and hence, overinvestment on highways. In comparison, funding transportation through general revenues would score “Weak” for economic efficiency, whereas MBUF would score “Strong” because of its potential to make better connections between actual roadway usage and direct user contributions, especially if the mileage charges are designed to incorporate congestion pricing (Coyle et al., 2011).

The evaluation of social equity concerns the extent to which fuel tax payments are considered “fair.” Measured by either the benefit-receive principle or the ability-to-pay principle, the fuel taxes score “Moderate.” The current fuel tax systems deviate from the benefit-received principle, as fuel efficiency improvements weaken the tie between fuel consumption and driving distance. The mismatch between the payments of heavier vehicles and the costs they impose on the roadway also deviates from the benefit-received principle. Furthermore, the exemptions and outright evasion exacerbate this deviation. Fuel taxes, like other consumption taxes, are highly regressive because they incur much higher burdens on lower income groups. In comparison, regarding the benefit-received principle, funding transportation through general revenues would score “Weak,” and MBUF would score “Strong.” Regarding the ability-to-pay principle, MBUF may be slightly less regressive than fuel taxes if the high-income group tends to drive newer and more fuel-efficient vehicles or even electronic ones (Coyle et al., 2011). General revenues that are used for transportation could be either regressive or progressive depending on specific designs of tax base and tax rates.

The criterion of revenue adequacy and sustainability concerns about the capacity to raise sufficient revenues over time. The fuel taxes score “Moderate” for revenue adequacy. Despite the large tax base, the low fuel tax rates impede the sufficient funding for the transportation system. A drastic increase of fuel tax rates still has the potential to generate a substantive amount of revenue, at least in the near term. The score of the fuel taxes on revenue sustainability, however, is “Weak.” That the fuel tax is not indexed with inflation aggravates the problem of revenue inadequacy and makes it unsustainable. Moreover, the technology advancement in fuel efficiency allows users to consume less fuel but drive more with fuel-efficient or alternative fuel vehicles, further reducing the fuel tax revenues. This is essentially the fundamental reason underlying the consideration to replace the fuel taxes with MBUF, which measures the transportation usage directly through VMT and has the potential to raise sufficient and sustainable revenues.

The feasibility principle concerns both political and administrative feasibility. The political feasibility of fuel taxes scores “Weak.” The fuel taxes are visible but not transparent, for users know that they are paying fuel taxes but do not know exactly how much they have paid. The tax exportation incurred by foreigners only generates an insignificant portion of the total fuel tax revenue. With high visibility and low tax exportation, fuel taxes are typically considered one of the least popular revenue raiser (Murphy, 2013). With respect to administrative feasibility, the fuel tax system scores “Strong” because of its cost of implementation, operation and enforcement, and the ease of payment. In comparison, different MBUF options that are current under consideration typically have much higher administrative cost or compliance cost than fuel taxes (Coyle et al., 2011; Duncan & Graham, 2013).

At a glance, Table 2 shows that the fuel taxes score “Moderate” or even “Strong” on more than half of the sub-criteria. Such results may explain why political leaders and the public are still reluctant for an overhaul of the current funding system. However, the research reveals that the fuel tax system exhibits two shortcomings as a major funding mechanism for surface transportation. The political feasibility is “Weak,” signified by the long-standing political unwillingness to raise fuel tax rates to catch up with increasing transportation demands. More importantly, the fuel taxes are no longer sustainable with the rapid erosion of their tax base. This is the fundamental reason that the fuel tax system needs an overhaul to keep up public roadway investment at the federal and state level. What would be the suitable replacement? Using general revenues to fund transportation is likely to score poorly on economic efficiency and social equity. MBUF seems the promising one, because it builds on fuel taxes’ traditional user-pay principle and improves on it. Based on a better measurement of direct transportation usage, MBUF has the potential to be more economic efficient, more socially equitable, and more financially sustainable than the traditional fuel tax (Coyle et al., 2011).

In a word, although this research does not indicate an absolute denial of fuel taxes as a revenue source to support transportation, it clearly shows that the current fuel tax–based transportation funding system has become obsolete with new advances of technology. In the short term, we recommend the federal and state governments to raise fuel tax rates despite political resistance. In the long term, we echo a growing number of transportation researchers and practitioners to advocate that the United States should move away from the reliance on fuel taxes and move to an alternative system for funding the transportation system. Whether and how MBUF or other replacement revenues should be adopted are beyond the scope of this research. However, given the difficulty to implement such a large-scale policy change, more related policy studies are in order, and a properly managed transition process should better start now.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The manuscript was derived from a research report entitled “From Fuel Taxes to Mileage-Based User Fees: Rationale, Technology, and Transitional Issues,” which was supported by the Intelligent Transportation Systems program, US Department of Transportation.

Notes

Author Biographies

Zhirong Zhao is associate professor of public affairs at the Humphrey School of Public Affairs, University of Minnesota.

Hai Guo is assistant professor of public administration at Florida International University.

David Coyle was research assistant at the Humphrey School of Public Affairs, University of Minnesota, when he participated in this project. He is now a student at Emory University School of Law.

Ferrol Robinson is senior fellow at State and Local Policy Program, Humphrey School of Public Affairs, University of Minnesota.

Lee Munnich is senior fellow at State and Local Policy Program, Humphrey School of Public Affairs, University of Minnesota.

References

Boarnet

M. G.

(1997). Infrastructure services and the productivity of public capital: The case of streets and highways. National Tax Journal, 50, 39-57.

Brons

Nijkamp

Pels

Rietveld

(2008). A meta-analysis of the price elasticity of gasoline demand: A SUR approach. Energy Economics, 30(5), 2105-2122.

Coyle

Robinson

Zhao

Munnich

Lari

(2011). From fuel taxes to mileage-based user fees: Rationale, technology, and transitional issues. Center for Transportation Studies, University of Minnesota. Retrieved from http://conservancy.umn.edu/handle/11299/112579

Denison

D. V.

Eger

R. J.

III . (2000). Tax evasion from a policy perspective: The case of the motor fuels tax. Public Administration Review, 60, 163-172.

Denison

D. V.

Eger

R. J.

III Hackbart

M. M.

(2000). Cheating our state highways: Methods, estimates and policy implications of fuel tax evasion. Transportation Quarterly, 54, 47-58.

Denison

D. V.

Facer

R. L.

II . (2005). Interstate tax coordination: Lessons from the International Fuel Tax Agreement. National Tax Journal, 58(3), 591-603.

Duncan

Graham

(2013). Road user fees instead of fuel taxes: The quest for political acceptability. Public Administration Review, 73, 415-426.

Energy Information Administration. (2014). Annual energy outlook 2014 early release. Washington, DC: U.S. Department of Energy. Retrieved from http://www.eia.gov/forecasts/aeo/er/pdf/0383er(2014).pdf

Environmental Protection Agency. (2013). Light duty automotive technology, Carbon Dioxide Emissions, and fuel economy trends: 1975 through 2013. Washington, DC: Author. Retrieved from http://www.epa.gov/fueleconomy/fetrends/1975-2013/420r13011.pdf

10.

Federal Highway Administration. (1997). 1997 Federal Highway Cost Allocation Study—Final report. Retrieved from http://www.fhwa.dot.gov/policy/otps/costallocation.cfm

11.

Federal Highway Administration. (2000). Addendum to the 1997 Federal Highway Cost Allocation Study. Washington, DC: U.S. Department of Transportation.

12.

Federal Highway Administration. (2008). Highway history. U.S. Department of Transportation. Retrieved from http://www.fhwa.dot.gov/infrastructure/gastax.cfm

13.

Federal Highway Administration. (2009). Licensed drivers, vehicle registrations, and resident population. Washington, DC: U.S. Department of Transportation.

14.

Federal Highway Administration. (2012). Highway statistics 2012. Retrieved from http://www.fhwa.dot.gov/policyinformation/statistics/2012

15.

Federal Highway Administration. (2014). October 2013 monthly motor fuel reported by states. U.S. Department of Transportation. Retrieved from http://www.fhwa.dot.gov/policyinformation/motorfuel/oct13/mftrates.cfm

16.

Fichtner

Riggleman

(2007). Mileage-based user fee public opinion study: Summary report phase I (qualitative). St. Paul: Minnesota Department of Transportation.

17.

Forkenbrock

D. J.

Hanley

P. F.

(2006). Mileage-based road user charges. Public Roads, 69(5). Retrieved from http://www.fhwa.dot.gov/publications/research/…/pavements/…/publicroads/06mar/02.cfm

18.

Furchtgott-Roth

(2010, May 20). Mileage fees over gas taxes? Real Clear Markets. Retrieved from http://www.realclearmarkets.com/articles/2010/05/20/mileage_fees_over_gas_taxes__98477.html

19.

Goldman

Wachs

(2003). A quiet revolution in transportation finance: The rise of local option transportation taxes. Transportation Quarterly, 57, 19-32. Retrieved from http://www.uctc.net/papers/644.pdf

20.

Halsey

(2013, December 4). House bill seeks to increase gas tax by 15 cents per gallon. The Washington Post. Retrieved from http://www.washingtonpost.com/local/trafficandcommuting/15-cent-increase-in-federal-gas-tax-proposed/2013/12/04/548d6d80-5ce9-11e3-95c2-13623eb2b0e1_story.html

21.

Harris Interactive. (2009). Topline results for tax foundation’s 2009 survey of U.S. attitudes on taxes, government spending and wealth. New York, NY: Author.

22.

Hsing

(1994). Estimating the impact of the higher fuel tax on US gasoline consumption and policy implications. Applied Economics Letters, 1(1), 4-7.

23.

Internal Revenue Service. (2009). 1040 forms and instructions 2009. Washington, DC: Author.

24.

Langer

Winston

(2008). Toward a comprehensive assessment of road pricing accounting for land use. Brookings-Wharton Papers on Urban Affairs, 9, 127-167.

25.

Lewis

(2008). America’s traffic congestion problem: Toward a framework for national reform. Washington, DC: Brookings Institution.

26.

Mikesell

J. L.

(2011). Fiscal administration: Analysis and applications for the public sector (8th ed.). Boston, MA: Wadsworth Cengage Learning.

27.

Morris

J. R.

(2006). The fuel tax and alternatives for transportation funding infrastructure. Banff, Alberta, Canada: Author.

28.

Murphy

(2013). Poll: Gas tax least popular revenue raiser: Voters surveyed on gov’s funding plan. Lowellsun.com. Retrieved from http://www.lowellsun.com/todaysheadlines/ci_22821753/poll-gas-tax-least-popular-revenue-raiser

29.

Musgrave

R. A.

Musgrave

P. B.

(1989). Public finance in theory and practice (5th ed.). New York, NY: McGraw-Hill.

30.

National Research Council. (2007). Water implications of biofuels production in the United States (Council of the National Academies). Washington, DC: National Academies Press.

31.

National Surface Transportation Infrastructure Financing Commission. (2009). Paying our way: A new framework for transportation finance. Washington, DC: Author.

32.

National Surface Transportation Policy and Revenue Study Commission. (2007). Transportation for tomorrow. Washington, DC: Author.

33.

Newbery

D. M.

(2005). Road user and congestion charges. In Cnossen

(Ed.), Theory and practice of excise taxation. New York, NY: Oxford University Press, pp.193-229.

34.

Parry

Small

(2005). Does Britain or the United States have the right gasoline tax? The American Economic Review, 95, 1276-1289.

35.

Parry

Walls

Harrington

(2007). Automobile externalities and policies. Journal of Economic Literature, 45, 373-399.

36.

Patashnik

E. M.

(2000). Putting trust in the U.S. budget: Federal trust funds and the politics of commitment. New York, NY: Cambridge University Press.

37.

Peters

J. R.

Kramer

J. K.

(2003). The inefficiency of toll collection as a means of taxation: Evidence from the garden state parkway. Transportation Quarterly, 57, 17-31.

38.

Puro

(2013). Statement for the record status of the highway trust fund. Committee on the Budget, U.S. House of Representatives. Retrieved from http://www.cbo.gov/sites/default/files/cbofiles/attachments/44093-HighwayTrustFund.pdf

39.

Robinson

(2008). Heavy vehicle tolling in Germany. Minneapolis: University of Minnesota.

40.

Rosen

H. S.

(2005). Public finance (7th ed.). New York, NY: McGraw-Hill.

41.

Rufolo

A. M.

Bertini

R. L.

(2003). Designing alternatives to state motor fuel taxes. Transportation Quarterly, 57, 33-46.

42.

Small

K. A.

Winston

Evans

C. A.

(1989). Road work: A new highway pricing and investment policy. Washington, DC: Brookings Institution.

43.

Sorensen

Ecola

Wachs

Donath

Munnich

Serian

(2009). Implementable strategies for shifting to direct usage-based charges for transportation funding. National Cooperative Highway Research Program, Transportation Research Board.

44.

Sterner

(2007). Fuel taxes: An important instrument for climate policy. Energy Policy, 35, 3194-3202.

45.

Sterner

Dahl

Franzén

(1992). Gasoline tax policy, carbon emissions and the global environment. Journal of Transport Economics and Policy, 26, 109-119.

46.

Texas Transportation Institute. (2012). 2012 urban mobility report. College Station: Texas Transportation Institute. Retrieved from http://d2dtl5nnlpfr0r.cloudfront.net/tti.tamu.edu/documents/mobility-report-2012.pdf

47.

Transportation Research Board. (2006). The fuel tax and alternatives for transportation funding. Washington, DC: Author.

48.

Wachs

(2003). A dozen reasons for raising gasoline taxes. Public Works Management & Policy, 7, 235-242.

49.

Wang

Zhao

(2014). Motivations, obstacles, and resources: Determinants of public-private partnership in state toll road financing. Public Performance & Management Review 37(4), 679-704.

50.

Whitty

J. M.

Svadlenak

J. R.

(2009). Discerning the pathway to implementation of a national mileage-based charging system. Washington, DC: Transportation Research Board.

51.

Williams

(2007). Paying at the pump: Gasoline taxes in America. Washington, DC: Tax Foundation.

52.

Wilson

S. G.

Plane

D. A.

Mackun

P. J.

Fischetti

T. R.

Goworowska

(2012). Patterns of metropolitan and micropolitan population change: 2000 to 2010 (2010 Census Special Reports). Retrieved from http://www.census.gov/prod/cen2010/reports/c2010sr-01.pdf

53.

Winston

Langer

(2006). The effect of government highway spending on road users’ congestion costs. Journal of Urban Economics, 60, 463-483.

54.

Zhao

Levinson

(2012). Introduction to the special issue on value capture for transportation finance. Journal of Transport and Land Use, 5, 1-3.