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States Forfeit $10 Billion Annually Thanks to Outdated Gas Taxes

10:49 AM PST on December 16, 2011

The gas tax: It’s the holy grail of our screwed up transportation system. We can’t have good infrastructure because no one has the political cojones to raise it. No one has the cojones to raise it because the economy is awful. But anemic investment in our country’s infrastructure isn’t exactly good for the economy.

It’s not just the federal government that is playing this game of chicken with roads, bridges and transit. A majority of states are equally egregious offenders. According to a new report from theInstitute on Taxation and Economic Policy, US states leave a combined total of $10 billion on the table every year that could be used for infrastructure.

Thirty-six states have gas taxes that aren’t indexed for inflation. For the average state, that tax has declined in real value by 20 percent since the last time it was raised. That amounts to $300 million in losses each for the states of Iowa and Oklahoma, or $500 million a piece for Maryland and New Jersey.

Of course, many states would likely just blow the additional revenues on unneeded highways.

But still, desperate states like Wisconsin, Utah and Nebraska are dipping into general fund revenues to offset the decline in gas tax receipts, according to TEP. That means education, healthcare, social services, economic development and other important government concerns are suffering because states are afraid to challenge the almighty driver.

Furthermore, that means those who choose to get around in single occupancy vehicles are enjoying an additional subsidy of their harmful activity.

You can see what your state has lost in forfeited transportation revenues in the appendix of the ITEP report [PDF].

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