Corker's gas tax proposal OK if tax breaks nailed

Corker's gas tax proposal OK if tax breaks nailed

June 19th, 2014 in Opinion Free Press

U.S. Sen. Bob Corker, R-Tenn.

U.S. Sen. Bob Corker, R-Tenn.

Photo by Associated Press /Times Free Press.

As a businessman, as a former Tennessee commissioner of finance, as a mayor and as a United States senator, Bob Corker always has been considered a practical man.

So, on Wednesday, he and Sen. Chris Murphy, D-Conn., proposed a new funding mechanism for the federal Highway Trust Fund that's practical but controversial.

The proposal would fund transportation projects at current spending levels for the next 10 years and add buying power as well. The controversial part is that it would raise federal gasoline and diesel taxes by six cents per gallon in each of the next two years and then index the gas taxes to inflation, using the Consumer Price Index, to ensure the fund remains viable into the future.

"If something is worth having," Corker, R-Tenn., said in a phone interview, "it's worth paying for."

To offset the taxes, he would permanently extend some of the tax provisions in the tax extenders bill currently stuck in the Senate. Among those provisions that would be extended is one that allows taxpayers who itemize their deductions to claim state and local general sales taxes. This is a big boon for taxpapers in states such as Tennessee that don't have a state income tax.

The offset, he said, would allow Republicans to avoid violating Americans for Tax Reform's Taxpayer Protection Pledge. The proposal, Murphy said, has the backing of labor unions and the U.S. Chamber of Commerce.

Corker said he knows the proposal will be controversial, but he says it's better than the current "game of chicken" that's played in Congress every year when "a gimmick" is proposed to fund the Highway Trust Fund for one more year.

"Since I came to Washington, I've watched a diferent way of doing business, on the left and on the right if [the proposal] is popular, to throw kids under the bus in order to borrow money from future generations [and] load them up on debt."

The gasoline and diesel taxes were last raised in 1993, Corker said, so those now have only 63 percent of the buying power they did at the time.

Although the proposal could be acted upon this summer, he said, a controversial bill with long-term solutions is more likely to be taken up after the November elections when it might be dealt with "in an appropriate and mature way."

So for the next fiscal year, Corker said, Congress, which has "such a lack of courage to address things," will "do the cowardly thing" and "throw kids under the bus one more time" to fund the Highway Trust Fund.

Three times since 2008, he said, that has meant transferring more than $50 billion of general fund dollars into the highway fund and getting the government further and further from its former user-fee, pay-as-you-go transportation funding model.

The current bill before the Senate, the senator said in a March Washington Post op-ed, would, for example, finance two years' worth of costs over as many as 10 years and would still leave the Highway Trust Fund insolvent.

A better model for the country, Corker said, is the road system in Tennessee, which he said "has not one penny of road debt" and boasts the second best roads in America, according to CNBC's 2013 study "America's Top States for Business."

Outside of returning to a pay-as-you-go formula or continuing the same recent "reprehensible" way of borrowing on the backs of future generations, he said, the only other solution is to stop road projects "and become a weaker and weaker and weaker nation."

Now when the state's junior senator says he knows the proposal will be controversial, he's right. At the end of the first two years, a gallon of gasoline at today's $3.21 cost (at one random Chattanooga station) would cost $3.33. So a 15-gallon fill-up would rise from $48.15 to $49.95. But your extra $1.80 per fill-up would help build and save the nation's roads.

That amount, in itself, is a reasonable solution (less than the price of a 20-ounce soft drink out of the gas mart cooler) if he and Murphy can get the Senate and the House and revenue-loving President Obama to go along with permanent tax breaks, or as the Corker plan says, "another bipartisan proposal to reduce taxes by at least the amount of revenue raised from the gas tax over the next decade."

Without the corresponding tax breaks, the gasoline tax rise is what it is, a sensible funding formula for the Highway Trust Fund but a tax increase alone nonetheless.