Finally, an Infrastructure Push (and How it Can be Improved)

April 1, 2021

Finally, an Infrastructure Push (and How it Can be Improved)

Yesterday, President Biden outlined his plans for a roughly $2.3 trillion infrastructure stimulus plan. It’s a big, bold initiative that’s long overdue. Here’s a good story breaking down its components.

The plan will now move to Congress where negotiations and changes will be debated over many months. One concern with the proposal is how it's paid for: higher taxes on corporations and wealthy individuals. I mention this because members of Congress may feel pressure to eliminate or reduce these specific proposed tax increases, which will ultimately impact how much infrastructure investment will be approved.

A surprise in the President’s proposal is that it doesn’t call for any increase in the federal tax on gasoline, whose proceeds are used to fund transportation improvements. This hasn’t been raised since 1993, and it's one reason our roads and bridges have fallen to such disrepair today.

This is as close to a user fee as one can get and thus may be more politically palatable than raising taxes elsewhere. And it would provide an incentive for motorists to consume less gasoline.

It’s also in-line with two of the biggest proposals in Biden’s infrastructure plan: he calls for $621 billion to modernize transportation infrastructure, as well as $174 billion to boost the use of electric vehicles.

I filled up my gas tank this weekend and recall it costing roughly $50. I paid attention to the overall cost, but didn’t do an immediate calculation as to how much of the $50 my gasoline consumption would send in tax revenue to Massachusetts (24 cents per gallon) or the federal treasury.

I’m assuming I’m not a major outlier on this. That’s why I think sliding in a long-overdue tax increase in the federal tax may be a tool that Congress can use to overcome potential resistance to other funding sources and ensure our infrastructure receives the support it deserves.



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