Strolling Through Gas Tax History
Sweet, James Stouder, The Federal Gasoline Tax at a Glance: A History, Bybee House, 1993.
This short history packs a lot of information into 23 pages. Using Mr. Sweet's booklet and other sources, the Rambler offers a summary of how the Federal excise tax on gasoline reached its current level.
The 1-cent gas tax was set to expire at the end of June 1933 (the last day of fiscal year 1933). The American Petroleum Institute and the American Automobile Association were among those who supported expiration of the tax. However, the National Industrial Recovery Act of 1933, which the President approved on June 6, 1933, extended the tax and increased it to 1.5 cents. The Revenue Act of 1934 (May 10, 1934) rescinded the half-cent increase.
Opposition from the highway lobby and State officials continued, but so did the tax, although each extension was "temporary" until the Revenue Act of 1941 (September 20, 1941) made the gas tax permanent and increased it to 1.5 cents a gallon to help pay for the country's defense buildup.
After World War II, opposition to the Federal gas tax continued from auto, oil and travel interests and the States, which maintained that the gas tax should be their sole province. In 1947, for example, hundreds of national, State, and regional organizations of highway users signed a petition urging Congress to repeal the automotive taxes, including the excise taxes on motor vehicles and trailers, lubricating oil, tires and tubes, automotive parts and accessories. The petition, submitted on July 15, 1947, summarized the history of the gas and other taxes, then stated:
Everyone of these levies initially was imposed over the protest and voiced opposition of all leading highway user organizations of the country. No tax for the general support of Government is just in its application when the amount of the burden is determined by the distance the taxpayer must drive to or from his farm or his place of employment, or in the conduct of his business.
When the taxes were extended and increased for emergency war revenue, highway users everywhere patriotically accepted them as part of the war burden which each must bear, regardless of equity. That emergency has passed and the continuing tax burden can now be redistributed under equitable measurements of assessment.
The National Highway Users Conference (NHUC), consisting of leaders of the trucking, manufacturing, and oil companies as well as automobile and farm groups, served as a clearinghouse for the petition. A transmittal letter from NHUC Director Arthur C. Butler, Executive Vice-President of General Motors, explained:
These organizations and the millions of taxpayers they represent are of the firm conviction that there should be no departure from the original concept of Federal highway aid. This concept is that the Federal Government should pay for such aid from sources of general taxation, because the benefits of that spending-to the national defense, to interstate commerce, to mail delivery and to the general welfare-are not limited to any special taxpaying group.
The Governors' Conference, predecessor to the National Governors Association, adopted resolutions opposing the Federal gas tax. They suggested that if the Federal Government would yield the taxes, the States would increase their taxes by a like amount, thus providing more funding for State road programs.
The Revenue Act of 1951 (October 21, 1951) increased the gas tax to 2 cents as a revenue source during the Korean War that began in June 1951, with the increase to be repealed on April 1, 1954.
Opposition to the gas tax continued into the early years of President Dwight D. Eisenhower, who took office on January 20, 1953. The Governors Conference passed resolutions, while the auto, highway, and oil interests worked Capitol Hill to bring an end to the tax. In fact, on the second day of his presidency, Eisenhower received a visit from Governors Walter J. Kohler, Jr. (R-Wi.) and Dan Thornton (R-Co.), who asked him to support a commission to study Federal-State relations, citing the gas tax as an example of a Federal activity that should be abandoned in favor of the States. Although President Eisenhower agreed to the commission, he did not agree about the gas tax. With the President planning a road initiative, he supported the Excise Tax Reduction Act of 1954 (March 31, 1954), which extended the tax to April 1, 1955, and the Tax Rate Extension Act of 1955 (March 30, 1955), which extended it to April 1, 1956.
By the time Congress took up proposals for financing the Interstate System, most parties had accepted the practical reality that the Federal gas tax wasn't going away. On May 4, 1955, during a hearing on the National Highway Program before the House Committee on Public Works, Representative Fred Schwengel (R-Ia.) asked Governor Kohler about the change in the Governors' Conference position, pointing out that for the past 10 years, the Governors had asked the Federal Government to yield the gasoline tax to the States. He continued:
I believe 2 years ago it was the unanimous opinion of the governors that that obtain . . . . Now, I think I see a complete flip-flop in this whole philosophy, where you are saying let the Federal Government stay in it. Do you realize when you are taking this position on this bill that you are committing the Federal Government to this gasoline tax for 30 years?
Governor Kohler responded:
Mr. Schwengel, we realize that this is the case . . . . I would like to point out that, so far as I know, the governors still, if polled, would adhere to their position as adopted at the Houston Governors' Conference in 1952, that the Federal Government should get out of the gas-tax field and leave that to the States.
The approach here is simply a realization of the practical political facts of life that the Government is not going to get out of that gas-tax field. So it is a question of relaxing and enjoying it, I think, rather than changing our minds.
In 1956, the outside interests agreed with congressional leaders on a compromise for funding the Interstate System. The gas tax would be increased to 3 cents, but highway user tax revenue from excise taxes on gasoline, tire rubber, tube rubber, and the sales tax on new trucks, buses, and trailers would be credited to a new Highway Trust Fund and reserved for use on the Interstate System and other highway projects. (The Highway Trust Fund is modeled after the Social Security Trust Fund-that is, the revenue goes into the general treasury, but is credited to the Fund.) The Federal-Aid Highway Act of 1956, which President Eisenhower signed on June 29, 1956, adopted this compromise.
A funding shortage in the late 1950's led President Eisenhower to request a temporary increase of the gas tax to 4.5 cents a gallon. Despite opposition to an increase from the usual opponents, Congress increased the tax, but only to 4 cents on a temporary basis, in the Federal-Aid Highway Act of 1959 (September 21, 1959). The Federal-Aid Highway Act of 1961, which President John F. Kennedy approved on June 29, 1961, the 5th anniversary of the 1956 Act, retained the 4-cent tax and extended it through September 30, 1972.
The tax remained 4 cents a gallon until the Surface Transportation Assistance Act of 1982, which President Ronald Reagan approved on January 6, 1983. The Act increased the tax to 9 cents, but the legislation created two separate accounts in the Highway Trust Fund. The Highway Account would receive 8 cents of the revenue while the new Mass Transit Account would receive 1 cent of the gas tax.
The Superfund Amendments and Reauthorization Act of 1986 (October 17, 1986) added 0.1 cent tax on gasoline for the Leaking Underground Storage Tank Trust Fund.
On November 5, 1990, President George H. W. Bush approved the Omnibus Budget Reconciliation Act of 1990. It embodied a compromise the Republican President had reached with the Democratic-controlled Congress to reduce the Federal budget deficit. The Act increased the Federal gas tax by 5 cents, with half the increase going to the Highway Trust Fund, the other half to deficit reduction.
The Omnibus Budget Reconciliation Act of 1993, signed by President Bill Clinton on August 10, 1993, increased the gas tax by 4.3 cents, bringing the total tax to 18.4 cents per gallon. The increase was entirely for deficit reduction, with none credited to the Highway Trust Fund. However, the Taxpayer Relief Act of 1997, which President Clinton approved on August 5, 1997, redirected the 4.3-cents general fund gas tax increase to the Highway Trust Fund.That is where the gas tax remains today.
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Now Chad since I looked up this data--could you do us a favor and look up which which party controled congress in every year there was a tax increase
--and report back please
