Gas taxes and your bottom line
Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.
Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

Supporters and opponents are polar opposites
Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.
Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.
While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.
The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.
Is a gas tax politically plausible?
Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”
Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”
Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.
Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.
“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”
Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.
Benjamin Bach
February 13, 2008 at 2:03 pm
Shailesh, I think what it comes down to is educating yourself about all the investments you’re making.
Taking underperforming equity out of a home to invest in a positive leverage situation can create massive returns for an investor – and if they aren’t careful, losses.
As Buffett says, education mitigates risk. My clients are educated, and do very well using home equity to invest in appreciating assets.
BenjaminBach.com
Robert D. Ashby
February 13, 2008 at 3:57 pm
I agree with what Benjamin stated and I have yet to have anyone who is educated tell me that it is overrated, rather they say the word needs to get out about what it equity management truly is.
Equity Management goes beyond simply taking cash out and investing, it is incorporating your home’s equity into your overall financial and investment plans. I am a conservative guy as well and would not “bet my house” either. Equity Management keeps you from “betting”, but rather balancing to provide a better chance of attaining financial goals.
Shailesh Ghimire
February 13, 2008 at 4:57 pm
Benjamin and Robert,
Great points. It is all about education and making sure it makes sense. However, my nervousness has to do with placing your house on the line. On paper whole thing makes sense, but with the way things can change overnight, it’s too risky and for most people it makes little sense. I’m fearful of the guys who have been calling me up wanting me to send them my borrowers so they can do a life insurance product for them with all their home equity. Sounds like a guy with a hammer that sees everything as nails.
Education, assessment, understanding risk and your personal risk level is what it’s all about. When it comes to investments, I firmly believe you have to play both offence and defense. Playing offence with your home when your home should be a surefire defense, that is what bothers me the most.
Thanks for your comments guys!
Benjamin Bach
February 13, 2008 at 8:45 pm
If you only play defence, you’ll never score a goal. You need a good defence, and a good offence.
Brian Brady
February 14, 2008 at 9:09 pm
Shailesh,
Equity management, as a name, may be “new”, the principle is not. I’ve practiced it since 1990 and it’s served me well. I have a leveraged home and enough cash to pay off the mortgage with a click of the mouse and a 3 day wait.
I think the problem is that we have unsophisticated originators talking to unsophisticated customers about a strategy that is a little more complicated than the brother a vs. brother b demonstration.
However, when properly implemented by a mortgage originator, a stockbroker, a CPA, and an insurance agent, any argument against the strategy (no matter what you call it) is defeated. I’ve heard critics claim that the strategy doesn’t work in a depression; trust me- neither does owning real estate, regardless of the mortgage