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.

Debt in the post-recession world

As the recession winds down and the economy sluggishly recovers, we look to how Americans are reacting in the aftermath. Did we all learn a lesson about debt and start shoving money into the mattresses, or did we sense a recovery and start signing up for more credit cards? Well, this is America, so of course we got those credit cards.

We’re taking on more consumer debt than ever, even adjusting for inflation, according to the Federal Reserve, which reports that pinching pennies isn’t the reaction of being hit hard by the recession, burying ourselves in debt it.

Consumer debt includes credit card debt, car purchases, student loans, but not mortgage debt. It seems that the recession slowed down credit spending, but having put off things like buying new appliances and cars has come to an end, and we’re signing on the dotted line for those things we denied ourselves for several years.

Consumption per capita has been on the rise since the recession, even though income levels remain stagnant and underemployment rampant. This consumption may stimulate demand at present, but consumption financed by debt is not a sign of future economic health or strong growth.

Credit cards are now 56 years old

On Bloomberg, economist Barry Ritholtz points out that today marks the 56th anniversary of the charge card, which significantly changed the global economy in a way that few things have since.

Ritholtz opines, “Credit is a tool, one that can be used wisely or foolishly. No one held a gun to our collective heads and forced us to borrow and spend; the decision to live beyond our means was a choice too many of us made, both as individuals and collectively.”0

“That doesn’t mean we have to like it,” he adds. “Nor should we remain ignorant about the impact of credit’s use and abuse. This is why we now find ourselves in a slow and unsatisfactory recovery. The deleveraging process continues, and each passing quarter brings us closer to a more normal environment.”

Silver lining: Millennials aren’t playing along

One of the most fascinating points left out by the Feds is that Millennials aren’t taking part in racking up debt, with only 27 percent even holding a single credit card, many of whom are so riddled with student debt that they pay cash for any and everything.

Consumers over 30 are fueling the all-time high American debt, and it appears that hope is still seen in the next generation who isn’t participating in the trend.