Advertisement

The Ever-Falling Gas Tax

Federal income tax brackets are “indexed” to inflation in order to prevent “bracket creep” by which real taxes would just rise year after year. But the federal gasoline tax is levied in terms of cents on the gallon and is not indexed, meaning that every year we don’t raise the tax the real value falls every year:

Pairing a small nominal cut in the gas tax with a provision indexing it to inflation would provide short-term stimulus while improving policy over the long term.

Advertisement