What does the federal gas tax go toward?

The federal gas tax has existed for 94 years, and it adds about two dollars to every fill-up. Yet it hasn't been raised since 1993. As President Trump and congressional Republicans debate a temporary pause on the tax to ease costs at the pump, and Democrats counter with a plan to tax oil companies instead, the episode steps back to examine what the gas tax actually pays for and why its funding model is cracking.

How the gas tax works

The mechanism is simple and tied to behavior. "If you drive more, you buy more gas, you pay more in tax," says Adam Hoffer of the Tax Foundation. The revenue flows to all kinds of transportation projects across the country: highways, bridges, buses, and light rail. Andy Winkler of the Bipartisan Policy Center notes the tax has been around for nearly a century—94 years to be exact. It has never been popular. "Almost everyone dislikes gas taxes," Hoffer says. "But bad roads are unpopular too."

The problem is that the tax has not kept pace with what the federal government spends on roads. "Really, in the past decade, the gas tax really hasn't kept up with the amount of federal expenditures on roads," Hoffer explains. A growing economy demands more roads, bridges, and upkeep to move goods and people, but the revenue stream is stagnating.

The double squeeze from efficiency and electrification