Blog Post

Reagan was Right on Infrastructure

May 20, 2021

Take a second and listen to what Ronald Reagan had to say about the federal fuel user-fee — his solution to maintaining America’s roads and bridges and funding infrastructure improvements:

It's easy to understand why President Reagan twice oversaw increases in the so-called "fuel tax": Because there’s no tax that safeguards taxpayer dollars as vigorously as the fuel user-fee does.

Contrary to the demagoguery surrounding this policy, the “fuel tax” is a model example of federal revenue efficiency. That’s because it’s collected at the wholesale level long before gasoline reaches the retail pump. There are roughly 1,300 wholesale racks across the country collectively operated by less than 270 entities – meaning fewer than 300 entities actually remit this tax.

The result is a tried-and-true system that minimizes overhead costs and maximizes efficiency – value – for road users. Ninety-nine cents of every dollar collected flows directly into the Highway Trust Fund. Compare that to alternatives like tolling or vehicle-miles tax systems, where as much as 20 cents of every dollar is lost to administrative, collection and overhead costs.

It is deficit-neutral, generating hundreds of billions of dollars in new revenue without adding a dime to the federal budget deficit. The apparatus to administer it already exists, which means no new government programs or bloated bureaucracy are required.

It’s time for Americans to reclaim our roads and bridges. We deserve infrastructure fitting of the world’s greatest economy. What it takes is real money — not fake funding. We urge Washington to take action to repair our nation’s roads and bridges.

It’s time to get America moving again.

Go further: Why a Vehicle Miles Tax is not ready for primetime