Opinion | Want to help Michigan’s poor and middle class? Scrap the gas tax

Al Churchill is a Ford UAW retiree and lives in Livonia

The fact that taxes are the price we pay for a civil society notwithstanding, most of us flinch when the taxman cometh. Good schools, police and fire protection, a corrections system, adequate public infrastructure and many other good things done with public money do not mitigate the resentment engendered by an unfair state tax code that gives advantage to the very well-to-do, never mind Michigan’s middle class and disadvantaged folks’  tax burden.

In Michigan, the federal gasoline tax is 18 cents per gallon while the state levies an additional 44 cents per gallon, a grand total of 62 cents per gallon. Altogether, that amounts to a 27 percent tax on a gas price of $2.25.

According to the Tax Foundation, Michigan levies the sixth-highest gas tax rate in the nation.

But then, gasoline is no longer a luxury. It is a costly necessity because people do not, generally, live close to where they want to go. They do not walk to work; they drive. School districts spend enormous amounts of money on buses and gasoline because children live far from schools.

Children require transportation to sporting events, libraries and other after-school activities. Shopping and entertainment opportunities are often present only beyond walking distance. We no longer live in small, self-sufficient communities where our friends and life’s amenities are close by. Modern existence is dependent upon energy and gasoline. Like food, gasoline is essential to survival. Like food, gasoline should be free of all forms of taxation.

Michigan's gasoline tax is regressive in that low- and middle-income taxpayers pay a higher portion of their income for both the gas tax and Michigan’s sales tax than high-wealth taxpayers. At a time when the price of gasoline has been near $2.25 a gallon and the overall tax system is burdensome and regressive, this reality is intolerable.

Let’s provide context.

Today, fewer and fewer are pocketing a larger and larger share of the nation’s wealth. Edward N. Wolff, in his book, “A Century of Wealth in America,” notes that the top 1 percent in this country are in possession of 40 percent of the entire amount of wealth in the country. The top 20 percent own 90 percent of “stuff” in America. That leaves 10 percent for the bottom 80 percent.

According to researchers at the Federal Reserve, the top 10 percent of working age households were the only ones who, when adjusted for inflation, were richer on average in 2016 than they were in 2007. Everyone else was somewhere between 17 percent to 35 percent poorer. That’s most of us in Michigan.

There is no credible economic theory in existence that justifies such a level of economic inequality.

Indeed, the Institute on Taxation and Economic Policy finds the Michigan tax code to be a matter of “soak the poor and middle class, spare the wealthy.” According to ITEP, the total Michigan tax rate on the top 1 percent, with average income of $1,164,700, is 5.1 percent. This includes all Michigan taxes.

The lowest 20 percent pays 9.2 percent rate. Not all that long ago, Michigan was one of the 10 most regressive tax systems in the country, according to ITEP.

The total tax package reduces the standard of living of those taxed the most. Low income families spend most of their income just to attain a minimum level of physical and mental comfort. Even middle income families spend most of their earnings to maintain a reasonable standard of living with, perhaps, a couple weeks of vacation thrown in.

A tax on these groups can directly diminish their quality of life. Unlike low- and middle-income families, the quality of life for very wealthy folks is minimally impacted by a higher level of taxation.  

Few would call a tax code fair if middle class and low-income citizens paid a higher portion of their income than the wealthier among us. Yet, that is exactly what we do in Michigan. Clearly, discretionary income has been shifting dramatically upward and away from America’s middle class.That reality ought to be integrated into the tax code. Bottom line is that we need to eliminate the gasoline tax, the flat rate income tax, the sales and excise tax and any other taxes that burden middle class and low income citizens more than the wealthy.

On the other hand, a fair tax system maintains that citizen contributions to government services be based on ability to pay. The level of taxation that taxpayers experience should depend upon what they can afford, not necessarily what they earn. A progressive income tax, like a consumption tax on luxuries, is not only fairer, it’s immensely more logical.

Opinion: Everyone – not just drivers – should pay for Michigan roads

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Comments

Arjay
Thu, 12/20/2018 - 9:08am

When almost 50% pay no federal income tax, I would hardly call that a fair tax system. That is half the people enjoying the benefits of our great country, and contributing nothing.

Fifty years ago I worked with a man from hardscrabble East Texas. His idea of fair taxes was that everyone pays the same amount, a head tax if you will. The Constitution guarantees equal opportunity. It does not guarantee equal results.

Stephen Eldridge
Thu, 12/20/2018 - 6:19pm

Amen!

Mark
Fri, 12/21/2018 - 6:51am

AMEN ++. The 50% of people not paying Fed Inc Tax is a very slippery slope for America. I am just tired of paying my Over Share of Fed and State Taxes.

Terri
Thu, 12/20/2018 - 9:12am

Without an additional increase in gas tax, you are relegated to bad roads, and bridges. It requires a Match of dollars to attain federal funds. Gas tax allows Michigan to gain more money to improve our road system. You can argue it's regressive, but that means we have NOT had an increase in wages to match inflation at the very least!

Up north living
Thu, 12/20/2018 - 10:01am

First, the whole Idea of a gas tax is that the roads are funded by those that use them and by how much they use them. If you don't want to pay more in gas taxes, take a bus, move to a metro region where everything is closer, or drive a more fuel efficient vehicle. Also, there is no requirement to drive by yourself, many people carpool to cut expenses.
Second, the "facts" presented about Michigan's fuel tax being in the highest grouping is an unfair representation, as Michigan is one of very few states that charge a sales tax on fuel. This sales tax goes to the General Fund, and is only partially directed back to roads. This accounts for thirteen cents per gallon when gas is $2.25. That thirteen cents is what pushes Michigan into the top few states.
Finally, in any economist that is honest would agree that gas taxes are a good application of the “benefit principle,” the idea in public finance that the taxes a person pays should relate to the benefits received.

Larry K.
Thu, 12/20/2018 - 11:29am

Interesting that Mr. Churchill is from Livonia, where the City Council long ago opted out of SMART public transportation. This is why Mr. Churchill, the residents of Livonia, and the approximately 18,000 people who work in Livonia "must" have a car. Having a car involves far more costs than paying the gas tax: it involves the cost of the car, for most people the cost of financing the car, insurance, and maintenance. A more equitable and sustainable option would be for Livonia and fellow opt-out communities to opt in, and pay the modest extra millage to bring public transportation to their community, and the fare to ride when they need to get somewhere.
Beyond Livonia, the most significant help for the poor and middle class would be scrapping the property tax and instituting a graduated income tax - with true, iron-clad local revenue-sharing. That's something we've needed for decades, and with fair redistricting, we may have a chance. We'll see in a few years...

Richard Barron
Thu, 12/20/2018 - 11:55am

I agree with Mr. Churchill that our taxation system is fundamentally unfair. Likewise, I agree that our current growing concentration of wealth at the very top of society is unconscionable. However, I disagree with him that the price of gasoline is too high. On the contrary, I believe that the price of petroleum products need to be higher! Why? Climate Change.
The current and future disasters caused by planetary warming dictate that we promptly put a price on the burning of all fossil fuels. Only by making the price of fossil fuels fully reflect the total social cost of using such fuels will we as a society shift our present planet-destroying paridigm of using polluting , greenhouse gas producing, fossil fuels to using clean and renewable "green energy." This fee would start modestly but predictably increase a fixed amount every year.
What about the adverse economic of such a major change on the non-economically secure? The best answer is to rebate the entire net fee collected from fossil fuel producers to every American household. This is predicted to offset expected fossil fuel price rises to the consumer for all but the very biggest fossil fuel users. Free market operations would then move fuel consumption from relatively expensive fossil fuels to relatively inexpensive renewable energy sources. This is an economically realistic solution that should appeal to both major political parties and dramatically reduce our major greenhouse gas emissions without federal regulations.
Somewhat surprisingly, in the last few days a BI-PARTISAN bill, The Energy Innovation and Carbon Dividend Act of 2018, has been introduced into BOTH houses of the Congress! Please take a look at this proposed legislation and if you agree with me that it represents a realistic political tool to actually slow climate change please urge your members of Congress to support this concept.

Mark
Sun, 12/23/2018 - 6:55am

There is no Man Made Climate Change. None of the Models have ever been near close to being accurate. The real data does not lie.

Charlotte Morton
Fri, 03/01/2019 - 11:31am

What real data are you talking about? Where is your data to prove Climate Change is not true? There are massive studies that prove the climate has been affected by Humans. If you are wrong can you face the consequences of your ignorance? It isn't fair to the us and our future generations to ignore these changes and not lift a finger to change them. Do you propose just continue doing damage to our ecology to benefit the wealthy and let the future generations deal with the consequences?

Stephen Eldridge
Thu, 12/20/2018 - 6:32pm

There IS a credible economic theory in existence that justifies such a level of economic inequality. It's called free-market capitalism that, allows individuals the freedom to "pursue" success, legally.
.
No, citizen contributions to government services should NOT be based on ability to pay. Your method is how we sadly arrive at the unsustainable point where the top 20% (who earn 60% of the income) pay an astounding 95+% of all the federal individual income tax, while the bottom 60% pay NONE!

Every person with the right to vote MUST feel some pain whenever govt spends OUR money. A head tax, or more likely a flat income tax (with no floor on income) makes the most sense. A gas tax on every gallon of gas, which is devoted to fixing roads is the most appropriate tad for that purpose.

Mary fox
Fri, 03/01/2019 - 6:57pm

Laughable. We no more have a free market than communist North Korea. Ours has special deductions for some businesses but not others, tariffs for some markets but not others, subsidies for some businesses but not others. Special tax deductions for the rich business men but not the poor. And recently, we even made the internet cater to some business but not others. Net Neutrality leveled the playing field. That myth of free market is LAUGHABLE.

Todd
Thu, 12/20/2018 - 7:48pm

The liberals would never go for it. they love being taxed to oblivion.

Mary Fox
Fri, 03/01/2019 - 6:54pm

Funny thing: the only people who have raised my taxes by 4.35 percent IN THE PENSION TAX AND MORE IN THE LOSS OF DEDUCTIONS.

Matt
Thu, 12/20/2018 - 8:12pm

Forget the tax aspect, that's minor. Using your logic, how can you say it's fair that the poor spend an out-sized portion of their income on just about everything? Groceries, clothing, yes gas, utilities, housing, alcohol and tobacco, how can you live with these inequities? What's your solution?

Charlotte Morton
Fri, 03/01/2019 - 11:35am

Maybe if we spread some of the wealth of the 1% by increasing wages for those who are at the bottom. Enact medicare for all for a healthier country. Put people to work on green energy projects and fixing the failing infrastructure.

Mary Fox
Fri, 03/01/2019 - 7:00pm

Absolutely. I am tired of tax dodges and low taxes for the rich after their special set of deductions including not having to pay social security tax or medicare on all their income while the rest of us do, getting to pay less for investment income, and deducting their 11 yachts (per Devos) as business expenses.

Geoffrey Owen
Fri, 03/08/2019 - 12:00am

Want to help the poor? Give them the roads they deserve. I'm sorry, but for 20 years Lansing has given us what we deserve while they stuffed their pockets with cash. $3.00 for gas and we get our roads fixed? After paying $4.00 for gas and busting my wheels on pot holes I will gladly pay the tax.

Mike
Mon, 03/11/2019 - 11:02am

Very simply...require the current fuel tax and fuel sales tax go directly to road repair and maintenance. Also, reduce the allowable truck weights. Michigan allows some of the highest truck weights on roads, further accelerating wear and tear and damage to our roads.