In all the heated debate about Washington’s new gas tax increase of 9.5 cents per gallon, one thing has been generally overlooked: the effect of another sales tax on lower-income residents. Today, however, the Seattle Post-Intelligencer ran an interesting article on the subject. But I’m still left wondering whether the tax increase is a good idea.
According to the Economic Opportunity Institute, Washington has the most regressive tax structure of any state in the nation. Because the Evergreen State assesses no income tax, but relatively hefty sales taxes, the burden of taxation falls more heavily on poor people here than anywhere else in the U.S. According to this study (pdf) from Citizens for Tax Justice, which is a tad dated now, the lowest-earning fifth of Washington residents pay more than 17 percent of their income in taxes, while the wealthiest 1 percent, pay less than 4 percent. So slapping on another 9.5 cents to the price of gasoline is conceivably a tough blow for lower wage folks.
But when I read the examples of people hurt by high gas prices I mostly didn’t have the reaction I expected to. Instead, I was struck by how our reliance on cheap fossil fuels has lured us into wasteful ways.
Find this article interesting? Support more research like this with a gift!
On the one hand, it seems tragically unfair for low income workers to face yet another financial hardship. On the other hand, typical examples are of people commuting 15 miles to daycare and another 15 miles to work (presumably, a total of 60 miles each day). Another person complains that her husband drives an hour each way to work.
In one bizarre example, a person complains about pumping $10 worth of gas to drive her minivan 14 miles. Yikes. Even though minivans are as fuel-wasting as SUVs, I’m highly skeptical of her claim. According to AAA, Seattle’s fuel is $2.51 a gallon, on average. So she must be getting only 3.5 mpg or else she’s wildly exaggerating. (For comparison, giant Hummers get about 10 mpg.)
To cite another example, of a landscaping business, "their four pickups log 400 to 500 miles a week, petroleum is in the PVC irrigation pipes and even woven into their fertilizers." My thought was: our vehicle fleet is inefficient, our homes are widely scattered (necessitating that 500 miles/week), and we have yards so big that we hire others to tend them, often with intensive chemicals.
Certainly, it’s not good that small businesses are struggling to stay afloat or that folks can barely afford to get to work. It’s more evidence of the serious economic consequences of energy inefficiency. As I’ve argued before, with respect to energy consumption in an era of rising prices, our economy is not in an enviable position. Japan can generate 3 times as much wealth with the same amount of energy; Germany can generate about twice as much.
Simply put, as prices rise, whether through taxation or market forces, it’s doubtful that we can sustain lifestyles where people typically drive 60 or more miles a day, just for essential travel. We’ll either need to live much closer to work, drive vastly more efficient vehicles, or rely on better transit networks.
For the sake of lower income workers and many small businesses—not to mention the environment—we need to restructure our energy use. Especially, we need to consume less petroleum, which can be accomplished in a variety of ways: efficiency, denser neighborhoods and better transit options, and alternative energy.
So to the extent that this new gas tax encourages better development, greater efficiency, and less consumption, I suppose it’s probably worth the pain. Of course, there are other (and better) ways of restructuring our energy use than raising gas taxes. Plus, it seems unfair that most of the hardship of this approach is shouldered by those who can least afford it.