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Republicans are setting a tax trap for Biden

·Senior Columnist
·4 min read

Republicans in Congress want to raise the federal gas tax. Yes, the same Republicans who oppose tax hikes most of the rest of the time.

You won’t hear them say, “let’s raise the gas tax,” exactly. There’s a code phrase: “user fees.” Senate Minority Leader Mitch McConnell, for instance, says Republicans will support $600 billion in infrastructure spending, as long as user fees cover the cost. “We’re happy to look for traditional infrastructure pay-fors, which means the users participate,” McConnell said in Louisville on May 3.

By “participate,” McConnell means whoever uses the infrastructure should pay for it, through taxes, tolls or other charges. That’s quite different from what President Biden wants to do, which is raise taxes on businesses and the wealthy to pay for nearly $2 trillion in road and bridge projects, green energy, and numerous other building programs. Republicans are dead-set against Biden’s proposed tax hikes, which would reverse some of the 2017 tax cuts that passed with only Republican votes.

The conventional wisdom on infrastructure is that it’s one rare area of bipartisan agreement, since everybody wants better transportation and a more efficient economy. But there’s not really bipartisanship, because of the clash over how to pay for it. It’s like a husband and wife saying they agree on the importance of money, except he wants to spend it while she wants to save it.

WASHINGTON, DC - MAY 12: (EDITOR'S NOTE: Alternate crop) (L-R) House Minority Leader Kevin McCarthy (R-CA) speaks with reporters as Senate Minority Leader Mitch McConnell (R-KY) departs outside the White House after their Oval Office meeting with President Joe Biden on May 12, 2021 in Washington, DC. Biden and Vice President Kamala Harris met with Congressional leadership on Wednesday, in an attempt to find common ground on issues. (Photo by Drew Angerer/Getty Images)
House Minority Leader Kevin McCarthy (R-CA) speaks with reporters as Senate Minority Leader Mitch McConnell (R-KY) departs outside the White House after their Oval Office meeting with President Joe Biden on May 12, 2021 in Washington, DC. (Photo by Drew Angerer/Getty Images)

User fees would force Biden's hand

If Republicans controlled Congress, it’s extremely unlikely they’d raise user fees or impose new ones to pay for an infrastructure plan. The federal gasoline tax, which is supposed to cover the costs of the national highway system, is a classic user fee because people who buy gas—drivers—pay into the fund that maintains the roads they drive on. But the gas tax has been stuck at 18.4 center per gallon since 1993, and it’s now too low to cover all the costs it’s supposed to. President Trump supposedly wanted a big infrastructure plan, and his fellow Republicans controlled Congress during the first two years of his presidency. Yet they never mounted a serious infrastructure plan, let alone new user fees to pay for it.

So why do Republicans favor user fees now? Because they would force Biden to break a core campaign promise, damaging him politically. Biden pledged not to raise taxes on households earning less than $400,000 per year, and any user fee applied broadly to the public would violate that pledge. User fees are actually a sensible and proven way to pay for big projects, yet Biden, for better or worse, has effectively ruled them out as a funding source for his ambitious plans.

Everybody in Washington knows this is the game. Virtually no Republicans would vote to raise the federal gas tax, if it actually came up for a vote, and no Democrat would vote to put Biden in the position of breaking a campaign promise. Biden would veto such a bill if it landed on his desk. Yet Rs and Ds are pretending to negotiate as if Republicans would really raise the gas tax and Democrats might be open to the idea.

Blandon, PA - April 27: The price for gas at the Redners Quick Shoppe gas station on 222 at the intersection with 73 in Blandon Tuesday afternoon April 27, 2021. (Photo by Ben Hasty/MediaNews Group/Reading Eagle via Getty Images)
The price for gas at the Redners Quick Shoppe gas station on 222 at the intersection with 73 in Blandon Tuesday afternoon April 27, 2021. (Photo by Ben Hasty/MediaNews Group/Reading Eagle via Getty Images)

This phony dialogue envisions an end game in which Democrats pass some but probably not all of Biden’s infrastructure agenda, including higher taxes on business and the wealthy. The most likely outcome is a narrow party-line vote, requiring every Democrat in the Senate to support it, with no Republican votes. Republicans are touting user fees now so that when they vote against what will probably be a popular bill, they can tell voters they love fixing potholes as much as anybody. They just prefer a different form of financing, which is why they opposed the Biden approach.

Biden could turn this around by saying he is, in fact, taxing the users of infrastructure to pay for his new plans. Businesses clearly benefit from improved transportation, since they move products, workers and data around and rely heavily on all forms of shipping. Paying more in corporate income tax for a more efficient economy ought to be a fair tradeoff.

Biden may not have to go this far, however, because raising taxes on businesses and the wealthy isn’t a hard sell. Voters generally support Biden’s building plans, and the tax hikes he wants to pay for them. There won’t be any new user fees, because in reality neither party wants them. Once the proposals pass, Republicans can stop pretending otherwise.

Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.

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