There’s no need for fees on electric cars with this option.
Using corporate stock buybacks to fund the Federal Highway Trust Fund might be the answer.
Any planned phase-out of fossil fuel cars with electric cars will most likely need an overhaul that replaces the gas tax with a new funding source. Currently, America’s Highway Trust fund depends on collecting gas taxes at 18.4 cents a gallon for gasoline and 24.4 cents a gallon for diesel.
The first federal gas tax started in 1932 to fund public works projects related to roads and it was one cent a gallon. The Federal Highway Trust fund was created in 1956 to fund the construction of the Interstate Highway system and it was three cents a gallon.
The Federal Gas Tax was last raised in 1993
The Federal Highway Trust Fund collected 41 billion dollars in gas tax money in 2018.
Meanwhile, the capacity of the Interstate Highway System, with the bulk of it built between the 1950’s and 1970’s, has not kept up with steady car population growth, causing massive traffic jams.
Amtrak’s passenger railroad network can barely get train speeds to surpass those from the 1920’s due to it sharing a lot of its tracks with freight railroads and the number of railroad crossings.
Another big source of tension for the federal Highway Trust Fund is that gasoline cars have to compete against non-automobile uses like public transportation and pedestrians for scarce highway funding from the trust fund fueled by gas taxes.
Fossil fuel lobbyists and anti-public transit opponents will often bring up the federal gas tax collecting funds for infrastructure while public transit siphons some funding away from car-specific programs to spend it on non-car uses.
The biggest argument against public transit and other non-automobile projects is the Highway Trust Fund is funded by drivers buying gas and driving on public highways that are mainly paid for by gasoline-powered car use. With gas-tax-based highway funds being so limited, the “don’t you dare spend one cent of my gas tax money on your blasted bike paths and subway train rides” mentally has set in.
Meanwhile, as the overall car population grows and the costs of construction projects rises, the existing gas tax can’t keep up with funding demands. The current quick-fix funding solution is to try to raise local gas taxes by a few cents and turn once-free roads and bridges into toll roads.
A long term proposal is to impose a Big Brother-style of GPS systems on everyone’s cars to keep track of where they drive and tax them for every mile. This, however, would invade people’s privacy.
Proposed gas tax hike
The United States Federal Government’s current gas tax proposals would have them raise the federal gas tax 5 cents to 25 cents in 2019 or in 2020 but even that seems unlikely. Rising the gas tax 5 cents to 25 cents would be the most realistic chance of passing Congress but that can only buy so much time before a new source of funding is needed.
On July 4th in 2019 states such as Virginia raised their state gas and diesel taxes 7 cents a gallon along Interstate 81 in Virginia to fund several Interstate highway safety projects in Virginia.
Fees on electric cars
The most extreme case of raising the gas tax in 2019 was when the State of Illinois raised their gas tax from 19 cents a gallon to 38 cents a gallon on July 4th. Illinois also raised their electric car fee from $35.00 dollars every two years to $248 dollars a year in 2019.
Illinois really, however, wanted to raise the electric car fee to a $1,000 a year which would have been the highest tax on anything related to owning a car in the United States. The Illinois electric car tax of $1000 dollars a year would be more in car taxes than buying a $25,000 car brand car new off the dealer lot in the state of Virginia.
The state of Virginia meanwhile has a $64.00 Dollar a year fee on EV’s and hybrids and it was pasted with the mentally that electric cars don’t pay their fair share on Virginia’s Roads.
But even with these EV fees that push people wanting to own an EV, more electric cars will come on the road over the next few years. An example is the electric car maker Tesla is building 7,000 to 10,000 new electric cars a week at their car Factory in California.
Gas will be gone
The year 2035 will most likely be the year the last public gasoline station shuts down. After the year 2040, gasoline might become a specialty item sold in cans on store shelves like in the pre gas station age of the 1910’s in rural America.
The first solution of raising the gas tax a few cents at a time will most likely only work another five to ten years at best. The second solution adding tolls to existing free roads adds more costs to people’s daily commutes and hurts low wage workers most of all.
An example is the state of Virginia has started tolls to once free roads is they added adjustable-rate toll lanes down the center of Interstate 95 in Northern Virginia. In the 1990’s the HOV lanes that once ran down the center of Interstate 95 in Northern Virginia used to be free. Now the HOV lanes have variable tolling that can go over $20 dollars a trip.
The State of Maryland is also looking at building an eleven billion toll road dollar proposal to widen Interstates 495 and 270 and Interstate 95 with a system of express hot toll lanes. They are building toll lanes now vs. simply adding one or two new 12 foot wide lanes to each side of the existing interstates.
A lot of state highway departments say that when they add toll lanes they don’t have funds to add new general-purpose lanes. And that highway capacity should now be based on supply and demand. If you can’t afford express lane tolls you sit in traffic sometimes for two or three hours which helps separates the Haves from the Have-nots.
The last road proposal is adding a GPS system to track people’s millage and charge them by the mile they drive is another bad idea for that for one thing invades people’s privacy. But the reality is the currently proposed funding sources such as GPS tracking and adding tolls to existing free roads or rising the gas tax will harm low wage workers with large commutes.
Such as it’s not uncommon for people to commute 50 or 60 miles one way to work at a store as a clerk due to the cost of living in a lot of places. If you work for $9.50 an hour getting hit with a new $4.00 toll each way on a commuter road that used to be free can really eat people up alive.
The ultimate solution
What is needed is to tap an abundant highway funding source that would use Wall Street’s wealth to pave the streets of Main Street. That new funding source could be taxing Corporate Stock share buybacks.
Corporate Stock Buybacks are when a Corporation uses its revenue to buy back shares of its own stocks to reduce the amount of free-floating shares still on the market. An example is a corporation has 10,000 shares of stock valued at 500 dollars a share.
The corporation goes out and spends $500,000 dollars to buy back 1,000 shares of its own stock to try to boost the stock price for its remaining investors by removing free-floating stock on the market. The corporation’s CEO meanwhile is given a bonus of 250 shares of stock so she sells off the 250 shares at 500 dollars apiece to collect $125,000 in cash to pay herself. The corporation is able to boost its stock price to $600 dollars a share.
The company meanwhile didn’t have to invest in the last tech or spend anything on research and new products. The corporation also lays off 1,300 workers and opens a new factory overseas but the value of the company still goes up based off.
But what if the plan goes sour?
The CEO meanwhile is seen as good at boosting the stock price so he or she gets another 50 shares of stock at 600 dollars a share. But then something causes their stock price to crash to $300 dollars a share when say a rival invests in a new product instead of buying back stock.
At 1,000 shares of stock valued at $300 a share, this is $300,000. This causes $200,000 in real money that this company spent to get burned up on the stock market. The money was destroyed simply by the stock price dropping destroying the real money the company used to fund the stock buyback.
That’s $200,000 dollars that could have been used for worker’s wages or new products or tech discoveries but instead was lost to fund stock buybacks. Stock buybacks themselves are not evil when done in moderation. Such as if a company has a good quarter and as all of its workers are making a minimum of $17.00 dollars an hour with none of them needing government handouts. While at the same time the company has launched a new product line.
Then, a corporation having a large set of stock buybacks wouldn’t a big deal for society. The trouble is stock backs are getting out of control in terms of the size and scale they are happening at companies. They have become like a severe drug addiction.
Instead of companies having stock buybacks when they are in good shape a lot of companies are eating themselves alive to fund them. Even when their stories and products need major investments and upgrades to stay in the market place. Corporations are also throwing their workers under the bus to fund stock buybacks.
Such as it’s not uncommon for a lot of corporations to have tons of workers on starvation wages and food stamps and public assistance while they fund sets of 5 to 20 billion dollar stock buybacks larger than the GDP of several small nations.
The large corporate tax breaks in 2018 were intended to create more jobs and cause companies to invest in America as a whole and instead caused Corporations to go wild on stock buybacks with over 1.1 trillion dollars in stock buybacks in 2018.
Over the last six years, there have been over 5 trillion dollars in corporate stock buybacks.
Meanwhile, despite record profits and stock prices Corporations have still have fired tens of thousands of workers to fund massive stock buybacks despite getting massive tax cuts from the federal government.
Another fun fact about stock buybacks is they used to be illegal before 1982 when they were considered a way for a company to game its stock price.
How could this fund roads?
Here are two versions of how taxing cooperate stock buybacks that could fix the federal highway trust fund.
Collecting corporate stock buyback taxes for the highway trust fund would take the stress off the trillion-plus dollar transportation improvement backlog off of the low and middle classes and place it on Wall Street.
Wall Street and the stock market are meanwhile at record-setting levels in August 2019 in profits and stock value, so they can afford to fill in a few potholes on Main Street.
Taking the funding stress of transportation funding off the low and middle class and local governments is going to be needed in the coming age of automation and outsourcing. Not to mention with robots and computers planning to take away millions of middle-class jobs over the next 20 years, a lot of towns might not have the funds to fix the roads on their own.
Here is how the first Cooperates Stock buyback tax proposal would work.
The first buyback tax proposal would tax cooperate stock buybacks at 3% to 6% and would act to fill in the void left by the declining federal gas tax. This will show the scale of funds collected from 3% to 6% of the 5 trillion in stock buybacks.
This first proposal is not meant to stop or slow down Cooperate stock buybacks from happening but to simply refill the Federal Highway Trust fund.
Here is how much that could have been raised over the last five years if there had been a 3% tax on the 5 trillion dollars in Corporate Stock Buybacks. $150,000,000,000 or one hundred fifty billion in new transportation funding could have been collected for road repairs and transit.
A sample of the needs for bridge repairs is the State of Michigan has over 1,175 bridges in bad shape and needs at least 10 billion dollars to fix them. The State of Pennsylvania needs 3,770 Bridges replaced at a cost of 14 billion. Spending 24 billion on bridge replacements would surely create a lot of jobs in these two states suffering from the closing down of several factories due to outsourcing.
Here is how much could have been raised over the last five years if there had been a 5% tax on Corporate Stock Buybacks it would have created $250,000,000,000 in new transportation funding.
A sample of the scale of the funding is it could be used to replace 410 old overpasses on Interstate 81 between Tennessee and Pennsylvania state line at an average cost of $30,000,000 million dollars a reconstructed Overpass. Along with that widen Interstate 81 to eight lanes would be $12,300,000,000 Billion Dollars.
Build 20,000 miles of new sidewalks at $500,000 a mile for $10,000,000,000 ten billion dollars.
Here is how much could have been raised over the last five years if there had been a 6% tax on Corporate Stock Buybacks it would produce $300,000,000,000 in new transportation funding. They could dedicate an extra 60 billion into public transit capital funding improvement over 5 years.
On top of these large numbers from the stock buybacks the existing gas tax would still be around bringing in 30 billion to 41 billion for a few more years.
As for the scale of $300,000,000,000 hundred billion dollars collected over 5 years Virginia’s State Transportation budget for 2019 was 5 billion dollars while California’s was near 15 billion.
A sample of some of the needs this new road funding could fix is the City of Richmond Virginia has a 100 million dollar pavement repair backlog and a 50 million sidewalk repair backlog in the City of Richmond with some streets not being repaved in over 20 to 40 years.
The next proposal for corporate stock buybacks is a more extreme version meant to try to possibly slow down stock buybacks or divert at least 10% to 25% of them from burning real-life money into imaginary money by converting some of it into transportation funding.
Imagine how much would be collected into the Highway Trust Fund if 10% of the 5 trillion in Corporate Stock Buybacks. At ten percent over 5 years that would be $500,000,000,000 hundred billion over 5 years.
A sample of this scale is the State of Virginia currently has 15 billion dollars worth of 300 unfunded Smart Scale Transportation improvement projects fighting one another for funding.
Amtrak currently has a 40 billion dollar backlog of railroad projects on its North East Corridor between Washington DC and Boston and a 5 billion dollar backlog on its Keystone Corridor between Harrisonburg Pennsylvania and Philadelphia.
Corporate stock buybacks taxed at 15% is $750,000,000,000 is seven hundred fifty billion dollars. At this scale the impossible transportation projects become possible. At this level of new funding, they could create a national system of fully grade-separated railroad main lines that would give railroads the same fully grade-separated treatment as the Interstate Highway System.
5 trillion dollars in corporate stock buybacks taxed at 20%, the same as India is currently proposing, this would raise $1,000,000,000,000 in new transportation funding over 5 years.
With that sort of funding, the possibilities are endless.
A word of warning
The fact is that this transportation funding proposal could trigger the largest inflow of revenue into America’s transportation system. This big funding proposal could become prone to big waste if some rules are not put into place before states and towns and cities get this new funding.
The first rule that should be put into place that there should be a federal ban on states using federal funding to build new virgin roads until all the existing bridges and pavement scores a 95% or better in a state.
The second rule should be the federal government should avoid funding projects that are too big to fail. Basically, they should limit how much federal funds are put into any one mega project at a time.
This is but one way to approach transportation funding. It avoids electric car fees and avoids raising gas taxes. In a way, it’s taking money from wealthy corporations and using that to fund transport. It’s not taxing the poor or targeting EV owners. It might work or it might not. Leave us your thoughts in the comments below.
Source: Read Full Article