Having dispensed with one dumb debate about the Biden jobs plan and what counts as “infrastructure,” Republicans and moderate Democrats have found another talking point that distracts from the very obvious problems the country needs to address. That talking point is “user fees.”
The pared-down infrastructure counterproposal, backed by the bipartisan Problem Solvers Caucus, is touted as more reasonable than Biden’s plan because it costs less and can be paid for in large part by user fees, alleviating the need to tax the rich. Specifically, the “user fees” in question include increasing the gas tax and then indexing it to either inflation, an index of how much it costs to fix highways, or fuel efficiency standards set by the government. The proposal also advocates for a fee on vehicle miles traveled and an annual registration fee specifically for hybrid or electric vehicles.
This is in contrast to Biden’s plan which proposes raising corporate tax rates from 21 to 28 percent—still lower than the 2016 rate—and increasing taxes on U.S. companies’ foreign earnings.
“User fees” is one of those terms that sounds self-explanatory. And sometimes it can be. A toll, for example, is a classic user fee paid by drivers. But, in most cases when politicians or policy wonks talk about user fees, they are really just talking about taxes by another name. In fact, this country has so often enacted “fees” to avoid the appearance of increasing taxes that there is now little difference between the two. One need look no further than the Problem Solvers Caucus plan itself, which does not use the term “gas tax” but instead calls it the “federal gasoline user fee.”
The U.S. would be a better country if we stopped pretending there was this other, better word for taxes and went about the perfectly sensible and widely popular business of taxing rich people more to pay for the things we need.
A few months ago I wrote about the useless trains at U.S. airports financed by passenger facility charges (PFCs), which are user fees on people who purchase airline tickets:
These arguments stem from the euphemism that the PFC is a “user fee” and not a tax, a distinction quite literally without a difference since they are both grouped under the “taxes and fees” line item of your flight cost (next to the PFC on your receipt are “congressionally mandated security fees” which pay for the Transportation Security Administration and is my all-time favorite euphemism for a tax). A “user fee,” the logic goes, must rigorously benefit the payee while a general tax can more readily be used for the common good. From the airlines’ perspective, using PFCs to pay for a mass transit connection is more like a tax and therefore an illegitimate use. It is all unbearably silly.
Since then, I have noticed the “taxes and fees” line item on receipts a lot more. It is not just airline tickets that blur the line between taxes and user fees. For example, my latest wireless bill’s “taxes and regulatory fees” section has the following line items:
- County Local Sales Tax
- County Sales Tax
- Local 911 Surcharge
- State 911 Tax
- State Taxes
- Federal Regulatory Assessment Fee
- Federal Universal Service Fund
- Local Gross Receipts Tax
- New York MTA Surcharge on Excise Tax
- State Excise Tax
There are three “taxes” under the “fees” section. The Federal Regulatory Assessment Fee is a fee Congress mandates the vast majority of people pay to fund the Federal Communication Commission’s core services. That is a tax.
To bring this back to current events, consider the gas tax again. It is an 18.40 cent per gallon surcharge levied by the feds, plus other rates that vary by state. There is a highly contested debate within the transportation landscape about whether to raise it for the first time since 1993 to help pay for the Biden jobs plan.
But, as the Problem Solvers Caucus rightly points out, it is technically a user fee. I, for example, do not own a car. To me, the gas “tax” looks a lot more like a user fee on private automobiles powered by internal combustion engines. And it is starting to look that way to a lot of other people too, such as people who drive electric cars. This is worrying government officials, too, who rightly forecast a steep decline in gas tax revenue. One of the most common alternatives proposed to the gas tax is a tax on vehicle miles traveled, although charging people to use roads sounds a lot like a toll, which is the classic case of a user fee.
We can go on like this about cigarette taxes or alcohol taxes or the taxes and fees assessed to rental cars and hotels. One could just as easily call them cigarette user fees, beer fees, or tourist fees. But that is not the point. Just like with the “What is infrastructure” question, you can call it whatever you want. The only question worth asking is: is any given proposal a good idea to pay for the things we need?
And here we get to the crux of the issue. Once everything gets correctly lumped into the same category of “taxes,” it then becomes a pretty straightforward debate of what is fairest given the current economic landscape. And it’s tough to make the argument that rich people shouldn’t be the first to pony up. Corporate tax rates were 35 percent just a few years ago, before the Trump administration’s massive tax cuts slashed them to 21 percent. Many of the biggest multinational countries pay much less than that. The U.S. has a record number of billionaires and rich people generally fared well during the pandemic while the less fortunate suffered. Economic inequality continues to get worse. And polling consistently shows Americans broadly prefer to pay for government initiatives by taxing corporations and the rich, especially when offered the choice between that and “user fees” on roads and bridges.
And why wouldn’t we? It’s always preferable to use other people’s money if you can. Nobody understands this better than large corporations and the billionaires that own them which routinely get subsidies for, say, putting their headquarters in a certain state. If the wealthy are still opposed to being taxed at higher rates, maybe we can go about it another way. Call it a user fee on private helicopters, large yachts, and access to the vast pools of human labor that make their wealth possible.
This post has been read 13 times!