Everyone notices it. They struggle with it, fight to survive through it, and when push comes to shove, they end up paying it anyways. It is gas taxation. Taxes on gas hit wallets hard and drain bank accounts. The federal gas tax was a mere penny per gallon and first came into effect in 1932 as a temporary charge. Nine years later, the gas tax became permanent through the Revenue Act of 1941 in order to help fund the war effort and increased by half a cent per gallon. In 1959, President Eisenhower raised the tax to four pennies per gallon to fund his creation of the interstate highway system. As of 2005, the federal gas tax alone is 18.4 cents on the gallon. Unfortunately, gas taxes are a necessary evil and not only hit Americans at a Federal level, but at local and state levels as well. (Alter, 2008). Oregon led the states in taxing gasoline when they became the first state to do so in 1919. Every state followed suit throughout the years, and now the states are responsible for an average of 20.8 cents a gallon since 2005. Local taxes are responsible for the rest of taxes accumulated per gallon. If one were to combine the various taxes piled on gasoline, Americans pay an average of 45.9 cents per gallon. According to the U.S. Department of Transportation, this equates to approximately $271 paid yearly per every man, woman, and child in America. (Alter, 2008). So what affect does this gas taxation have on the U.S. economy? It is pretty obvious that consumers get the brunt end of taxation being the ones that have to break the piggy bank to pay them—especially during times when gasoline prices are so high. The taxes placed on gasoline do not really have to be a thoroughly considered issue because consumers must buy gasoline in order to go to work and make money to live. No matter the price of gas and the amount paid in taxes, gasoline is a necessity. Consumers may conserve a little better and opt to carpool or walk more often, but the gasoline market will not flop...
References: Alter, J. (2008). A tax holiday to nowhere. Retrieved October 1, 2008, from EBSCO Host database.
Mankiw, N.G. (2004). Principles of economics (3rd ed.) Ch. 6. Chicago, IL: Thomson South-Western.
Williams, J. (September 13, 2008). Local, state, and federal gas taxes consume 45.9 cents per gallon on average. Tax Foundation. Retrieved October 2, 2008, from http://www.taxfoundation.org/publications/show/1054.html
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