W II O PA YS
The BILLION DOLLARS ?
AN old fable tells the story of a man who invented
a perpetual-motion salt-making machine. In universal
use, salt until recently was a relatively precious article
of commerce, and many fortunes were made in it by
traders the world over. The inventor of the saltvnachine
put it in a ship ai\d started it working. Unfortunately,
once started the device could not be stopped. It kept
turning out salt until the ship was filled. Under the
heavy weight of the salt, the vessel sank, carrying down
with it the salt machine, which still keeps working and,
according to the legend, that is the reason why the sea
is salty.
In the United States a modern version of this old
fable now is being re-enacted. A tax machine was set in
motion in 1919 that now is far out of control and is
running wildly, like an engine without a governor. That
machine is the gasoline tax. This year it wilt
pile a billion-dollar burden on the users of
automobiles - an amount equivalent to seven per
cent of the totsfl wages received by all industrial
workers in manufacturing pursuits in the en
tire country, an amount of money equal to what
will be collected annually in social security
taxes on industrial payrolls. That billion dollars
is greater than the amount of individual in
come taxes currently being received by the
federal government. Yet most of the 20,000,000
car-owning families in the United States who
pay gasoline taxes have incomes of only S2O
to S3O a week. They possess no such financial
ability to pay taxes as do those w 7 ho pay income
taxes. Contrary to popular thought, most
motorists in the United States are persons w ith
modest means.
When the gasoline tax machine first started
grinding in Oregon in 1919 the rate of the tax
was lc per gallon and the yield was approxi
mately $1,000,000. The principle of that tax
was that motor vehicles need better roads and
that real estate, which previously had borne
virtually all taxes for roads on the theory that
they are needed for access to and from homes,
farms and factories, should not be required to
pay the entire costs of roads as in the past.
Other states adopted the gasoline tax and by
1929 all the states were taxing gasoline. In
that year, the pre-depression peak year, the
states collected $431,000,000 in gasoline taxes.
In 1932 the federal government, despite the
fact that all the states were taxing gasoline
heavily, imposed a duplicating tax on motor
fuel. The states generally increased their rates
and the average state tax the country over today is
about 4c per gallon. The duplicating federal tax, cur
rently at lc per gallon, brings the tax burden on gaso
line to an average of about 5c per gallon. This is more
than one-third of its average retail price. The gasoline
tax has become the highest sales tax imposed upon any
generally-used essential commodity.
While the tax rates on gasoline were being increased,
the automobile was becoming more and more an integral
part of American life. When the states first imposed
their lc per gallon gasoline levies, the automobile was
still largely a luxury. Only one out of every six families
owned a car. But all that has changed. Two out of
every three families in this country now own automo
biles. Not only do more families own automobiles, but
they depend upon them more to get about. Fifteen years
ago the average annual consumption of gasoline per
motor vehicle was about 400 gallons. Now it is about
GSO gallons. And increased use of motor vehicles, plus
a five-fold increase in gasoline tax rates, have pushed
the annual gasoline tax burden on automobiles from $5
to more than $lO.
Motorists of the United States will pay in 1937
nearly $1,000,000,000 in gasoline taxes to the state and
federal governments. That is four times what they paid
10 years ago and approximately $100,000,000 more than
was paid in 193 G. Automobile ownership is increasing
by 2,000,000 cars a year and now there are about
30,000,000 automobiles on the highways, of which about
25,000,000 are passenger cars and 5,000,000 trucks.
Besides paying $1,000,000,000 in gasoline taxes, owners
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of these motor vehicles will pay an additional $500,-
000,000 in registration fees and other levies.
Who will pay these taxes? The rich? Far from it.
I he little fellow carries this tax burden. Surveys have
indicated that more than half the motorists in the United
States earn less than S3O a week. Less than half of the
motorists have ever owned a new car. There are millions
more “used-car motorists” than there are new-car
motorists. The valjie of the cars operated by these
‘typical" motorists with medium incomes is less than
S2OO and the average annual tax burden is more than
SSO, or 25 per cent of the value of the vehicle. The
“typical ’ motorist, earning as a class less than S3O a
(’EI A HOUSE. Thai'* exactly what some motorists
are doing in slates with excessive gasoline tax rates.
Photo shows an ex-motorist with the ear's rubber
tired wheels on the buggy. That's one war to beat
the tax collector. '
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RICH MEiSf AO .’ Chart shows that most motorists
earn less than f.W n week. Yet they pay the hulk of
the $1,000,000,000 gasoline tax bill. Studies also
show that most motorists in the Ignited Slates have
never owned a new car.
THI 'TYPICAL" U.S. MOTORIST
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$1.000.000.000 is m lot of money but
motorists of this country will pay nearly
that amount this year in gasoline taxes.
Chart shows the sky-rocketing year by
year.
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week, must work nearly two weeks to pay his special
additional motor taxes.
But you say, despite the high tax burden, somebody
must pay for the roads. True enough. But the motorists
of this country are paying about $2 for every $1 worth
of road they get. Misuse of highway funds diverted to
non-highway purposes, burdensome highway debts un
wisely incurred, unsound division of funds with political
sub-divisions of the states, competition of the state and
federal governments for the motorist’s tax dollar, and
other tax-wasting policies depreciate automotive tax
dollars and give less roads. If tax-squandering were
eliminated in some states, the gasoline tax could be
abolished and the revenue from registration fees would
be sufficient to carry out the state’s highway program.
In other states the gasoline tax rates could be cut in
half—if wise financing methods were introduced and
misuse of funds stopped.
Expansion of automobile ownership anti use has
pushed up state gasoline tax receipts by 25 per cent
during the last three years. That in itself should enable
most of the states to lower their gasoline tax rates bv
lc, or one-quarter of the average state tax rate of 4c
per gallon.
How long will the gasoline Lax machine keep grinding
out a heavier and heavier burden on the nation’s motor
ists? This year it is one billion dollars, or more than
twice that of the pre-depression peak vear of 1929
The average gasoline tax bill per vehicle'has increased
in the past 15 years from $5 to S3O. Is the sky the limit?
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