Trump could make everyone happy by raising this tax

One obvious answer is to raise the existing federal levy that makes the most sense to the most voters: the federal gas tax. Currently less than 19 cents a gallon (higher on diesel) and stuck there since 1993, the federal gas tax generates approximately $35 billion in revenue a year. This month, Trump told Bloomberg News that he is open to a tax reform package that hikes the federal gas tax. Good. In contrast to a “border adjustment tax” that few support and fewer understand, a hike in the federal gas tax could be easily explained to voters as the price of three distinct goals: infrastructure investments, the building of the Trump-promised 350-ship Navy and tax reform that ignites broad and sustained economic growth.

If a half-a-buck-a-gallon hike brought in $100 billion in revenue annually, it could be coupled with a cut in the corporate rate; repeal of the military-crippling sequester and a real increase in defense spending (especially on the Navy fleet); a dip in marginal income-tax rates; and, crucially, a boost in local infrastructure spending.

The naval buildup has to be devised and supervised by Congress and the president, just as federal tax policy must emerge from inside the Beltway. But there is no reason that, say, a third of any new gas tax revenue couldn’t immediately be returned to the counties of the United States on a per capita basis so local people could decide the local infrastructure needs that deserve priority. Enough of “shovel-ready” declarations from inside the Beltway. Send the infrastructure dollars to local people to spend.

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