In terms of their impact on trucking, all taxes are not created equal
Now that we've survived the trauma of last month's tax-filing deadline for yet another year, it might be a good time to look at the bigger picture. What types of taxes have the greatest impact on our industry?
There are roughly two types of taxes: those that tax us for the good and service we use (user taxes), and those that are put in place to redistribute wealth in our society (graduated income taxes).
User taxes include fuel, excise, weight-distance, and sales taxes, as well as registration fees, licenses, and special permit fees. While most of us understand the need for these taxes, we sometimes question whether the benefits we receive are worth what we're paying for them.
This cost/benefit ratio often gets out of whack because user taxes can take on a life of their own once they're in place. Authorities are prone to keep them going even if the reason they were originally put in place no longer exists.
A good example of this for trucking is the tax on fuel. Money collected in this way was put into the Highway Trust Fund for maintaining and upgrading highways. However, a substantial portion of this money has been redirected to make up for a shortfall in general tax revenues. Ironically, the much-publicized surplus in the federal budget is due in large part to the redirection of what were essentially highway funds.
Another reason the fuel tax is not good for trucking is that it's regressive. This means that people are taxed the same to use this product, regardless of income level. In other words, the less money you make, the greater the percentage of it you must spend on fuel.
Some people think this is fair, arguing that if you want to use a resource, you have to pay for it. But how fair is it if you have to use fuel to get to work because there's no public transportation available? If my income is less than yours, I must use a greater share of it just to get to my job.
Some may respond to this dilemma by suggesting that I get another job in a different location, buy a more fuel-efficient car, or move closer to work. But this may be easier said than done. Maybe I can't get another job. Maybe I'm driving this six-year-old gas hog because it's all I can afford. And maybe I can't afford the more expensive housing that's closer to work. The basic structure of user taxes doesn't take any of these issues into account.
Income taxes fall into the second major tax category: that designed to redistribute wealth. Our graduated income tax structure is designed so that people at lower income levels will not lose too much of their disposable income.
Trucking can benefit from this because lower income groups will be able to spend a greater share of their income on goods and services than if the tax structure were not graduated. And if they are buying more products, truck traffic will increase.
Property tax falls between a user tax and redistribution tax. To the extent that you get a greater proportion of services the more property you own, it's a user tax. But past that point, it's a redistribution tax.
Regardless of the tax category, money spent on taxes means less money spent on goods and services - which is by definition bad for trucking.
There are pros and cons to both kinds of taxes as far as the impact of trucking is concerned. Since a key element for most tax proposals is how easy they are to enforce, and whether they can be collected cost-efficiently, we probably won't see any big changes in our current tax structure.