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At this writing. President Kennedy is debating whether or not he should seek an immediate across-the-board tax cut to spur the national economy. Without going into tire merits of a general tax cut , this is a good time to talk about the tax bill paid by the nation’s motorists.

by Roy Wiley
September 1, 1962
3 min to read


At this writing. President Kennedy is debating whether or not he should seek an immediate across-the-board tax cut to spur the national economy. Without going into tire merits of a general tax cut - I feel that it would be utterly reckless to reduce the income tax without a corresponding reduction in federal expenditures - this is a good time to talk about the tax bill paid by the nation's motorists.

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According to the Automobile Manufacturers Assn., motorists paid $10.6 billion in special motor vehicle taxes last year, of which approximately $4.3 billion went to the federal government. In 1956, the federal take was $2.8 billion and 10 years ago it was $1.5 billion.

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Much of the recent rise has come from the additional federal tax on gasoline imposed to pay for the mammoth interstate highway program. Congress boosted the gasoline tax from two cents to three cents a gallon in 1956 when the highway program was launched and added another penny in 1959.

The tax on gasoline is the most lucrative of any of the federal taxes paid by motorists - with collections rising from $1.l billion in 1956 to $2:3 billion last year. It can be argued that this is a just tax since motorists receive the great benefits in the form of a modern cross country highway network. However, it should be pointed out that the cost of the interstate highway system has been greatly increased by government bureaucracy and mismanagement. Also, while the special gasoline tax may he used to finance the system, it is doubtful that it will ever be removed or reduced. Big government doesn't operate this way.

A good example is the federal excise tax on new cars. The present 10 per cent levy first took effect during the Korean War. It was a "temporary" one year measure that has been renewed every year since. The AMA estimates federal excise taxes on a car delivered at retail for $2,500, including radio and heater, amount to $193. Included in this is the federal weight tax on rubber tires.

The federal excise tax on new cars last year amounted to slightly more than $1.1 billion, or more than one per cent of the total federal budget. But this was not the end of federal excise taxes. Taxes on tires and tubes - eight and nine cents per pound respectively - raised $270 million for the government and the 8 per cent, tax on parts and accessories brought in another $180 million. A six-cent-a-gallon tax on lubricating oil accounted for another $40 million.

The government's take this year should be even more as the result of sharply increased auto sales.

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AUTOMOTIVE FLEET feels that it is time to consider reducing excise taxes on motor vehicles, or at least remove the "temporary" rates that have been in force for 10 years or so. Congress, under heavy pressure from lobbying groups, recently eliminated the "temporary" excise tax on railroad tickets and reduced it on airline fares. However, Congress has shown no inclination to give relief to motor vehicle users - in fact the trend has been for more and more taxes.

Fleet users should be particularly concerned with tins inequitable taxation. Since their vehicles are primarily work tools, the heavy taxation increases operating expenses and reduces profits. Fleet associations should join with other automotive groups in seeking to lower the tax load on the motor vehicle user.

While on the subject of taxes, fleet users should also work to see that state motor vehicle and gasoline taxes are used for highway purposes only. Since he pays the bill, the motor vehicle user should have full use of the revenues and not have them diverted to other activities. Unfortunately, only 27 states have anti-diversion laws.


Topics:Operations
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