Fueling the Boom: Gasoline Taxes, Invisibility, and the Growth of the American Highway Infrastructure, 1919-1956

Abstract

72 The Journal of American History June 2012 In 1938, in Santa Fe, New Mexico, the photographer Dorothea Lange turned her camera to a mundane feature of the American landscape: a sign advertising gasoline prices. Unlike most such signs, however, this one broke down its 201⁄2 cents-per-gallon price: gasoline, 51⁄2 cents; state, 5 cents; Uncle Sam, 1 cent; city, 1 cent; railroad, 23⁄4 cents; agent, 11⁄4 cents; and “Me,” 4 cents. (See figure 1.) The joke lay partially in what many saw as the modern equivalent of highway robbery. Yet the humor also depended on another, equally important characteristic of gasoline prices, which always took the form of a flat, pergallon rate: the rate of taxation was neither listed nor even necessarily known by the seller. Unlike goods with itemized sales taxes, gasoline appeared to be tax free, even if buyers and sellers both typically knew this was not the case. The invisibility of gas taxes is partly a historical accident—the tax has always been an excise tax collected from wholesalers rather than a sales tax collected at the pump—but it also symbolizes the significant, yet opaque role that gas-tax revenues have played in underwriting the expansion of the nation’s vast automotive infrastructure. When automobile ownership began to surge in the late 1910s and early 1920s, gas taxes provided a new, almost magically large source of revenue that allowed states to embark on aggressive roadconstruction campaigns. But when strapped state governments in the early 1930s attempted to allocate a portion of gas-tax income to nonhighway purposes, opponents launched a successful campaign that prompted a growing majority of state legislatures to earmark gas taxes for highway expenditures. This system, coupled with new highway-planning methods that prioritized “self-funding” highways, resulted in a powerful, self-replicating system in which new highways generated new traffic, which in turn generated new revenues that were legally reserved for more new highways.1 When the U.S. Congress created an inviolate Highway Trust Fund in 1956—into which federal gas-tax revenue flowed, obligated entirely for interstate highway bills—it greatly expanded the system by elevating it to the federal level. Yet if the interstates themFueling the Boom: Gasoline Taxes, Invisibility, and the Growth of the American Highway Infrastructure, 1919–1956