September 7, 2011
“The poor pay a much larger share of their income on these taxes. The gas, cigarette and alcohol taxes are highly regressive,” says Fred Giertz, an economist and an excise tax expert at the University of Illinois at Urbana-Champaign.
“But that’s not necessarily a condemnation of the tax,” he adds. “If the purpose of the tax is to fund roads or reduce smoking, then it’s serving its intended purpose.” Giertz says there’s research showing that alcohol taxes have reduced drunken driving and tobacco taxes have reduced smoking and ultimately lung cancer.
He argues the gas tax is too low. “Fuel economy has improved. We’re driving more miles per gallon and the wear and tear on the roads is increasing. But the gas tax hasn’t changed and the Highway Trust Fund is not as robust as it used to be,” Giertz said. As a result, he says, more money from the general fund paid by all income tax payers -- even non-drivers --  is now going to roads.
In an attempt to demystify some of the major excise taxes and fees, The Fiscal Times has compiled a list of 10 big ones, explaining what they are and where the money goes.