Who Dreamed Up the Gas Tax?

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During the Clinton years, when energy prices rose, Republicans demanded that the federal gas tax be reduced. When George W. Bush became president the administration opposed cutting the tax.  

Who dreamed up the gas tax?

The gas tax was devised by Dwight Eisenhower in 1956 as the best way to finance the building of what was expected to be the largest public works project in history: the interstate highway system, which experts said would cost $101 billion.

Eisenhower first raised the idea of crisscrossing the country with concrete in 1955. But the idea had died when Congress failed to agree on a funding mechanism. Wary of defict spending during times of prosperity, the members were reluctant to embrace a program that would cost the country billions. The following year Congress settled on a gas tax as the best means of financing the system. The tax would be exclusively devoted to road construction.

The tax cost motorists a few cents when it went into effect in the 1950s. Today it adds 18 cents to the price of a gallon of gasoline.

Eisenhower offered three reasons for building an interstate highway system. First and foremost, he believed it was essential to the defense of the country. This also incidentally made the program easier to sell in Congress, which was vitally interested in defense during the Cold War. Second, Eisenhower believed that good roads were essential to economic development. As a young army officer during World War I he had undertaken a cross-country tour by car. It had left a searing impression on him. The roads were awful. Third, Eisenhower believed that one of the functions of government is to help stimulate the economy during economic downturns. But he hated the leaf-raking projects of the New Deal, which were put together in a slapdash fashion in response to a crisis. Far better, thought Ike, to have a public works project in place and running at all times. Then, during downturns, the program could be beefed up to help restore prosperity.

Some in Congress wanted to honor Ike by giving his name to the Interstate highway system. Ike demurred. It was one reason he was so popular. His modesty went over well in America.


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hey - 1/15/2003

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Michael R. Fein - 6/14/2001

Of course, the states had been collecting gasoline taxes for decades to support the construction of their own highway systems. The state tax, developed in the 1920s, financed a major state highway construction boom. In the 1930s, the Great Depression prompted most states to divert significant proportions of these "user taxes" to non-highway purposes like unemployment relief.

Oregon established the nation's first one-cent gas tax in 1919, and the practice quickly spread. New York State was the last to adopt the tax in 1929. By then, the one-cent tax had been replaced by taxes from two to six cents per gallon across the country. In 1929, an estimated $450 million was collected nationwide, up from $5 million in 1921.

See: John Chynoweth Burnham, "The Gasoline Tax and the Automobile Revolution," Mississippi Valley Historical Review 48 (Dec. 1961): 435-459

Michael R. Fein
Dept. of American History
Brandeis University