Cincinatti - Let Wall St. Pay for New Brent Spence

Op-Ed

By Marek Tyszkiewicz

The Highway Trust Fund is currently financed primarily through federal gas taxes -- 18.4 cents per gallon of gas and 24.4 cents per gallon of diesel. These amounts have remained unchanged since 1993 and have not kept up with inflation. Because of more fuel-efficient vehicles, we are also using less gas.

The gas tax does not generate enough revenue to keep the Trust Fund solvent. For fiscal year 2015, revenue of $38 billion is expected to be raised by the tax, $15 billion short of the $53 billion needed.

A new, long-term, reliable funding source is needed. Many in Congress simply suggest raising the gas tax. Instead, I propose repealing the gas tax altogether and raising the needed revenue from a small transaction fee on derivative trading.

Recall that our most recent recession was started by a collapse in the financial markets caused, in part, by speculative trading. It would only be fitting to use a speculative trading tax to help restore our economy and infrastructure. The numbers on why we should do this are pretty compelling.

By eliminating the federal gas tax, fuel prices nationwide will drop. More money will flow directly into the hands of consumers and businesses who will spend it, effectively creating a $38 billion economic stimulus.

The gas tax revenue lost can easily be replaced with a derivative trading tax. A study by the University of Massachusetts Amherst illustrates how. Excluding all stock and bond trading and assuming derivative trading volume decreases 25 percent as a result of the tax, a small transaction tax (1-2 percent per trade, depending on type of trade) produces $63 billion in annual revenue, $10 billion more than currently needed!

Every $1 billion in infrastructure spending creates approximately 15,000 to 20,000 new jobs. This extra $10 billion financed by Wall Street bankers creates approximately 175,000 new jobs and a strong infrastructure, creating strong corporate balance sheets that positively impact our financial markets.

A transaction tax on speculative trades has other added benefits. Consider the impact this type of trading has on pension savings. With the demise of traditional pension plans, most ordinary folks now save for retirement through 401Ks and IRAs and are subject to market volatility.

If carefully targeted at certain short-term trades, such as automated, high-frequency trading or derivative trading purely for speculation, more investors will look to buy and hold strategies, reducing market volatility. Wild market swings create panic and increase the likelihood that ordinary investors will make bad decisions. Reducing market volatility is a good thing for the middle class.

Reducing fuel prices, rebuilding our infrastructure, creating jobs, and decreasing market volatility are ideas that appeal to both political parties. Shippers, truckers, commuters, labor, and the Chamber of Commerce all support funding of the Highway Trust Fund.

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