Subsidizing Automobility: Financing Highway in the U.S.

This paper aims to examine the role of gas taxes in highway building and finance as one of the major factors that has contributed to the dominance of the automobile in America. In particular, it looks at how gasoline taxes came to be linked to highway building at the state and federal levels and how this practice affected the use and adoption of the automobile. Modern highway building in America started with the Good Roads movement in the late 19th century, which led to state and federal governments' aids to highway building in 1891 and in 1916 respectively. At first, highway building was financed out of general tax revenue, but, starting from 1919, states imposed gasoline taxes to use for road building. As states diverted gas tax revenues for non-highway purposes amid the Great Depression, automotive interest groups successfully lobbied for legally linking them to highway building. Federal gas taxes imposed from 1932 were also earmarked for highway building with the creation of the Highway Trust Fund in 1956. Earmarking gas taxes for highway building not only represented an instance of privilege granted to automobility in America, but led to more highway building both at the state and federal levels. Meanwhile, motorists' contribution to highway expenses through gas taxes never meant an end to the government subsidy to road building. The combined effect of these government actions was the widespread use of and dependence on the automobile in America.