How can we separate the state and federal taxes on gas so we know where our money is actually going?

by Kirk Mason (mason@wsbt.com)

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Skyrocketing gas prices have politicians debating the best way to ease the burden on consumers. (WSBT photo)

By Tiffany Griffin

Story Created: May 19, 2008 at 10:07 AM EST

Story Updated: Jul 23, 2008 at 9:55 AM EST

The first big holiday weekend of the summer travel season is almost here.

Many of you are thinking about gas prices with Memorial Day approaching.

Sheila Hughes of Granger wants to know, “How can we separate the state and federal taxes so we know where our money is actually going?”

Do you find yourself staring at gas prices wondering how they got that high? Taxes are a substantial portion of it. Right now, whether you're filling up in Indiana or Michigan, the taxes are about the same.

We based our calculation on gas that costs $4.00 per gallon. Michigan drivers pay an 18 cent per gallon federal gas tax, a 19 cent state gas tax, and then a 6 percent sales tax which amounts to 24 cents per gallon. So in Michigan, based on $4.00 per gallon, you're paying 61 cents of that in taxes.

Indiana drivers also pay the 18 cent federal tax and an 18 cent state excise tax. In Indiana, the sales tax is now 7 percent. But that doesn't include the other tax money, so it would be 7 percent of $3.64. Drivers would pay just over a quarter in sales tax.

So, based on a $4.00 gallon of gas, Indiana drivers would also be paying 61 cents of that in taxes.

Presidential candidates Hillary Clinton and John McCain both support suspending the federal gas tax.

Barack Obama argues against the plan, saying prices could go up offsetting the tax cut. That's because more drivers might then head to the pump to fill up.

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