The Hill is reporting that the Obama administration is flirting with the idea of taxing cars based on how many miles they drive. From the Hill:
The Obama administration has floated a transportation authorization bill that would require the study and implementation of a plan to tax automobile drivers based on how many miles they drive.
[...]
Obama’s proposal seems to follow up on that idea in section 2218 of the draft bill. That section would create, within the Federal Highway Administration, a Surface Transportation Revenue Alternatives Office. It would be tasked with creating a “study framework that defines the functionality of a mileage-based user fee system and other systems.”
This won’t just be a public relations nightmare, but on every imaginable policy level, including environmental, health, government spending, national security, and civil liberties, this is a really terrible idea. I can only hope this is a trial balloon I can soon pop.
We already have a system for effectively taxing people to pay for the highway system based on how much they drive, it is the gas tax. It is a far superior way to pay for the highway system. It encourages people to buy more fuel-efficient cars and places a larger tax per mile on heavier vehicles, which tend to produce more wear on our infrastructure. It also makes the cost of increased driving more tangible than a miles tax would. That should more effectively encourage less driving while helping people better budget their transportation costs.
A horrible alternative
Using a vehicle miles tax instead of higher gas tax takes away this incentive to drive less and drive more fuel-efficient cars.
- Environmental - This means more greenhouse gases.
- Public Health – This will result in more car-based air pollution that causes serious health problems, like asthma in high-population areas.
- Government Spending – Health care costs are a huge driver of government spending. Choosing a policy that is worse for public health will end up very costly overall.
- National Security – This will take away an inducement to reduce our use of foreign oil.
- Civil Liberties – To make this system work requires the federal government to gather even more information about you and your movements.
- Tax Evasion – It is very hard to drive a car while avoiding buying gas, avoiding any miles-based tax system would likely be easier.
- Government Efficiency – Creating and running the new system to implement a new miles tax is going to eat up at least some of any new revenue, but since the gas tax is already in place, any increase in that tax will be pure added value.
A PR nightmare
The only logic I can see for trying to create a new vehicle miles tax instead of just raising the gas tax is that politicians have decided that raising the gas tax would be too unpopular. Well, creating a brand new tax that requires the government to create a whole new system to gather more information on people is going to be even less popular. Also, the gas tax is basically hidden in the price at the pump, getting a yearly or quarterly tax bill from the government based how much you drive makes it much easier for people to hate it.
Maybe at some point in the distant future we will be so lucky that 80 percent of the cars on the road are electric and at that point we will need a debate about a new funding source for our highways. Until then, however, the gas tax is such a radically better policy on every level that any talk of a vehicle miles tax should be dismissed forcefully.
Update:The Hill is reporting the Obama administration is disowning the car mileage tax. Thanks to micki.






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Sorry Jon, I think you’re wrong here. You hint at a major reason in your close–every lightweight or nongas vehicle on the road cuts the revenue for highways, and eventually we’ll reach a tipping point. And it won’t take 80%, either; long before then the fund would see significant declines that would need replacing.
But the larger point–that people react to driving cost increases–isn’t supported by the facts, that either you provide or I believe are true. People react to the high PRICE of gas, but not the COST of driving. When prices go up, there is a quick and direct way to avoid that cost: stop driving so much. But the cost of a heavier vehicle is built-in, and much more inelastic, particularly in a recession: how are you supposed to buy a new, lighter car? For one thing, people understand enough about the cycles of gas prices, that driving less becomes reasonable but changing cars is too much of a change.
Have lighter/low fuel cars become more popular as gas has become nominally more expensive (remember, it’s still near or lower than peak real-dollar prices in the early 80s)? Sure. But we also have seen the rise of bigger SUVs and crossovers right along with it. People don’t buy hummers anymore, but they’re still buying (eg) Lexus 350s and Acura MDXs, both of which are smaller than true SUVs but have horrible mpg. For many people, the vicious cycle of wanting a bigger car for safety because of all the bigger cars on the road, is more important than saving money with a smaller car. In short, the use of gas pricing to get people to buy smaller, more efficient cars has seen mixed results at best.
But what DOES happen when prices go up, is that people either drive less, drive with others more, or switch modes entirely (to public trans or cycling, for instance). It is a direct, micromanagable response, one that changing cars is not.
So taxing by miles is really just a consumption issue, fully adjustable at the consumer level. Your ability to assess costs is highly transparent: drive another mile, pay more in tax. Figuring out how heavy your car needs to be, or what its mpg should be, in order to reduce your tax is much more abstract. You know those are factors, but they are unfixable on the fly and are a function of the car rather than the usage pattern. How you can assert that drive-by-mile taxes fail to provide the incentive to drive less, is beyond me. I just rented a truck to move some items in town, and you’d better believe with a per-mile charge I was honed in on how much I was driving. If I was simply forced to refill the tank when done, and the more I drove the more I’d have to fill up, would I have thought to myself, “Hmmm, what’s the sweet spot between size of truck and how much stuff I have to move?” Doubtful, and I’m more energy conscious than 75% of my fellows IMO. Most of your assertions on the problems stem from the idea that there will be more driving, not less, with a mileage tax. I don’t see where that’s supported, and intuitively I think it’s wrong.
In Oregon this very idea was floated, with the concept of an odometer checker as an installed piece on new cars for generating the taxable amount. I feel pretty confident this would make applying the tax MORE efficient, not less–it would be electronically transmitted at the individual level.
Which leaves only the civil liberties argument, which is indeed somewhat problematic. The govt may not know WHERE you’re driving, but they would know exactly how much. Frankly, I can live with that. Evasion might also be an issue, with folks disconnecting or spoofing their mileage transmissions, but that would be limited to an infinitesimal slice of the populace, perhaps similar to the people who can defeat copy protection on DVDs.
It doesn’t seem that gas tax really encourages less driving or more efficient vehicles, look at the SUV culture that still exists in this country. All the gas tax really does is create a political pain point that Republicans can exploit.
If anything the gas tax should be moved into a general tax which everyone contributes to. There is not a person in this country who does not benefit from roads, they’re not just for driving. Really businesses need roads in order to do commerce, so they should pay the most for them. But that would just be a cost passed on to everyone, so might as well go for the simplest solution and make general fund taxes pay for roads.
Agreed.
Regressive gas tax ideas never die, they just morph into something worse. None of the issues Jon mentioned should be addressed at the driver/car-buyer level.
He’s jus giving the teabags summit to yawp about so they can hold up their end of the Ostermann Window. He knows he looks silly when pre compromising with himself. Acrobatic position puts a cramp in his candy ass too, doncha know.
http://www.youtube.com/watch?v=Mb4hK8GZ93s
So let me get this straight: if I drive 10,000 miles in a Honda Civic I would pay the same tax as someone who drives 10,000 mils in a Hummer?
More Obama stupidity.
This again?
They already floated this once, at the beginning of the administration. Lasted one news cycle.
Not even sure what they are trying to accomplish.
If you want to reduce driving you design (yes, Virginia, I mean central planning) cities that do not require automobiles.
If you want to reduce petroleum usage you put a $5 per gallon tax on fuel, and reduce some other tax somewhere else (maybe raise the standard deduction or something) to keep it revenue neutral.
If you want to raise revenue you tax big business and the wealthy.
According to a recent CBO report, full implementation of the next round of CAFE standards will require that the gas tax be raised to $2.10/gal in order to provide sufficient funds to maintain the road system. I’m not, fundamentally, opposed to that. The bigger the stick pushing people out of their cars and freight from road to rail, the better off we will be. If there are some groups who are disproportionately harmed by this and need relief, figure out a way to give them an income tax rebate.
On the flip side, the sort of reduction in fuel consumption caused by full implementation of the next round of CAFE would reduce the underlying price of fuel.
The biggest offenders in terms of road damage are heavy trucks, and the number of miles they drive is already closely tracked by both the government and truck owners. It would be relatively low-impact to impose a substantial per-mile tax on heavy trucks.
The guy in the Hummer pays a lot more in gas taxes than the person in the Civic. No-one is talking about eliminating the gas tax.
WHITE HOUSE DISOWNS PLAN TO TAX CAR MILEAGE
Pop!
Good on the POP! I was just going to mention something not ber micro-manageable: rural people often drive fairly far to work, grocery stores, etc. Not too easy to change locations by now. It may be tough nugies one day, but…
But it is a great excuse to track everyone’s movement.
There is a difference between:
(a) a tax on miles driven; and
(b) a tax on miles driven that is proportional to the per mile fuel efficiency of the car.
Which are we talking about here?
What the hell is wrong with this jackass? For Gods sake man, end oil futures gambling, end the oil subsidies, raise taxes on the rich. Get revenues rolling. Enough with hitting everyone but the rich and wall street already.
he hasn’t gotten rid of tax payer subsidies to billion dollar profit oil companies and now he wants to tax me more for driving to work. and Surtt at 10 is right–way to collect more information on us. this will be additional gas taxes on top of the gas that Obama allows wall street to speculate on. no. don’t think so. Obama needs to flirt and bat his eyes with the idea of cutting all subsidies to the rip-off and environment-destroying oil companies.
It’s a police state thing. Put a chip in my car and you will always know where I am and where I have been. When I file my taxes I declare my miles. The IRS compares my claim to actual miles and bills me if I cheat. I have a sticker on my windshield that shows my vehicle has been recently inspected for compliance. If I’m not doing anything wrong why should I object?
I almost forgot. Government and corporate vehicles will be exempt.
Jon, this first came out in 2009, it was proposed by REPUBLICAN Ray La Hood, President Obama’s Secretary of Transportation. It was dismissed quickly then, just as it has been dismissed quickly today. This story really has no traction but is all of a sudden being recycled.
Well intentioned people occasionally have a bad idea.
Nationalize oil, energy, transportation.
Regulate Wall St. and investing.
RAISE taxes on corporations and the wealthy.
End of story.
Heh, who the hayall is well intentioned on the behalf of we the people?
*G*
Electric cars are powered by fuel
burned at the power plants.
Much of the energy is lost
in transmission to the electric car.
The U.S. early on had elaborate, award winning
mass transit systems.
http://academic.regis.edu/jroth/TAKEN%20FOR%20A%20RIDE.htm
(factual statements not independently verified)
http://sites.google.com/site/evernewecon
Robin Chase, founder of Zipcar, has been talking about this for awhile. From what she’s said I gather that a vehicle miles tax is very much in the pipeline for both Federal and state agencies. Part of the attraction may be the possibility of not only logging but tracking every mile traveled. 24/7 personal tracking is already happening with cell phones. It’s fairly trivial to extend it to cars and trucks.
Right and that’s the punisher for this idea, you can replace the gas tax but adding it on top of the gas tax is insane (I saw the update that the WH has already shot down the trial balloon).
What does make sense is a GPS-based congestion pricing, but only in the most congested metro areas (no reason for people in Montana to get riled up over a car-based GPS system when there is no congestion for hundreds of miles. Oregon experimented with congestion pricing and found it reduced rush hour highway usage by more than 20%.
http://ops.fhwa.dot.gov/speeches/epssummit07/images/hovhotlocations.jpg
http://www.scribd.com/doc/49429115/Traffic-Congestion-Pricing-Europe-vs-US
A disclaimer- during the day Faux news is the only news channel I can get at work, so when I saw Neil (my head’s about to explode because of this 2 sizes 2 small shirt collar) Cavuto say this today, I thought it was just the usual Fox news nonsense.
Wow, talk about your bad ideas!
Another phrase for a vehicle miles tax is “toll road”.
No doubt some genius thinks we can implement this with an E-Z Pass for All initiative.
It is the “user fee” approach to infrastructure. If the E-Z Pass for All system is what is intended, it is possible to assign different tax rates to different vehicles, based on characteristics like mileage, weight, pollutants. And this information can be tied to VIN number. And taxes could vary by location, taxing congested areas at a higher rate.
Implementation means E-Z Pass sensors on every mile of road in America. And refitting Google maps with a trip cost indicator, based on route.
When a fuel tax increase would be easier to implement because the collecting system is already in place. And fuel use depends on weight. And asphalt costs depend of crude oil prices.
The only reasonable assumption for doing it is to collect highway taxes after non-fossil fuel vehicles dominate American highways. So is this really a tax-collecting infrastructure proposal?