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VMT Tax is the WRONG WAY to Fund Our Infrastructure
Vehicle Miles Traveled Tax Impact on Climate, Privacy, and Complexity
If the U.S. Department of Transportation was run by somebody with decades of administrative transportation experience then one could make an argument for giving the department even more power, but instead, it’s run by Pete Buttigieg.
A small-town mayor who made a national name for himself by running a failed presidential campaign. He clearly wasn’t chosen to lead our trillion-dollar transportation sector because of his experience.
During one of his many TV interviews, Pete suggested the federal government should consider implementing a Vehicle Miles Traveled Tax, which is “a policy of charging motorists based on how many miles they have traveled.”
If we believe in that user-pays principle—the idea that how we pay for roads is based on how much you drive—the gas tax used to be the obvious way to do it. It’s not anymore. A so-called VMT tax or mileage tax, whatever you want to call it, could be a way to do it. — Pete Buttigieg
But first, as a matter of principle, the largest government in human history shouldn’t be implementing new taxes/programs/regulations that have NEVER BEEN FULLY IMPLEMENTED ANYWHERE IN THE WORLD BEFORE!
There should be a long track record of success on a multi-state and/or multi-national level before moving forward with any new policy proposal no matter how wonderful it may sound on paper.
In the United States, a VMT fee currently exists as part of a limited program for 5,000 volunteers in Oregon and for trucks in Illinois. These are just “pilot programs” though. Internationally, Germany, Austria, Slovakia, Czech Republic, Poland, Hungary, Belgium, Russia, and Switzerland have implemented various forms of commercial truck VMT fees, but not for passenger cars.
With that said, there are three main reasons why one would support a VMT Tax…
Shrinking Gas Tax Revenue: As Pete pointed out the federal government is getting billions of dollars less in gas tax revenue each year due to more fuel-efficient and electric vehicles.
“Regressive”: Dems tend to dislike flat taxes hence why they call them a “regressive tax,” i.e. “a tax applied uniformly, therefore taking a larger percentage of income from low-income earners than from high-income earners.”
Happy Oil Companies: Often public policies become law because some corporate lobbyist is pushing for it behind-the-scenes, i.e. The Affordable Care Act was pushed by Big Pharma and Big Insurance hence why they have bigger profits now than ever before. A VMT tax would reduce the economic incentive to buy fuel-efficient vehicles therefore a VMT may actually “increase purchases of less efficient vehicles.”
This leads me to why, for the time being, a federal VMT Tax is a terrible policy proposal…
Pollution: If you really want to gauge if a politician believes we are in a climate emergency then look into if they support raising the federal gas tax. I understand it’s regressive, but it’s offset by the fact the U.S. has the most progressive tax code in the world. The top 10% pay 71% of federal income taxes. With that said, I support raising taxes on the 1% in order to bring down the national debt, but my point here is Democrat politicians shouldn’t dishonestly feign horror over a “climate emergency” if they’re only willing to hold people accountable whose vote they don’t depend on. Economists, environmentalists, and Elon Musk are CLEAR that raising the gas tax is the single best thing the federal government could do to curb carbon emissions. Economics 101: you should have to pay for your negative externalities!
Privacy: Big Brother is watching YOU in order to tax your movement! No thanks. With that said, VMT Tax proponents have proposed a variety of theories that could protect some of a driver’s data but I rather not be a guinea pig: destroying data after 30 days, multi-data entry system, on-board toll meter where all the raw data would be stored in the device and only some of the information would be sent to the federal tolling office, pay the tax with a stored value card instead of a credit card, or various forms of privatization.
Complexity: So in order to reduce some of the downsides I mentioned, a federal VMT tax could charge drivers different rates depending on their income, vehicle weight/efficiency/speed, roads they’re on, state they’re in, device/payment method they chose, etc. This information would then have to be shared on a multi-department/multi-state level. You can therefore see how this system applied to over 286 million registered vehicles could get complicated real fast, especially for a small-town mayor who has a busy media schedule. If you thought the rollout of Obamacare was a car crash then just wait until this gets the green light.
The bottom line is we can all agree air pollution is a serious health hazard and so there’s no reason for us to move so quickly away from a gas tax. A courageous politician, especially one who campaigned on the existence of a climate emergency, would support raising the Federal Gas Tax because it hasn’t been raised in almost three decades. And then once EV’s take over the roads, we don’t need to introduce another new tax, but instead, we can just readjust existing taxes like the auto sales tax and auto insurance tax to better finance our infrastructure. I believe this would be the best road forward. Vroom vroom!