Search


Subscribe to AFM


Subscribe to AllFinancialMatters
by Email

All Financial Matters

Promote Your Page Too

The American's Creed

Site Sponsors

Books I Recommend


AFM in the Media


Money Magazine May 2008

Real Simple March 2008

Blogroll (Daily Reads)

« | Main | »

I HATE This Idea: Taxing Drivers By the Mile

By JLP | February 26, 2009

There’s a new commission report (study) out about Americans and their driving. From the Wall Street Journal:

The government should make it a lot more expensive for Americans to drive and should install devices in cars that levy a fee for every mile traveled, according to a report being released Thursday by a congressionally chartered commission.

Among the proposals: raising the 18.4 cents-a-gallon federal gasoline tax by 10 cents, or 54%, and then indexing future increases to inflation. The study estimates that would cost American households about $9 more a month. The plan also calls for adding 15 cents a gallon to the 24.4 cents-a-gallon tax on diesel fuel.

Longer term, the study calls for shifting away by 2020 from a fuel-tax system to a technology-enabled system that levies taxes based on how many miles people drive.

I don’t know about you guys but last idea just gives me the creeps—a little too big-brotherish in my opinion. I like the per gallon gas tax better. At least with the per gallon tax, you can control it somewhat by buying a more fuel-efficient car. A miles driven tax would ruin that. Plus, I think it penalizes people who live in the country or parts of the country where driving is a necessity. I would be interested to know how much driving the people on the commission do.

I think if they want to do something like this then they should also tax taxi customers per mile and people who ride buses and subways. I mean let’s REALLY make it “fair.”

Topics: Miscellaneous | 28 Comments »


28 Responses to “I HATE This Idea: Taxing Drivers By the Mile”

  1. Kevin Says:
    February 26th, 2009 at 2:27 pm

    I actually find this surprising that the government is trying to stay ahead of the technological curve for once. THey are only doing it because it hurts their tax base but I am impressed none the less.

    First you are already paying the tax and the only reason they want to change it is because in the future some people will be circumventing the tax by having all electric vehicles.

    The problem is actually in a fundamental flaw in their thinking. And that is that people who don’t drive shouldn’t be taxed for road maintenance. Just because you don’t personally drive a vehicle doesn’t mean you don’t derive benefits from having a road go by your house or into your town. How does your food get to the store? How do you get to work if not by car?

    Just increase everyone’s property taxes and be done with it. That way the cost gets passed onto everyone and there is no big brother tech needed.

  2. The Weakonomist Says:
    February 26th, 2009 at 3:17 pm

    I admire the study’s attempts for progressive forms of taxation, but I don’t like where this is headed either.

    Kevin had a great explanation above too. People who don’t drive still see advantages from others who do.

    Thanks for posting this. I know it’s tossed around in the UK often but hadn’t heard it here.

  3. Compounding Says:
    February 26th, 2009 at 3:54 pm

    This is a ridiculous idea, plain and simple. They want to install GPS units in EVERY vehicle, and then they “phone home.” Further, they claim that this wouldn’t be used to track people’s whereabouts and that there no privacy concerns…. rolflmao!!!

    If they really want to track mileage, why not have them check your mileage at the BMV when you renew your plates each year?

    The better idea, if more funds are absolutely necessary (and I am not sure that they are), would be to just raise the fuel excise tax. It is simple and doesn’t create a ridiculous new department in the federal government…

    Honestly, Obama has already gone on the record stating that he doesn’t support this. I think his administration leaked this idea on purpose just so people would beg him to raise the fuel excise tax as a “reasonable” alternative.

  4. Chad Says:
    February 26th, 2009 at 4:06 pm

    Hmm mileage tracking device for taxes? THAT would be the first wire I cut.. or find some way to bypass… First Daytime Running Lights and ABS.. now this… either that or never buy a new car, just keep the old one around.. it may be cheaper to fix it than pay all the taxes, compounded over time based on mileage.

  5. anna Says:
    February 26th, 2009 at 4:19 pm

    I do find the idea of taxing per mile to be pretty over the top, but your statement at the end of “I think if they want to do something like this then they should also tax taxi customers per mile and people who ride buses and subways. I mean let’s REALLY make it “fair.”” is just kind of silly sour grapes.

    You already are taxed per “mile” to ride a taxi – it’s called a fare. And the bus/train are going those routes anyway – so the more and longer people ride it, the *more* efficient they are. Person*miles/fuel increase faster than fuel or electricity used do. Your arguments are much more compelling when you don’t add strawmen to the end of your text.

  6. Andrew Says:
    February 26th, 2009 at 4:27 pm

    Kevin–that’s a stupid argument. People who derive benefits from roads but don’t drive will pay for this tax (if it is implemented) in the cost of the goods and services they buy that make use of the roads.

    “How does food get to the store?” On a truck, whose operator charges the grocery store for his services. If the truck operator has to pay a per mile road tax, the grocery store will have to pay it to him, which means we food-eaters will have to pay it to the grocery store. This isn’t exactly rocket science.

    A per-mile road use tax simply makes sense. It’s really more like a fee than a tax. Roads cost money to maintain, and people who use them more should pay proportionately more for this maintenance. A Prius does just as much damage to a road per mile as a BMW, so there’s no reason a Prius driver should have to pay less for road upkeep even though he uses less gasoline. Such a tax would not “penalize” people who live in areas where lots of driving is required. It will simply result in them paying their fair share of the cost of the roads they drive on, rather than making the rest of us subsidize them.

  7. JLP Says:
    February 26th, 2009 at 4:27 pm

    Anna wrote:

    “You already are taxed per “mile” to ride a taxi – it’s called a fare.”

    That’s not a tax—you’re paying for the cost of gas, oil, repairs, and the service, which is what you pay when you drive your own car. It’s not a tax.

  8. Andrew Says:
    February 26th, 2009 at 5:28 pm

    JLP — obviously, the cost of any per-mile road tax would be incorporated into the fare. Just like, as you even mentioned yourself, the cost of gas (including gas taxes) is already incorporated into the fare.

  9. vanderlei Says:
    February 26th, 2009 at 5:36 pm

    This is a push for people to better use public transportation which is government controlled/subsidized that will be pushed in the name of fairness.

    the gas tax is supposed to pay for roads, what will all this extra money be used for?

  10. rob Says:
    February 26th, 2009 at 8:13 pm

    toss this argument in the mix as well: If you live out in the country and you have roads being built and maintained that are miles and miles long in the middle of nowhere but 50 or less people drive on them a day, the mileage tax takes care of that (partially anyway). You chose to live 30 miles away from a walmart, etc for serenity and peace; you should pay if you want paved roads. My wife and I tossed ideas back and forth because we were in an area for volunteering to have GPS units installed and sent a fake bill. It came down to them (Gov) fearful of losing taxes due to non-gas transportation.

  11. tom Says:
    February 26th, 2009 at 9:05 pm

    Mileage tax is a horrible idea. Just another HUGE Gov’t program that requires a ton of oversight and unnecessary technical infrastructure.

    An added gas tax is a good idea, but not now. It should have been done after 9/11 with the justification that middle eastern terrorists get 99% of their funding from oil. Not only would that have “forced” Americans to drive less, it would have provided a massive amount of funding for alternative energy. BTW… I am stealing this directly from Thomas Friedman’s book. I thought he was a great idea.

  12. Preston Says:
    February 26th, 2009 at 10:44 pm

    What I find is unfortunate is that there isn’t a motorized vehicle that is affordable that can get me my 2 miles to work safely. What, 2 miles, you lazy blob Preston you, you say?

    The road to work is 40MPH, 2 lands + center, with 12″ diameter pot holes every 24″. There is no shoulder, and the road drops fairly steeply 3 feet or so to water diversion tracts.

    As a result, the only safe place to say, ride a bike, is on the road. Unfortunately, because it is 40MPH folks believe that YOU the cyclist aren’t entitled to use the road and try to force you to the side. I’d have no problem with that if (A) there was a side to go to or (B) if I hugged the line, they wouldn’t swerve to avoid the potholes (C) the potholes ON THE LINE were fixed.

    That being said, raising the tax per mile makes a ton of sense in my mind as folks who drive more will bear more of the burden.

    Unfortunately taxing gas alone hurts me more than say, the person who drives 60 miles because on a whole, their journey is more fuel efficient.

    Now if the road was properly maintained, I could ride a bike and the whole thing could be moot.

    :-)

  13. Andrew Says:
    February 26th, 2009 at 10:50 pm

    @tom: Not sure why you think it would require lots more oversight or infrastructure. Just take a new odometer reading every time the vehicle is inspected and report it to the IRS and/or state tax agency.

  14. Stacey Says:
    February 27th, 2009 at 12:25 am

    JLP, you already know how I feel about this one. I might be moving to Costa Rica b/c I feel like I…. am getting taxed…to … d-e-a-t-h…

    P.S. RIP fellow top “2%ers.” You worked yourself to death for the “98%.” That’s what you get for being overachievers and siezing the opportunities your capitalist country offered. I guess there will have to be a new 2% targeted to replace the bodies, um I mean workers, eh? And so it will go…

    Oops, should this be on APM?

  15. headknocker Says:
    February 27th, 2009 at 7:58 am

    I one way this would be another tax on the middle class. Most middle class people have to commute long distances to get to work because they can’t afford (or choose not) to live/raise a family in the city.

  16. EZ Says:
    February 27th, 2009 at 8:32 am

    Does anyone want a tracking device in their car so the government bureaucrats can track you? The potential for abuse is huge. Isn’t this America, the land of the free and the home of the brave?

  17. Neal Frankle Says:
    February 27th, 2009 at 8:35 am

    Roads and bridges lead to easier commerce – and that is important for everyone- even for the person who doesn’t do the driving.

    You are right, this is a dumb idea.

  18. Scott Says:
    February 27th, 2009 at 9:07 am

    Another example of Government oversight! By oversight, I mean they did not think of the consequences of their prior actions. As in taxing tobacco to pay healthcare, the consumption of tobacco went down and a shortage of funds for healthcare followed. Higher oil prices, less miles driven, less tax revenue. Raise taxes more, less miles driven. More miles per gallon, less gallons used; all resulting in less revenue.
    Where I come from, this is closing the gate after the horse got out…..
    Lets encourage government to work “for” us (;>)
    After all, isn’t it a government OF the people, BY the people, FOR the people. “THE PEOPLE” is what has lost it’s definition, comrade!

  19. BD Says:
    February 27th, 2009 at 10:11 am

    Taxi customers already pay a fare based on miles driven – it just seems obvious to me that they’d pay new miles-driven tax through higher fares! Why are you skeptical?

    I wish there was a way to implement this other than GPS units, though. Maybe at the same time that you have to get a smog check you could get an official odometer reading?

  20. Lindsay Says:
    February 27th, 2009 at 11:42 am

    There are two things that bother me about this idea:

    #1 – Using taxes as a method of controlling people’s behavior. Trying to “force” people to drive less by taxing them (or raising the gas price artificially) is dangerously curtailing freedoms that Americans have bought and paid for with their lives. Sure, Americans didn’t die in order to have “freedom to drive” – but they did fight and die in order to have their freedoms NOT encumbered with additional, useless legislation.

    #2 – From what I’m reading, the idea is to replace the gas tax with the per-mile tax. So, the government “promises” that it will remove taxes on gasoline once it institutes the per-mile tax? And we believe them? As has recently been pointed out to me, how often are taxes REMOVED??

    Add to that that I’m totally against GPS devices in my car the the government has installed, and you have my reasons for being totally against this plan. The government is a sucky money manager, or it wouldn’t need all this additional income. My opinion:

    No New Taxes!

  21. Tim Says:
    February 28th, 2009 at 4:16 pm

    I find it amazing the ACLU and other civil liberty folks aren’t screaming loudly about privacy. I guess when their dude is in the office, who cares about privacy.

  22. thomas Says:
    February 28th, 2009 at 9:13 pm

    You forgot to add: bicyclists, pedestrians, skateboarders, unicyclists (I actually saw one yesterday). They all use the roads and from my understanding, aren’t contributing enough to the system. We could open up extra lanes if bike lanes were removed.

    The real reason for this is actually quite simple – The gov’t isn’t getting the tax dollars. Think of how much they are pushing fuel efficient cars and how the economy is affecting our behavior. Taxes come from fuel sales, a majority of it for all you anti oil company folks, and now that we have begun correcting our behavior the gov’t revenue is down.

    So this is their answer, to punish good behavior. Oh sure, there are still people who drive Hummers and all that, but the real reason is the gov’t needs more of your money.

    ALWAYS follow the money.

  23. Geoff Says:
    March 2nd, 2009 at 9:51 am

    The only reason they would need to use a gps is to make sure that they are only charging you when you are driving on american roads. The idea is the same for states trying the pay-per-mile tax, they want to make sure they’re only taxing you for using state roads, not when you are out of state.

    As others have said, roads aren’t cheap, we’ve built too many into places with few individuals and everyone else is paying for those roads, and if you want to live in rural areas you have to deal with the costs; and the gas tax is only a bandaid to our infrastructure problems since cars are becoming more efficient and the federal and most state gas taxes are not linked to inflation. The only problem I see with this is that larger vehicles may not be taxed more than smaller ones even though larger vehicles wear down the road faster.

  24. Beth Says:
    March 2nd, 2009 at 1:36 pm

    Could we possibly look at the programs that do not work and the money we are squandering on them?

    I made the choice to live in a small town and drive 20 miles (one way) to work. If I were to give up my job, and obtain a job in the town where I live to avoid the tax, I would likely take a 60% cut in pay. That would lower my tax obligation all the way around – and give me less disposable income.

    If there is a way to jam these devices, you know someone will figure it out. The government needs to figure out they need to reward the good – punish the bad.

    We need more fiscal responsibility – not more rules and regulations!

  25. sam Says:
    March 2nd, 2009 at 5:26 pm

    I can’t believe that people are arguing about relative merits of this idea. The fact that someone in the government thinks it is a good idea to put a tracking device into our cars and record where we are driving is depressing and infuriating. And apparently some persons have no problem giving away more of the dwindling amount of their privacy in search of some more “fair” or “progressive” way to collect the tax on fuel. People with such a low regard for their liberty or privacy deserve neither.

  26. Preston Says:
    March 3rd, 2009 at 11:41 pm

    sam, you’re advocating I pay for my freedoms and liberties. I’m far more practical than that: If I’m going to not have those freedoms and liberties, I will at least get a chance to pay less.

    You have no privacy. Don’t deceive yourself.

  27. todd Says:
    March 6th, 2009 at 5:50 am

    to anna:
    you miss the fact that roads help us all so we should all pay. the demise of our country comes from a tiny word. Hate. People hate to see others do well. we hate certain groups of people as a whole. just ask the rich we already tax them so hard they pay for 90% of the total tax rev. and make up less than 10% of the population. Last time I checked the rich are the ones with more money to spend. when i got my stimulus i had to pay bills with it. Rich people didnt need that money so they used it buying new products which helped our economy. Screw obamas plan to create everything equal. I want an equal shot at a government job. i applied for the post office in MD where i live and nobody called back but i’ll be damned if they dont have new black workers all the time coming and going. when whites are the MINORITY, i’m draining everyone of everything I can and making sure everythings EQUAL. so equally pay for the roads anna, you douchebag!

  28. todd Says:
    March 6th, 2009 at 6:01 am

    sorry to outburst but i’m sick of double standards and people thinking they don’t have to chip in. In balt city a white old lady was assaulted by 5 black males on a bus but no hate crimes were filed. There’s a NAACp headquarters 3 miles from where that happened. but if they were 5 white males they’d never see the light of day again. ridiculous! they’d say we’ll drop gas tax but they’d keep that then tax per mile. think man! couple that to the fact it must start a new agency of overpayed minorities who won’t fully qualify for the jobs this tax will create. Things don’t run themselves you idiots. everything needs oversight. factories that make foods still need workers to run machines and so do gps devices and tax agencies

Comments