The Stupid Driving Tax That No One Wants

Back in January, The Big Money ran a sharp piece by Matt DeBord arguing that while an increase in the gasoline tax would not necessarily reduce American dependence on foreign oil, it was a good policy idea anyway and should be pursued. When he first proposed it, I was wary of running it, because it seemed to me politically impossible to hike the gas tax while so many Americans are out of work or afraid of becoming so.

Since then, the parameters of the impossible have shifted, and now tax experts are openly treating as possible one of the dumbest ideas to come around in decades: taxing people for driving, not for buying gas. Sunday's New York Times ran a strangely credulous story on this proposal; on Tuesday morning, NPR's Morning Edition aired a piece with slightly more context. The argument backs into the policy this way: We use the federal gas tax to fund road construction and maintenance. Due to the recession, more fuel-efficient cars, and higher gas prices last year, the revenue gathered is declining; "The Department of Transportation took in about $71 million less in gas taxes in the 2008 fiscal year than in 2007," says the Times. Down the road, as it were, the gap between what the government collects from gas tax and what it will need to spend on infrastructure is bound to be immense; one federal study predicts the gap will be around $68 billion by 2035.

The proposed alternative: taxing Americans for how much they drive. Based on pilot programs in Oregon and elsewhere, people are now saying it would be a good idea to put a device in every car to measure the mileage driven and tax drivers on that basis.

How many ways is this a bad idea? First of all, while I personally don't put much stock in privacy concerns here, there will be organized opposition from people who say it's not the government's business where and how often they drive their cars. That represents a waste of a lot of political energy—and, probably, expensive lawsuits. Second, there will be substantial costs associated with implementing the devices, certifying that they've been installed, and enforcing that they are being used properly. There are about 235 million carlike vehicles in the U.S. (cars, minivans, vans, SUVs, etc.), and another 9 million trucks. Figure it costs $100 to rig each one with an odometer monitor; that's $24 billion for installation alone, leaving aside the costs of maintenance, replacement, and enforcement.

But most of all: Gas-tax revenue is declining because Americans are driving more fuel-efficient cars than they used to and, for the first time in modern history, Americans are actually driving less—about 13 billion fewer miles in November 2008 than in November 2007, according to the Times. Those are good developments that we should be celebrating and encouraging! As Mark Gimein pointed out on our site recently, the state twists itself into a very strange position when it becomes revenue-dependent by taxing behaviors that society would do best to discourage. To its credit, the Obama administration has shot down the idea of a federal mileage tax anytime soon. (Although the transportation secretary said he was considering it, he was shot down the next day by the White House press secretary.)

The only positive aspect I can see in a mileage tax is that it would theoretically allow the government to differentiate between vehicles that waste gas and pollute and those that save gas and don't pollute as much (such as electric vehicles). But the truth is, the government can already do that through tax incentives and disincentives. Taxing mileage is a bad idea that no one really wants; it's simply a lack of imagination that makes anyone advocate it all.