Vance Ginn Economics
  • Home
  • About
  • CV
  • Media
  • Podcast/Speeches
  • Blog/Research
  • Research
  • Teaching
    • ECON 2301-Princ of Macro
    • ECON 2302-Princ of Micro
    • ECON 3352-Energy Eco
  • Home
  • About
  • CV
  • Media
  • Podcast/Speeches
  • Blog/Research
  • Research
  • Teaching
    • ECON 2301-Princ of Macro
    • ECON 2302-Princ of Micro
    • ECON 3352-Energy Eco

A “Vehicle Miles Traveled” Tax is a Bad Idea

8/19/2021

 
​As if the $1.2 trillion “infrastructure” bill in Congress could not be worse, a closer look shows that among other bad ideas there is $125 million allocated  to fund the creation of pilot programs to evaluate a federal vehicle miles traveled (VMT) tax.

The idea behind the VMT tax is to tax drivers for every mile they drive, which could address both traffic congestion and the increasing supposed shortfall in the Highway Trust Fund. This shortfall is caused in part by lower gas tax revenue (lower than some desire, that is) due to more fuel-efficient vehicles and the increased use of electric vehicles (EVs) that don’t pay fuel taxes, as well as by inflated costs of building and maintaining roads and bridges.

How would a VMT work? In short, it won’t. But let’s play along with the fantasy.

One method would be to require a GPS device in every vehicle which would transmit your vehicle’s data to the federal government. Thankfully, in 2012, the Supreme Court ruled that such a requirement would be unconstitutional.

A second method would be annual odometer readings done at vehicle inspections; this would likely just incentivize fraud. The IRS would have to assume the responsibility of auditing the odometers of roughly 289.5 million registered vehicles. Doesn’t that sound fun?

Oregon and Utah are two of the first states to launch state-level pilot programs.

Oregon’s VMT tax trial participants have three options to sign up for—two privately run systems and one administered by the state’s Department of Transportation. The private companies allocate devices to drivers which log location and distance travelled, then send out tax bills and remit the taxes to the state.

State programs operate on a small scale, while the proposed national system would require the feds to track hundreds of millions of vehicles.

Remember, the federal government does not have $1.2 trillion available, as some of the bill is being funded with unspent, previously authorized funds, but the new spending could add at least $250 billion to an already bloated national debt. Despite President Biden’s call to ease the financial burden on America’s lower-income earners, these policies will prove to be most detrimental to them.

Consider the ongoing 2018 Two-Hundred lawsuit against the California Air Resources Board (CARB) aimed at stopping the implementation of its multi-billion dollar “scoping plan.” The plan’s goals included a “net zero” emissions requirement, a numeric per capita threshold, a mandated VMT tax, and a “vibrant communities appendix.” The costs to fund this plan disproportionately harm low- and moderate-income families and negatively influence the state’s economy.

Such policies continue to drive up housing costs, contributing to their homelessness problem.

VMT taxes will place an additional financial penalty on low-income families who can’t afford to—or choose not to—live in urban centers. Urban inhabitants are forced to move out of urban areas, then charged even more for doing so by imposing a tax on lengthy commutes.

Gas and VMT taxes create an unnecessary burden on taxpayers, as they are funneled through third-party channels, increasing the costs. They also discourage driving, which will inevitably hurt employment and upward mobility. Both taxes increase the price of consumer goods and have a negative impact on economic growth.

The U.S. shouldn’t impose a VMT tax to make up for a lower gas taxes collected. Instead, transportation spending should come from general revenue, which it has since 2008. Also, more affordable ways of providing transportation should be considered instead of repeating the same costly mistakes.

The federal government needs to quit piling on new taxes and subsidies that hurt those most who can least afford less opportunities available to flourish. Instead, Congress should focus on unleashing the power of the free market to make energy (which affects everything we do) more affordable.

It is time to reexamine why such a large transportation-related deficit is automobile-centered and face the fact that it is unsustainable. Adding and raising taxes thrusts our constitutional republic towards an autocratic order, which along with irresponsible spending should be rejected in favor of responsible spending that better helps all Americans, especially low-income earners.

Commentary

Comments are closed.

    Vance Ginn, Ph.D.
    Chief Economist
    ​TPPF
    ​#LetPeopleProsper

    Vance Ginn, Ph.D., is founder and president of Ginn Economic Consulting, LLC. He is chief economist at Pelican Institute for Public Policy and senior fellow at Young Americans for Liberty and other institutions. He previously served as the associate director for economic policy of the White House’s Office of Management and Budget, 2019-20.

    Follow him on Twitter: @vanceginn

    View my profile on LinkedIn

    Archives

    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    January 2015
    November 2013
    September 2013
    May 2013
    February 2013
    August 2012
    July 2012
    January 2012
    May 2011
    April 2011

    Categories

    All
    Biden
    Book Reviews
    Budgets
    Capitalism
    Carbon Tax
    Congress
    COVID
    Debt
    Economic Freedom
    Economic Prosperity
    Economy
    Education
    Energy Markets
    Fed
    Free Trade
    Ginn Economic Brief
    Healthcare
    Immigration
    Inflation
    Interview
    Jobs Report
    Let People Prosper
    Licensing
    Louisiana
    Margin Tax
    Medicaid
    Minimum Wage
    Occupational Licensing
    Opportunity Project
    Pensions
    Podcast
    Poverty
    Property Taxes
    RAB
    Regulation
    Rules
    School Choice
    Socialism
    Spending Limits
    Taxes
    Tax Foundation
    Testimony
    Texas
    Transparency
    Video
    White House

    RSS Feed

Proudly powered by Weebly