VMT v. Raising the gas tax...

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almightyze
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VMT v. Raising the gas tax...

Postby almightyze » Sat Feb 21, 2009 5:37 am UTC

I've been noticing, in recent weeks, talk of VMTs (vehicle mileage taxes) in America. The name explains itself: A tax placed on the distance a vehicle travels by the mile. I keep facepalming every time I hear it. Besides privacy invasions galore, it would be a logistical nightmare to implement, and would take years to be implemented properly and effectively to yield the kind of revenue state and federal governments would want from it. Even if it were successfully implemented, the results would be ineffective at best (half-cent per mile is the common tax rate spouted...most people prolly don't drive more than 30,000 miles a year or so, so that's at most $150).

I don't know what to suggest on the state level as an alternative. However, I can make a suggestion on the federal level, that may alleviate the need for a state alternative: Raising the gas tax.

For the record, the federal gas tax is 18.4¢ per gallon. The national average (which include federal with state) is about 47¢ per gallon. Seems a bit much? Not really. In Europe, the average tax is (based on some estimates) $2 per gallon. Plus, they have a bunch of taxes (VAT, GST, what have you) that Americans don't get to deal with. And yet, their transit infrastructure is an unambiguous degree of magnitude better than ours.

Granted, America is a large country, and furthermore, raising the taxes to a European level would be, without certainty, a disaster. But it shouldn't take much to vastly improve the roadway infrastructure. My guess, a simple 10¢ increase would be enough to sustain and improve roadway infrastructure for at least the next 5-10 years. If the tax was simply double to 36.8¢ per gallon, that would not only make it possible to easily maintain roadway infrastructure, but also improve other assets of transit infrastructure as well (be it air or public, but especially rail).

Furthermore, it seems Americans could take it: Driving patterns didn't really change until the price of gas reached $4 per gallon. Of course, the economy's a mess right now, but I don't think a 10-18¢ increase in the gas tax will have a severe effect on car drivers. And it doesn't have to be busted it up immediately. A progressive increase of 5 or 6 cents over a few years wouldn't hurt that much.

Yet, there seems to be no political interest whatsoever in doing precisely the kind of thing I'm suggesting.

Am I just being crazy in thinking this could work? Or are there more legitimate benefits to the VMT that I'm not seeing?

Note: Apologies if this was discussed already, the topic search is giving me SQL errors.
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Re: VMT v. Raising the gas tax...

Postby Carnildo » Sat Feb 21, 2009 7:46 am UTC

The point of a "mileage tax" is that vehicles are getting more fuel-efficient. Plug-in hybrids used for in-city commuting may only need a few gallons of gas per thousand miles, and electric cars don't use gas at all. Is it really fair that some people can drive on roads without paying to support them? A gas tax is a crude approximation to a road-use tax, as heavier, more damaging vehicles tend to burn more gas per mile; a tax per ton-mile or a graduated mileage rate based on GCWR would be a direct tax on the wear and tear produced by vehicles.

Working with your $0.47 per gallon and assuming a hybrid car getting 45 miles per gallon, a mileage tax of $0.01 per mile would be equivalent to the current gas tax; a heavy pickup truck with trailer at 10 miles per gallon would need a tax of $0.045 to be equivalent, and the gas-guzzling school bus I rode in fifth grade would be paying $0.45 per mile.

At least in states with periodic emissions testing or mandatory inspections, the logistics are straightforward: checking the odometer becomes one more box on the checklist. Tampering with an odometer is already illegal, and there are measures in place to make it difficult.

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Re: VMT v. Raising the gas tax...

Postby Malice » Sat Feb 21, 2009 11:00 am UTC

If your goal is to tax road usage, put up toll booths.

If your goal is to reduce the number of high-mileage cars on the roads, tax those cars and provide tax breaks for hybrids and other more efficient vehicles.

If your goal is to reduce all driving, tax gas.

What is the goal here?
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almightyze
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Re: VMT v. Raising the gas tax...

Postby almightyze » Sat Feb 21, 2009 9:55 pm UTC

Malice wrote:If your goal is to tax road usage, put up toll booths.

If your goal is to reduce the number of high-mileage cars on the roads, tax those cars and provide tax breaks for hybrids and other more efficient vehicles.

If your goal is to reduce all driving, tax gas.

What is the goal here?


The goal is, essentially, the point of why such things are being taxed in the first place: To increase infrastructure revenue. And doing so without relying on private funding or continuous federal grants that are at best a temporary stop-gap and worst a method of corruption and wasteful spending.
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Re: VMT v. Raising the gas tax...

Postby Carnildo » Sat Feb 21, 2009 11:55 pm UTC

Malice wrote:If your goal is to tax road usage, put up toll booths.


Toll booths are only profitable if 1) there is no reasonable alternative route, and 2) the route is relatively high-traffic. These two things are only true for maybe 0.0001% of US road miles: bridges and some controlled-access highways.

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Re: VMT v. Raising the gas tax...

Postby Bubbles McCoy » Sun Feb 22, 2009 1:29 am UTC

almightyze wrote:The goal is, essentially, the point of why such things are being taxed in the first place: To increase infrastructure revenue. And doing so without relying on private funding or continuous federal grants that are at best a temporary stop-gap and worst a method of corruption and wasteful spending.

If your goal is just to raise revenue, then you'd probably be better of just sticking with property or income taxes. I see no particular need to come up with random "creative" means to raise revenue like this, it just adds to bureaucracy, increases potential dodging and frequently comes across as basic harassment.

On a broader level though, I think gas taxes are probably a good idea for the time being. In terms of CO2 reduction (or just general gas usage reduction), it's by far the most straightforward and effective means of doing so. Things like CAFE attack the problem way to indirectly, and in many ways discourage specialization by forcing car manufacturers to offer a number of good high-mileage vehicles in order to sell low-mileage vehicles.

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Re: VMT v. Raising the gas tax...

Postby almightyze » Sun Feb 22, 2009 5:57 am UTC

Bubbles McCoy wrote:If your goal is just to raise revenue, then you'd probably be better of just sticking with property or income taxes. I see no particular need to come up with random "creative" means to raise revenue like this, it just adds to bureaucracy, increases potential dodging and frequently comes across as basic harassment.


Basically what I was arguing against VMT, only better said. The VMT is exactly as you describe it as being "creative," whereas the gas tax is an established tax that needs no new rules or bureaucracy in order to be implemented. Furthermore, the gas tax is explicitly intended to be used towards transit infrastructure already, whereas income and property taxes are directed to a variety of channels (and are thus more touchy subjects).
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Re: VMT v. Raising the gas tax...

Postby slakr » Sun Feb 22, 2009 9:30 am UTC

1. It's a regressive (poor) tax, as poor people pay a greater portion of their income to the tax than rich people.

2. There's plenty of money to go around from the income tax pool when billions aren't financing a zero-sum war or subsidizing/"bailing out"/no-bid-contracting industries that have high short-run political sway but little long-run viability. Europe, with the exception of the prison-state-in-progress Britain, seems to manage it nicely. In fact, Norway's even gone one step further and actually made free some of the roads and bridges that were once tolled. Not really surprising, either, seeing as their development index is ridiculously high and they're the most peaceful country in the world. It truly is amazing what can happen when you sink money domestically instead of foreignly.

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Re: VMT v. Raising the gas tax...

Postby phonon266737 » Tue Feb 24, 2009 5:17 am UTC

A mileage tax is a negative incentive on fuel economy: We don't care how much mileage you get, we're going to tax your MILES.

Not only that, but it encourages cheating the system. It is infinitely easier to under-report how many miles you drive as opposed to driving those miles without using gas.

The feds already make more money on fuel sales than the fuel companies do. Half cent per mile? $100 a year? Just increase my income tax already. I don't want to have to go through filing ANOTHER yearly tax form. Do I need to take my car to a shop to get the "annual mileage" certified for this one? How much are mileage certifiers or GPS tracker installers getting paid anyway?

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Re: VMT v. Raising the gas tax...

Postby Marquee Moon » Tue Feb 24, 2009 11:01 am UTC

almightyze wrote:The goal is, essentially, the point of why such things are being taxed in the first place: To increase infrastructure revenue. And doing so without relying on private funding or continuous federal grants that are at best a temporary stop-gap and worst a method of corruption and wasteful spending.


Sure raising revenue is one part of a tax, but another important part is changing how people behave. A gas tax makes people pay for the damage their CO2 emissions do to the environment, and creates an incentive for people to buy fuel efficient cars or use public transport, companies to research alternative ways of fueling cars etc. A vehicle mileage tax deals I think with a whole lot of different externalities like noise and air pollution, damage to roads, traffic congestion etc.

I think we should evaluate these taxes independently and not in a 'one or the other' kind of way since they're targeting different things. If you think global warming's a jerk, then you'll want a gas tax. If you think air pollution's a jerk, you'll want a vehicle mileage tax. If you think they're both jerks, then why not use both taxes? Of course, there are the practical problems with administering a vehicle mileage tax that have been mentioned above. And having a tax for every single externality might not be very efficient. I also think the vehicle mileage tax is very inaccurate tax because things like the amount of air pollution you make for every X kilometers would vary greatly depending on what car/van/truck you're talking about.

slakr wrote:1. It's a regressive (poor) tax, as poor people pay a greater portion of their income to the tax than rich people.


You could counter this by making the income/payroll tax more progressive (ie an tax cut for the poor).

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Re: VMT v. Raising the gas tax...

Postby Scott5114 » Tue Feb 24, 2009 11:41 am UTC

Oregon, which has proposed a VMT, proposed using a GPS unit installed in each car to track the mileage. A lot of people are opposed to it for that reason alone. A less invasive way to track the mileage would be to do like some states do and require annual vehicle inspections. While you're inspecting other things, your mileage as shown on the odometer is recorded. Of course, then you have problems with inspectors under-reporting the mileage on their friends' cars, but I would imagine that'd be easier to deal with than problems you would have if you went the self-reported route.

One problem with a VMT that has been raised is that you would be taxed on mileage accrued on private roads (e.g. in gated communities, on driveways, driving around on ranches, etc). Another is that you would be taxed twice for driving on toll roads (such as the Kansas Turnpike, which is 100% self sufficient and requires no tax money for maintenance costs). Of course, those are problems with the gas tax, too.

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Re: VMT v. Raising the gas tax...

Postby Plasma Man » Tue Feb 24, 2009 5:28 pm UTC

There's always the option of introducing a road tax, such as exists in the UK. For every vehicle you own, you have to pay a fixed amount per year to be allowed to drive it on public roads. Wikipedia says that some US states have this system, but it's up to the individual states to decide for themselves. The advantage is that it would be possible to earmark the money raised from this tax, ensuring that it goes to infrastructure improvement (which, incidentally, is not the case in the UK). It is also possible to vary the tax to attempt to change behaviour, for example by levying lower taxes on less polluting / more fuel-efficient vehicles. I know a disadvantage is that it can be seen as a regressive tax, but if higher taxes are levied on more polluting prestige vehicles, that somewhat mitigates the effect.
Personally, I would choose higher fuel taxes or higher road tax over a mileage tax. It would be simpler logistically and have less privacy concerns than trying to track vehicles. The drawback is that raising fuel taxes does tend to be rather unpopular, so it's not something politicians are generally keen to do.
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Re: VMT v. Raising the gas tax...

Postby TheStranger » Tue Feb 24, 2009 10:05 pm UTC

Plasma Man wrote:The drawback is that raising fuel taxes does tend to be rather unpopular, so it's not something politicians are generally keen to do.


Quite reasonably so... an increase in the fuel tax raises the costs of EVERYTHING else.

This idea first turned up over a year ago in Oregon or Washington. Apparently the number of hybrid or electric vehicles on the road started to impact the revenue needed to maintain the roads. None of the methods proposed (mostly involving GPS systems) seemed like they could be implemented easily / cheaply or without raising serious concerns about privacy. An increased vehicle tax is with out a doubt the easiest way to improve revenue in this regard.
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Re: VMT v. Raising the gas tax...

Postby almightyze » Thu Feb 26, 2009 10:27 am UTC

TheStranger wrote:
Plasma Man wrote:The drawback is that raising fuel taxes does tend to be rather unpopular, so it's not something politicians are generally keen to do.


Quite reasonably so... an increase in the fuel tax raises the costs of EVERYTHING else.

This idea first turned up over a year ago in Oregon or Washington. Apparently the number of hybrid or electric vehicles on the road started to impact the revenue needed to maintain the roads. None of the methods proposed (mostly involving GPS systems) seemed like they could be implemented easily / cheaply or without raising serious concerns about privacy. An increased vehicle tax is with out a doubt the easiest way to improve revenue in this regard.


I'd be keen on the vehicle tax, but I must ask: How does raising the fuel tax raise the cost of EVERYTHING else? I see it raising the cost of certain things, but not everything.
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Re: VMT v. Raising the gas tax...

Postby Bubbles McCoy » Thu Feb 26, 2009 11:41 am UTC

The thinking goes that virtually everything is dependent on transport to be sold (including services, to lesser or greater extents) so by raising the prices of transport, so will the costs of the goods being delivered. However, few taxes don't trickle down one way or another to harm industries outside of that being directly taxed, so I'm not sure how valid of a concern it is.

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Re: VMT v. Raising the gas tax...

Postby TheStranger » Thu Feb 26, 2009 12:36 pm UTC

almightyze wrote:I'd be keen on the vehicle tax, but I must ask: How does raising the fuel tax raise the cost of EVERYTHING else? I see it raising the cost of certain things, but not everything.


It increases the cost of anything that has to be transported, which is every consumer good that I can think of. An extra cent1 on every mile that an item has to transport adds up quite quickly.





1: that's not the actual amount of the increase, it would be very complicated to calculate how much it would end up costing per mile for a given item as weight / size of the item and the efficiency of the vehicles used in transport (as well as the rest of their load) would have to be known.
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Re: VMT v. Raising the gas tax...

Postby Seraph » Thu Feb 26, 2009 3:01 pm UTC

Scott5114 wrote:A less invasive way to track the mileage would be to do like some states do and require annual vehicle inspections.

How would that differentiate between in state and out of state milage? What justification would a state have for taxing out of state milage?

TheStranger wrote:It increases the cost of anything that has to be transported, which is every consumer good that I can think of. An extra cent1 on every mile that an item has to transport adds up quite quickly.

1: that's not the actual amount of the increase, it would be very complicated to calculate how much it would end up costing per mile for a given item as weight / size of the item and the efficiency of the vehicles used in transport (as well as the rest of their load) would have to be known.

Unless your shipping things the size of a truck that isn't even close to the kind of tax that is being proposed. For example:
I used to unload trucks for a well known american department store. Outside of the Christmas season a "full" truck would generally have something around 1800 boxes on it. Excluding clothes each box generally contaned between 4 and 24 items to be sold. In short a truck would frequently have more then 10,000 items on it. If the truck is being taxed an doller mile (orders of magnitude beyond the proposed taxes), that truck could drive cross the USA without adding one cent to the average cost of an item.

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Re: VMT v. Raising the gas tax...

Postby Comic JK » Fri Feb 27, 2009 7:00 am UTC

I would say that simplicity trumps the miniscule fairness problems involved in people using the roads without using gas (something we in Turkmenistan want to encourage at any rate). I would guess that many people who say they are 'against taxes' are more opposed to the number of them than the dollar amount. Getting rid of toll booths, the Social Security (payroll) tax, sales tax, property tax, and similar money-raising schemes and using a graduated income tax as the prime source of revenue would save a bundle in compliance costs, and would also make the exact cost of the system clearer to those who use it.
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Re: VMT v. Raising the gas tax...

Postby Philwelch » Fri Feb 27, 2009 6:42 pm UTC

almightyze wrote:For the record, the federal gas tax is 18.4¢ per gallon. The national average (which include federal with state) is about 47¢ per gallon. Seems a bit much? Not really. In Europe, the average tax is (based on some estimates) $2 per gallon. Plus, they have a bunch of taxes (VAT, GST, what have you) that Americans don't get to deal with. And yet, their transit infrastructure is an unambiguous degree of magnitude better than ours.


Driving in much of Europe is still a luxury. In America, there's usually no good alternative even for simple transportation. You get away with higher taxes on luxuries, luxury activities have small tax bases and thus higher tax rates, and luxury activities demand higher quality, which is why Europe has better highways and higher gas taxes than we do. Much of Europe's better transit infrastructure is not geared towards individual-resident-operated automobiles the way America's is.
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Re: VMT v. Raising the gas tax...

Postby Comic JK » Sat Feb 28, 2009 9:37 pm UTC

Philwelch wrote:Driving in much of Europe is still a luxury. In America, there's usually no good alternative even for simple transportation.


Doesn't this seem like a problem? Easy for me to say, living in a major city, but I think that the spreading-out of American communities has done a great deal of harm. Around my mother's home town on Long Island, vast areas that used to be woodland and farms when she was young are now covered by asphalt and cookie-cutter developments. I would propose much higher gas taxes, using the extra revenue to improve mass transit; a VMT won't be necessary for this purpose until a large fraction of the population uses electric cars. Perhaps this, along with improved zoning laws that don't discriminate against density, would arrest the centrifugal tendency and save the land that remains.
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Re: VMT v. Raising the gas tax...

Postby Philwelch » Sun Mar 01, 2009 1:04 am UTC

Comic JK wrote:
Philwelch wrote:Driving in much of Europe is still a luxury. In America, there's usually no good alternative even for simple transportation.


Doesn't this seem like a problem? Easy for me to say, living in a major city, but I think that the spreading-out of American communities has done a great deal of harm.


Agreed.

Raising taxes, though, is a bad way to redesign 50 years of infrastructure.
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Re: VMT v. Raising the gas tax...

Postby Comic JK » Sun Mar 01, 2009 6:03 am UTC

Philwelch wrote:Raising taxes, though, is a bad way to redesign 50 years of infrastructure.

But is there a better way? It will certainly take money to rebuild infrastructure, and without a certain degree of pain from taxes on existing behavior, people won't change their ways.

It makes sense to me to combine these two ideas, and use money from a gas tax to pay to build light rails and subways.
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Re: VMT v. Raising the gas tax...

Postby Carnildo » Sun Mar 01, 2009 6:11 am UTC

Comic JK wrote:It makes sense to me to combine these two ideas, and use money from a gas tax to pay to build light rails and subways.

Is there a reason why you picked the two worst options for mass transit? Very few American cities are structured in a way that would make fixed-route mass transit even remotely efficient.

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Re: VMT v. Raising the gas tax...

Postby Philwelch » Sun Mar 01, 2009 9:20 am UTC

Honestly, you'd have to increase population density in urban areas first, which WOULD have been a good way to use the real estate crash as an opportunity.
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Re: VMT v. Raising the gas tax...

Postby Comic JK » Mon Mar 02, 2009 4:20 am UTC

Carnildo wrote:Is there a reason why you picked the two worst options for mass transit? Very few American cities are structured in a way that would make fixed-route mass transit even remotely efficient.

Evidently I live in one of those very few cities. And it is quite efficient.
I hate riding buses myself, which is the only mode of mass transit I know that doesn't have fixed routes. What I'm assuming is that if you tax gas and build a commuter rail line, then densities along the line will increase. People living farther away can take buses to get to the main trunk line, and hopefully will stop building houses still further from where they want to be.
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Re: VMT v. Raising the gas tax...

Postby Carnildo » Mon Mar 02, 2009 5:01 am UTC

Comic JK wrote:
Carnildo wrote:Is there a reason why you picked the two worst options for mass transit? Very few American cities are structured in a way that would make fixed-route mass transit even remotely efficient.

Evidently I live in one of those very few cities. And it is quite efficient.
I hate riding buses myself, which is the only mode of mass transit I know that doesn't have fixed routes. What I'm assuming is that if you tax gas and build a commuter rail line, then densities along the line will increase. People living farther away can take buses to get to the main trunk line, and hopefully will stop building houses still further from where they want to be.

You haven't mentioned where you live, but I'd guess either Washington DC or New York City. DC has a strongly-defined traffic flow: people live in the suburbs around the city and commute to the city center to work, which gives the traffic volume needed for subways to be cost-effective. NYC does it off sheer population density: Manhattan, for example, has more people per square mile than some smaller cities have total.


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