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And Miles to Go Before We’re Taxed

The green plan to have Uncle Sam watch your odometer.

Jan 21, 2013, Vol. 18, No. 18 • By ETHAN EPSTEIN
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Give the environmental movement credit: When it comes to reducing vehicle emissions, it has won a stupendous victory. Since 1975, when the first federal mileage per gallon standards were introduced, the average mpg for American-driven cars has zoomed from less than 15 to nearly 35. Ever-more stringent emission standards from Washington, growing environmentalist sentiment among the general public, and rising gas prices have all played a part in this phenomenon. So has the bevy of tax subsidies that the federal government offers for buying hybrids and other low-emission vehicles. Federal and state gas taxes, too, have been a potent force in encouraging drivers to switch to more fuel-efficient cars; at a rate of 18.4 cents a gallon, any driver can greatly reduce his annual federal tax bill by simply buying less fuel.

Representative Earl Blumenauer

Representative Earl Blumenauer

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But now the green movement’s hard-won gains against emissions are bumping up against another of its passions: tax revenues. Because more and more Americans have switched to less fuel-hungry cars (and because some Americans have dropped driving altogether), gas tax receipts have fallen precipitously. It’s a “problem” created directly by the success of environmentalist goals.

Enter the prickly, greener-than-thou Representative Earl Blumenauer, a Democrat from Oregon, who wants to require the Treasury Department to “study” ways to replace the gas tax with a vehicle-miles traveled (VMT) tax.

Blumenauer—who fulfills the Portlandia stereotype by wearing an unwieldy bicycle pin on his lapel—has long been a proponent of a VMT tax. Claiming that “it is time to get creative and find smart ways to rebuild and renew America’s deteriorating infrastructure,” he introduced a bill in December that would have forced the Treasury Department to “establish a pilot program to study alternatives to the current system of taxing motor vehicle fuels.” The bill as drafted only mentions one “alternative”: a tax “based on the number of miles driven.” (The choice of having the Treasury Department study the VMT tax rather than the Department of Transportation is a shrewd one, by the way, because last year the House voted to ban the DOT from studying a VMT.)

Blumenauer’s bill died in committee last month. According to his spokesman Patrick Malone, however, Blumenauer plans on reintroducing the bill in the next Congress. It’s an idea that’s gaining momentum. President Obama claims to oppose the VMT tax, though his transportation secretary, Ray LaHood, has said it’s a proposal that “should be looked at.” Several European countries are planning to implement VMT taxes in the coming decade.

Perhaps the most striking thing about the VMT tax is that it appears in direct conflict with green goals. If a Prius is suddenly taxed at the same rate as a Ford Expedition, after all, the government has removed a powerful incentive for driving cars that pollute less. Some VMT tax supporters say it “could” be structured so that less-efficient vehicles are taxed more heavily. But isn’t this precisely what the gas tax accomplishes? Why switch to a complicated new system only to maintain the same fundamental structure? It’s also simply not true that all cars are equally culpable in wearing down the roads; numerous studies have shown that heavy trucks cause the vast majority of damage to roads and highways.

There’s an obvious privacy issue, too. Because odometers are relatively easily tampered with (and besides, using odometers to gauge miles driven would require the government to engage in frequent and costly car mileage inspections), cars would almost certainly need to be outfitted with some form of government tracking device. Blumenauer waves these concerns aside by saying that the VMT tax can be administered in a way that “protects personal privacy.” Tellingly, he provides no details as to how. A VMT tax pilot program involving about 50 drivers in Blumenauer’s home state of Oregon that’s been in effect since 2006 isn’t encouraging. According to Governing magazine, “That study involved using GPS devices to collect data on the number of miles traveled by each motorist, transferring the data to gas stations, and levying the appropriate fee when drivers filled their tanks.”

Rep. Blumenauer and other VMT tax proponents are right about one thing: Highway maintenance is suffering and the highway trust fund is dwindling. The American Society of Civil Engineers has given American infrastructure a grade of D. Over the past four years, Congress has transferred nearly $50 billion from the general fund to the highway trust fund just to shore it up. But this sorry state of affairs isn’t only a result of falling gas tax revenues; the highway trust fund is also suffering from some serious mission creep.

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