Home > Taxes > A new tax for miles driven is the wrong solution

A new tax for miles driven is the wrong solution

October 29, 2013

Recently the LA TImes published a story about the government entities looking to implement a new tax system based upon miles driven. A crumbling infrastructure along with increased mileage of newer vehicles are being touted as the reason this new tax is needed. I think the fact a new tax is being suggested highlights the current “lets create a new tax” environment that exists in politics today.

Lets look at the reasoning for this tax. This from the LA Times story:

The push comes as the country’s Highway Trust Fund, financed with taxes Americans pay at the gas pump, is broke. Americans don’t buy as much gas as they used to. Cars get many more miles to the gallon. The federal tax itself, 18.4 cents per gallon, hasn’t gone up in 20 years. Politicians are loath to raise the tax even one penny when gas prices are high.

I do actually believe higher gas mileage has had the consequence of lower tax revenues from the gas tax. For years there has been pressure for better fuel economy. The battle for better use of energy resources is winning! But now, thanks to that battle being won, DC politicians want to use it an excuse to create a new tax. A new tax would be more feasible if the only source of revenue for the government was through gas taxes. It is not.

USGovernmentSpending.com has some interesting numbers to look at for 2013 total federal and state spending. Here is a high level chart showing total 2013 spending in US by Federal, State, and Local governments.

govtspending2013chart

Chart Source USGovernmentSpending.com

Total spending between the Federal, State, and Local governments was projected to be about $6.4 trillion, with $3.7 trillion of that being the Federal government. Total spending on transportation was only 4% from all three sources. Total for the federal government was 3%. States spend a lot more on transportation at 8%. Looking at the above total spending it is not hard to find areas where money can be shifted. Here are a couple of suggestions of how to better spend taxpayer dollars to take care of the crumbling infrastructure:

  • Stop borrowing so much money! Governments spend much more in interest payments from our current ‘put it on the credit card’ policies than go to transportation. Even if 1% of overall spending could be shifted from interest payments to transportation that would be a large increase in the dollars available for infrastructure. This is why so many fiscal conservatives were mad when the debt ceiling was raised yet again with no real cuts. Money borrowed is NOT free! Every dollar going to interest payments could have been better used in other places.
  • Don’t spend so much on Defense! Defense is important and is actually one of the few government responsibilities mentioned in the Constitution. However that does not mean we should spend without regard to cost. DC politicians have been talking about a leaner and smarter military for years. It is time for DC politicians to stop sending pork to the military-industrial complex and actually work on a lean and effective military. Money saved there could easily be shifted to transportation infrastructure.

I could probably look at each spending area and make cases for each to be reduced. However I believe interest payments and defense spending are two easy places to get more resources for the crumbling infrastructure. A new tax is not needed. We need politicians in DC to stop pork spending and over-borrowing so we can actually pay for road maintenance. There may be other solutions as well. I just fear DC will continue its “we need a new tax” attitude without looking at other possibilities.

PS: I am going to blog about the privacy issues of this story on a different day. I will also deal with the supposed libertarian support for this concept at that time as well.

Categories: Taxes Tags: ,
  1. Merlyn Schutterle
    October 29, 2013 at 6:28 pm

    Don’t use generalities. Say exactly what you would cut. Don’t say cut military spending unless you say exactly is not needed. How are you going to get out of debt if you don’t have a plan to pay it off.

    • Ken Santema
      October 29, 2013 at 6:58 pm

      I keep it in generalities to get ideas out there. This post was high-level. However some specifics to look at cutting would include the following for defense spending:

      Congress in the next two years has a half-billion dollars budgeted for tanks the Pentagon says are not needed or wanted. Removing that pork is a good start.

      The Navy wanted to retire several aging vessels that would be expensive to refurbish for continued use. Congress decided it knew better than the Admirals as to what is ‘necessary’ and is going to pay for refurbishing these vessels the Navy does not need.

      The Air Force has also tried to retired aging fleets of aircraft totaling with a savings of about 1/2 billion dollars (if I remember right). Again Congress chose pork spending over fiscal conservatism and has been trying to force the Air Force to keep using these outdated aircraft.

      Just with those three items there is over a billion in savings that the military is actually asking for and Congress won’t give them.

      Greater savings could be realized if the US would stop trying to be the international police force for the world. The money spent by US government arming rebels in Syria and other countries could be used to fix potholes here back home. Instead of bombing infrastructure in Pakistan (and thus causing more terrorist sympathizers), we could use those tax dollars to rebuild or re-enforce aging bridges.

      I’m not going to presume to have the only answer, or even the best answer. What I do think is important is that more answer than just “create a new tax” are presented and talked about.

      • Merlyn Schutterle
        October 29, 2013 at 10:50 pm

        Those are some good points. I would like to see the documentation.

        I was visiting with my son-in-law this evening. He is from Syria. Some of his family is being killed and some are having to starve to death. He tells of the killing of innocent children that doesn’t seem to bother anyone. What would you think of the USA if you were Syerian and the USA refused to help? Are we a nation that condones this brutality? Are we really a Nation under God? A Christian nation?

  1. December 26, 2013 at 3:11 pm
Comments are closed.
%d bloggers like this: