Penny per mile odometer tax

[tangent]

I am generally libertarian so the concept of open road tolling everywhere seems like a authoritarian police state dream come terrifyingly true where the state would be constantly tracking your movements for the purposes of taxation or whatever else.

But with car electrification coming slowly but surely the ability of the gas tax to maintain our road infrastructure is being eroded.

So, a 1 cent per mile odometer tax. Collected per registered Massachusetts vehicle annually following inspection when odometer reading is recorded or prepaid on a quarterly or monthly basis.

We already have most of the infrastructure in place for recording odomoter readings, so the IT and management effort required to set up the billing infrastructure should be reasonably cost effective compared to installing cameras at every intersection throughout the state.

Compared to deep real time open road tolling which seems only somewhat reasonable if we are going to set up congestion zones downtown.

Most leases are 10,000 or 12,000 miles so it works out to be $100 to $120 per year or less for most people. With the ability to cut back on driving to reduce that cost.

Discuss

 

[Arlington]

The gas tax is broken. Before hybrids and the Tesla truck, gas usage was a good measure of vehicle weight and distance.

VMT such as Oregon tested (https://en.wikipedia.org/wiki/Vehicle_miles_traveled_tax) fixes the electrics and hybrids "problem" but not the congestion problem.

The reality is that demand for road-building (and opposition to road diets) comes from peak-hour users. Micro econ says Roads should be more expensive at rush hour when demand is high (and employed people can pay) so I'm still going to vote for dynamic tolling.

Straight VMT ends up being regressive (probably bad) and anti exurbs (controversial but pro environment) so I think it ends up being not targeted enough.

 

[fattony]

I think a round number like $0.01 is arbitrary and would be difficult to change. The correct amount may not be a round number of cents, and it might be better psychologically if it isn’t. I suspect the right number is much higher than $0.01.

I also think you can do a lot to mitigate the regressive nature of the tax. You can give an income based credit on income tax. People still have the incentive to drive less or not at all to avoid the tax, but they’ll get the credit one way or the other. Maybe you need a current vehicle registration to get the credit. Or maybe you can only be credited up to the full amount you paid that year. There are a lot of ways you imagine it working.

I can also imagine both the state and municipalities levying the tax, based on the address of the registration. Cambridge may choose to charge a VMT while Springfield may not. I can imagine this replacing the whole excise tax system. They can collect the same revenue as under the excise tax, but also get the driving reduction incentive. The rate will have to adjusted up/down over time to collect the correct levy, just like they do with property taxes.

I consider this an AND, not an OR, with congestion tolling. Odometer tax cannot influence where and when you drive, except of course that all trips begin and end at your home/garage location.

 

[Scott]

The state has a $1 Billion surplus and we are talking about raising taxes. Think about that

 

[George_Apley]

The state has a $1 Billion surplus and we are talking about raising taxes. Think about that

We're talking about sustainability. The state has an annual surplus this year of a billion dollars. That's not much in the grand scheme of unpaid deferred maintenance bills the state already has and will accrue going forward. I don't disagree that it's a good idea to reform the state bureaucracy to eliminate inefficiencies and conform to best practices, but this is the "reform before revenue" mindset that pushes off investments into decrepit systems across state government. If the state ends up with regular annual surpluses obviously the legislature should consider budgeting changes, but this implication that we shouldn't discuss raising taxes because we have a 2019 surplus kind of misses the point in favor of a veneer of fiscal conservatism.

 

[Arlington]

Yes, sustainability! The $1b surplus and some sort of mobility fee should both go to undoing our infrastructure maintenance deficit (e.g. accelerated bridge replacement 2.0)

 

[fattony]

The state has a $1 Billion surplus and we are talking about raising taxes. Think about that

I thought we were talking about changing how taxes were collected, not how much was collected, but I’ll second the above comments that there is nothing wrong with the occasional surplus. If you never have a surplus it means you always have a deficit. That will probably work fine for the federal government as they are the sovereign issuer of the US dollar, but it doesn’t work for states or municipalities.

 

[Scott]

I never said anything about inefficiency, that was not my point. Also consider this, the cigarette tax was supposed to go to smoking prevention but ended up in the general fund. Don't be surprised if you get the old bait and switch.

However, if you were telling me that a new tax would be dedicated by law to fixing the T, building bike infrastructure, and to actually fixing roads I might be persuaded. Otherwise no.

 

[BostonUrbEx]

The state has a $1 Billion surplus and we are talking about raising taxes. Think about that

Changing how taxes are collected and spent =/= raising taxes. The gas tax should be eliminated entirely, unless we want to keep around some sort of nominal gas tax that will kick some funding into environmental initiatives. But the gas tax is completely broken as a way of funding roads, and will only worsen. Get rid of the excise tax, as well. There needs to be a tax which takes mileage and axle-load into account, so those doing the most damage to the roads pay the most on their mileage.

 

[George_Apley]

I never said anything about inefficiency, that was not my point. Also consider this, the cigarette tax was supposed to go to smoking prevention but ended up in the general fund. Don't be surprised if you get the old bait and switch.

However, if you were telling me that a new tax would be dedicated by law to fixing the T, building bike infrastructure, and to actually fixing roads I might be persuaded. Otherwise no.

Short of a constitutional amendment, we can't stop the legislature from raiding earmarked funds (I mean, voters should deal with it, but we don't...). I agree that tax dollars should be earmarked if the tax is specifically designed to incentivise/disincentive behavior.

 

[Scott]

I have to respectfully disagree George. Taxes should never be used as an incentive or disincentive. Taxes should be used to fund needed government programs not for social engineering

 

[George_Apley]

That's a fair philosophical disagreement. So you're against a congestion tax, for example?

 

[Scott]

That's a tough one. There are two seperate issues, there is the infrastructural needs of the city that the government has a right to impose taxes or tolls to pay for; and whether the government can essentially fine you via taxes for doing something that is not illegal. I have no problem with the first one, but see the latter as ripe for abuse.

 

[BostonUrbEx]

Should airlines be barred from charging more for a popular departure times between the same two cities? Should movie theaters not give discounts on weekdays? Should ski resorts not have different levels of season passes with different blackout dates? They're all congestion charges, smoothing out demand curves for limited supplies.

 

[Arlington]

I have to respectfully disagree George. Taxes should never be used as an incentive or disincentive. Taxes should be used to fund needed government programs not for social engineering

Taxes are inherently a disincentive for the thing being taxed, and an incentive to do some substitute activity that is not taxed. Taxes ARE social engineering. THey are coercive. They can be assumed to ALWAYS change behavior.

- State Sales taxes discourage consumption (and encouraged online shopping when that wasn't taxed for the first ~20 years of internet sales)
- Income vs capital gains taxes cause people to shift activities in time.
- People travel to NH to buy lesser taxed Apple products.

People respond to incentives and disincentives and this has to be factored in, and there's no moral case for ignoring it, and much moral case for managing it.

 

[tangent]

Taxes are inherently a disincentive for the thing being taxed, and an incentive to do some substitute activity that is not taxed. Taxes ARE social engineering. THey are coercive. They can be assumed to ALWAYS change behavior.

- State Sales taxes discourage consumption (and encouraged online shopping when that wasn't taxed for the first ~20 years of internet sales)
- Income vs capital gains taxes cause people to shift activities in time.
- People travel to NH to buy lesser taxed Apple products.

People respond to incentives and disincentives and this has to be factored in, and there's no moral case for ignoring it, and much moral case for managing it.

Problem with that argument is that it forgets that sin taxes incentivize the people working in government that rely on the sin tax revenue to encourage the sins.

I am ok with taxing things you want to discourage... except whenever you do that and create that revenue dependency then you create a moral hazzard trap on the other side of that taxation that will work against your original goals.

That's why in other threads I have argued against a congestion tax unless it is linked with rationing of access to the congestion zone. Otherwise you just get 110% usage and a government getting perversely rewarded for bad planning.

So maybe you figure out what a capacity is for rush hour in a congestion zone, then you take 95% capacity. Let people bid on 65% of that based on a schedule of use that they need for jobs or whatever... leave the rest of the capacity for same day bidding based on real time usage.

But that only really works for relatively constrained congestion zones... Not all of Boston, more like the downtown or financial district or Seaport or whatever.

An odometer tax is more of a simple broad based road tax to actually fund maintenance of the roads as the gas tax fades in relevance with electric cars. Even slow adoption of electric cars means a gas tax that is ever less and less able to keep up with inflation.

 

[fattony]

I have to respectfully disagree George. Taxes should never be used as an incentive or disincentive. Taxes should be used to fund needed government programs not for social engineering

I agree with Arlington. Taxes are part of prices. Prices are an inescapable arbiter of supply and demand. Thus all taxes influence behavior. That is so crystal clear to me, I have a hard time even thinking up a scenario where taxes aren’t either deliberately made unavoidable or used to influence behavior.

Income, consumption, and property taxes are levied against activities/assets you are motivated to pursue, despite any tax. It’s no coincidence those form the tax base of modern society. Vice taxes are levied against activities you have a hard time avoiding, but it would be better for society if you did. The gas tax started as the first type, but clearly it (or its successor) needs to migrate to the second because fossil fuel consumption has become, undeniably, a vice that society needs to discourage.

 

[whittle]

I have to respectfully disagree George. Taxes should never be used as an incentive or disincentive. Taxes should be used to fund needed government programs not for social engineering

There's strong consensus among economists that taxing harmful behavior (ie that which causes negative externalities) is a good idea, even absent of the need to fund the government.

 

[Scott]

^I don't believe that is true.

 

[tysmith95]

I have to disagree with migrating from a gas tax to a per mile tax, at least at this point. We should encourage the development of electric, fuel efficient, and hybrid cars. A gas tax does this, but not a per mile tax.

Of course in the future that will change once electric cars hit critical mass, but at this point they haven't. In 10 years the picture will be different and a per mile rate makes sense.