Thursday, September 29, 2011

And Miles to Go Before We're Taxed

Contrary to what you might believe, government bureaucracy never sleeps.

Yes, it's vast and lethargic. But somewhere in all of that slothfulness, little hamsters spin themselves silly on spurious assumptions and half-baked ideas. All apparently designed to make life increasingly frustrating for the rest of us.

For example, consider the big changes they're cooking up for America's drivers.

By the Gallon or the Mile?

Perhaps you're already aware that the amount of taxes being collected to pay for road work has been declining. Yes, the price of gasoline has been on a roller-coaster recently, but not the gas tax. This has prompted bureaucrats and politicians to contemplate new revenue sources to fund transportation spending.

And yes, I'll comment on "transportation spending" in a moment.

One of the more popular ideas gaining steam as a revised funding mechanism involves taxing drivers not by each gallon of fuel we purchase, but by each mile we drive our vehicles.

In other words, instead of penalizing drivers for how much gas we use, the government wants to penalize us for how much we drive.

It may sound like an insignificant change... but is it? Some critics of the plan suspect it could be the next war in the struggle for tax equity.

Proof that No Good Deed Goes Unpunished

Several reasons exist to support the rationale for changing course on transportation funding. First, since the federal government has mandated greater fuel efficiency in vehicles, Americans haven't needed to buy as much gas as we used to. With increased mileage, we go farther on a tank of gas, and that means we spend less in taxes to go the same distance.

You'd think that would be a good thing - and it is, for you and me. But not for state and federal transportation departments, who still have to build and maintain our roads, the costs for which continue to escalate.

Second, with our national economy tanking and gas prices becoming more volatile, fewer people are taking road trips, or even driving to work. Plus, anybody who does purchase a new vehicle these days has usually been trading-in a gas hog like full-size SUVs and pickup trucks for a more fuel-efficient automobile to cushion sticker-shock at the pump.

Way down at number three is the increase in mass transit ridership and bicycling, two anti-gas alternatives that some cities have managed to encourage. Of course, mass transit is its own tax hog, even if it helps individual drivers conserve fuel. And bicyclists don't pay any extra tax to use our smoothly-paved roadways.

So in spite of trying to to conserve gasoline, and being relatively successful at it, taxpayers still can't win. To prove it, some activist bureaucrats, faced with declining tax revenues, have been cajoling politicians to switch from taxing each gallon of gas to taxing each mile we drive.

Can Technology Beat This Status-Quo?

But how effective would such a change be in real life? After all, practicality has never been our government's best attribute.

1. We've been told that conservation is key to divesting ourselves of America's reliance on foreign oil. However, by reducing incentives for drivers to care about fuel efficiency - which removing taxes per gallon will do - how do we maintain the gains we've made towards energy self-sufficiency?

2. Penalizing people who need to drive long distances to work - which is what many suburbanites do these days - won't help lower unemployment or help secure living wages for the middle class.

3. Large metropolitan areas with shorter commuting distances will be penalized if taxes are based on miles instead of gallons. Think about it: governments in urban areas benefit from traffic congestion, which forces people to waste fuel in bumper-to-bumper traffic, even if they're not traveling very far. City dwellers use gas stuck in gridlock, even though they don't drive the distances rural folks do. So cities will collect less gas money than they're getting now.

4. Perhaps the greatest reason for sticking with the fuel tax is the wildly optimistic - almost farcical - assumptions advocates for mileage taxes make in terms of how revenue would be collected. Personal recordkeeping? Smartphone applications? GPS technology? At some point, they all rely on an honor system that has pretty much proved worthless when it comes to collecting taxes. Meanwhile, taxing fuel by the gallon is simple, efficient, forthright, and it's worked for decades.

There is the possibility that each vehicle's odometer can be engineered to transmit mileage amounts wirelessly to the government. But considering how apprehensive many Americans already are about the Big Brother reach of state and federal regulators, how suspicious will we be that even more electronic surveillance of our lives is going to help us? Then too, what's the likelihood that a booming new underground industry related to disabling the odometer's ability to transit information would be forthcoming?

Spend Properly, Tax Fairly, and See Who Complains

Just because the amount of taxes being collected has fallen as the number of gallons sold has declined, who's saying that automatically means the gas tax doesn't work?

If we need to raise the gas tax to help make up for any shortfall caused by improved mileage standards, then let's have a conversation about that. All drivers know how important good roads and reliable bridges are, and we recognize our responsibility to pay for them. Granted, I suspect that many transportation budgets could still benefit from a thorough review of expenditures before we start panicking about revenue shortfalls. Certainly, our current transportation administration's infatuation with unrealistic high-speed trains needs to be yanked out of service before it wastes more highway dollars.

Even then, however, if our nation's highway infrastructure still needs new capital to keep the driving public safe and our economy moving, don't expect Joe Taxpayer to keep scrupulous mileage records on his iPhone when he gets lost on his next cross-country drive.

Remember: a big part of taxation must be fairness. And tax systems with enormous holes - like a mileage tax - only make scofflaws happy. Which helps explain why, in this discussion, it's interesting to hear people advocating higher taxes (on gasoline) rather than new methodologies (like mileage) for collecting those taxes.

Bureaucrats and politicians should use that anomaly as proof that some old ways of running our government actually do work.

Even if none of us really wants to admit it.
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