The problems with a nationwide VMT tax

By Felix Salmon
February 11, 2010
Andrew Samwick calls a tax on vehicle miles travelled (VMTs) "one of the most ridiculous policy proposals I've read in a while", and Ryan Avent responds with a defense of the idea. The weird thing, here, is that they're both right. Samwick agrees with Avent that congestion charges -- essentially VMT taxes which vary according to the route you take and the time of day that you drive -- are "worthwhile policy measures". And it's pretty clear that if we're going to have congestion charges, we're going to need to implement some kind of VMT-tax technology. (I'm a fan of Skymeter, myself.)

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Andrew Samwick calls a tax on vehicle miles travelled (VMTs) “one of the most ridiculous policy proposals I’ve read in a while”, and Ryan Avent responds with a defense of the idea. The weird thing, here, is that they’re both right. Samwick agrees with Avent that congestion charges — essentially VMT taxes which vary according to the route you take and the time of day that you drive — are “worthwhile policy measures”. And it’s pretty clear that if we’re going to have congestion charges, we’re going to need to implement some kind of VMT-tax technology. (I’m a fan of Skymeter, myself.)

So yes, a flat nationwide VMT tax makes little sense — but the fact is that once VMT-tax technology was introduced, it would have lots of knobs and dials allowing it to be anything but flat, and to charge much more for VMTs in central business districts during rush hour than for VMTs in the middle of Wisconsin on a Sunday afternoon.

The problem is in the implementation: it’s hard to have a compulsory VMT tax, since that involves attaching some kind of meter to every American’s car, and Americans are not going respond well to that idea. Hell, even New York cabbies went on strike to protest GPS devices being put in their vehicles to track their every movement.

A single city can implement VMT metering by attaching carrots as well as sticks: cheaper and more convenient on-street parking, say, for metered vehicles, and lower insurance, based on miles travelled rather than a flat monthly fee. And people who still opt out of the scheme can just be charged very large sums manually for entering the city — something eminently doable in Manhattan, for instance, simply by installing a couple of tolls on East River bridges. But that kind of thing doesn’t scale well to the nation as a whole, and there really is something quite creepily Big Brotherish about trying to track every single vehicle in America.

So although I’m a fan of a cap-and-trade system over a carbon tax, and although in theory a VMT tax is to the gas tax as cap and trade is to a carbon tax, I can’t get very excited about the idea of a nationwide VMT tax. The difficulty of implementing it is just too great, and the marginal upside is too small. Let’s start with a couple of cities, and work out from there. Starting nationwide is far too ambitious.

Comments
15 comments so far

So let me see if I understand you correctly. You think it’s creepy that the government would track every vehicle in the country and you’re not very excited about it, you’re still OK starting it with a few cities.

Not a very consistent perspective.

Posted by dhjdhj | Report as abusive

Sounds as nutty as acorns.

Posted by fred5407 | Report as abusive

WTF?!!!

Seriously?!! How much more obvious does it need to be?! Citizens are seen as nothing more than walking ATM’s. We have needs like public health care, easy access to education, and stable housing regulations that don’t force whole families out when problems arise beyond their control.

But what do we get? Stupid ideas like taxing EVERYONE who drives?!!

Corporate tycoons rake in billions in bonuses even when their businesses are run into the ground. And citizens have to socialize those losses without having any choice in the matter. But when we demand our needs be met, we’re told to stop being socialist and to do for ourselves.

This government no longer belongs to the citizenry. Get comfortable with slavery or start getting serious about putting the screws to our elected officials in congress. Get rid of corporate citizenship.

Posted by Benny_Acosta | Report as abusive

I have two neighbors, one with a Prius and one with a Hummer, that would disagree with this: theory a VMT tax is to the gas tax as cap and trade is to a carbon tax.

Posted by BillDollar | Report as abusive

Varying the tax by the route taken might reduce congestion, but would do little to reduce emissions. A flat tax on miles traveled would be easier to implement (check the odometer) and would cut down on emissions by reducing the amount driven, which leads directly to less congestion.

For most newer cars, there wouldn’t need to be any installation of a tracker for metering. Just contract the duties out to OnStar*

Posted by drewbie | Report as abusive

Mr. Obama really is doing every tax possible to make sure he’s a one term president.

Posted by jorge62 | Report as abusive

Rather than a nationwide VMT tax (or cap and trade or whatever you want to call it), how about a state VMT Carbon tax. Small states, rather than cities would be a good incubator for testing this idea out. In many states, yearly vehicle inspections are accompanied by recording of miles driven, so you don’t need some kind of fancy GPS recording system. The data is already being collected. Divide your miles driven per year by the estimated MPG for your vehicle and you get your “automobile carbon use estimate”. You then pay based on this estimate. If you drive a car that gets more than, say, 40 mpg, you don’t pay the tax.

This sort of tax could be used in place of state sales taxes on gas and the revenue could be used by states at their discretion. And if your state doesn’t want to do this, don’t pass it into law.

Posted by Empty | Report as abusive

Typical. Why do we we need a new tax with a fancy acronym? This tax already exists. You pay it every time you fill up – nearly 64 cents per gallon in California. And it’s perfectly weighted: drive more than your neighbor, pay more tax; drive a huge SUV, pay more tax; drive a Prius, pay less. The incentives are already there, the mechanism is in place. Just jack up the taxes if you want people to drive less or to push them toward more fuel-efficient vehicles.

But just admit that any tax on fuel or driving is brutally regressive. The commuting single mother thanks you for thinking globally.

Posted by Sensei | Report as abusive

The goal here is to reduce oil consumption and traffic congestion. The best answer is far simpler than any VMT. Impose tariffs on imported oil. Oil consumption will be reduced, our dependency on foreign oil will be reduced, alternative energy and mass transit will get a boost and the federal government will get the needed boost in revenues.

Posted by Pete_Murphy | Report as abusive

How about a ‘general crapping tax’ (GCT), because you don’t have to drive anywhere and we can call it a ‘crap-and-trade’ system.

…”and there really is something quite creepily Big Brotherish about trying to track every single vehicle in America” – nothing that 300 000 000 drones cannot handle.

Posted by Ghandiolfini | Report as abusive

Problems with this tax proposal start with the fact that it’s circular enough to drive Americans nuts.

The majority of roads of which use is liable to be taxed aren’t worth driving on to begin with, not being properly planned, cleaned or even maintained (other than by convicts). Also that, in this so-called free market economy any ensuing revenue is destined to be subverted into paying for wars, mercenaries and other bailouts of Soviet proportions. People notice things like this, even while driving, especially when they’re not allowed to use their cel-phones…

Ultimately, a tax of this nature may be the last straw in reactionary Americans’ flimsy argument of “not-wanting” any measures that might put them in stylistic proximity with socialized economies. America’s economy is supposed to be going somewhere, whereas it’s getting harder and harder for taxpayers to pay even lip allegiance to this false flag.

Plus of course, in Western European socialized economies, the roads would be properly paved and maintained, which in America is, of course, not the case – because the money’s already been given to weapons makers, mercenaries, zombie banks, TBTF corporate bailout artists, none of whom pay their fair share of taxes etc.

Posted by HBC | Report as abusive

Taxes are going way up in this country, even for the beloved middle class. You know 9 of the top 30 job sectors ten years ago are shrinking to the point of extinction due to foreign competition and technology advances? The US economy is in tailspin. I work for http://storyburn.com and the angry chaos around America is getting worse each day. Companies are using this recession to do far more with less people. State governments like California and New Jersey are reeling in red. Whether your in Abu Dhabi, Germany or in New York City, get ready for a huge wealth transfer to other regions and classes

Posted by hambo | Report as abusive

I think we already have the mechanism for congestion pricing. It’s called EZ-pass and tolls. It’s pretty easy to make roads toll roads at various times of day with rush hour and off peak pricing.

The VMT is basically the idiot child of politicians who are afraid of raising the gas tax, but don’t have the brain cells to realize this would be much much worse.

Posted by mattmc | Report as abusive

Mattmc — To your point, I think the politicians see embracing the idea of a VMT is a way out of the discussion about whether current taxes, like the motor fuels tax, ought to be raised. Beyond that, it’s a planner’s dream, but people tend to forget that raising taxes through the VMT won’t be any easier, politically, than raising the gasoline tax. For more perspective, check our out blog. http://transportationblog.dallasnews.com  /archives/2010/02/would-you-rather-pay- gas-tax-p.html

Posted by lindenberger | Report as abusive

The answer to traffic conjestion isn’t more taxes, its technology. Check out KPTV in Portland. They put webcams around the city at major traffic areas and anybody with internet can check before their commute if they should take another route or postpone their trip until another time. If people around the country had real time webcam info and traffic bulletins/advisories, part of the driving population wouldn’t be flying blind, thereby reducing some of the conjestion. If government were really doing their jobs, they would have more and better electronic signs on the highways giving us advanced warning of upcoming conjestions and alternate routes to take. Car pooling and park and ride schemes also help but eventually we need to think about decentralizing big urban areas, there are too many drivers and too few roads in some places.

Posted by csg57 | Report as abusive
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