Officials in the state of Oregon have been talking about a mileage-based tax for some time. Illinois and Nevada have also planned "experimental" programs.
But I think it's a bad idea for a number of reasons. First of all, every car would be required to have some sort of little GPS gizmo or measuring device, which would obviously have to be paid for by
someone. And notwithstanding whether the technology design can reasonably be expected to assuage privacy concerns, a lot of people are going to be troubled by the existence of any stored data. Women worried about deranged, nutcase stalkers, for instance.
In the Oregon discussion of this matter, someone raised the concern that since the idea was to finance
State of Oregon roads and highways, what about residents who travel out of state? Should Oregon be allowed to tax those miles? The answer proponents gave was, "We have the ability to track and separate non-Oregon miles." The obvious rejoinder is, "Fine. But doesn't that mean you also have the ability to track all sorts of other things people might not want to have sitting in some database somewhere?"
Politicians are reticent to talk about doing it for obvious reasons, but raising the gasoline tax would be far less damaging, and incomparably simpler. (Since it's already in existence.) If that, over time, disincentivizes fuel consumption to the extent that revenues eventually fall, so what? I see that as an unambiguously good thing. As has been noted earlier, roads and highways can be financed with general revenue, like most other things. The very existence of highway "trust funds" amounts to just an unnecessary extra layer of government complexity.
Personally, I think that cars should be taxed every year on value, like real estate. You drive a fancy 7 series or S class, you pay the price.
Originally Posted by Bert Jones
Ad valorem taxation of vehicle market value would be a messy, clumsy process and would simply add more bloat to tax appraisal and collection entities. Vehicles obviously decline in market value very rapidly. Do you think we should hire a bunch of new clerks to sit around confirming the latest year's Blue Book value for every vehicle in the country? (Although I suppose that unabashed fans of big government would note that the idea would be a "jobs program!") Also, don't forget that buyers of luxury cars already pay a higher tax on expensive cars once (the sales tax).
Nobody likes paying more taxes. But there are relatively transparent, less bad forms of taxation, and clumsy, crude, annoying methods that produce undesirable side effects and large deadweight losses -- and in some cases backfire (as was the case with the short-lived "luxury tax" of 1990).
It seems obvious that it's preferable to avoid the latter.
