Why Obama's plan to tax cars by the mile is wrong

A draft of a transportation bill written by the Obama administration sets out a plan for taxing drivers for every mile they drive. The idea has backers in Congress who say fuel taxes won't keep paying for roads much longer. It won't work. But here's a plan that will. Update!

The U.S. government ships about $35 billion a year to states and local governments for building highways, about a fourth of their total road-building costs. Of that, $24 billion comes from the 18.4 cents-per-gallon federal tax on gasoline, with another $8.1 billion from 24.4 cents per gallon on diesel.

But Americans are burning less fuel every year as vehicles become more efficient, even as the price of maintaining or building roads continues to rise. And experts contend the typical combo of state and federal fuel taxes — about 48 cents/gallon on gas and 53 cents/gallon on diesel — already falls short of actual road maintenance costs. The Congressional Budget Office estimates that based on future fuel economy standards, paying for roads without any new fees would require gasoline taxes of $2.10 a gallon.

And the advent of electric vehicles which pay no fuel taxes has already spooked several state lawmakers, with at least four states considering charging electric cars an annual fee or by-the-mile for using state roads, a plan that's already drawn opposition from General Motors.

Hence the idea that every driver should be taxed based on how many miles they drive, something the Obama administration wants to study as part of an upcoming transportation bill. There's a basic nugget of fairness to the idea; people who use highways more should pay their fair share. But making it a reality is far more complex — so much so that it would create far more problems than it solves.

Why Obama's plan to tax cars by the mile is wrong

Any by-the-mile tax has to acknowledge that all miles traveled aren't equal. Rural drivers put far less strain on roads than urban ones, and passenger cars and pickups do far less damage to roads than heavy commercial trucks. Fuel taxes are regressive to begin with; lower- and middle-income Americans pay more of their income than wealthy families, and many people have to travel for work in this job-short economy.

But designing a government system smart enough to distinguish some of those nuances inevitably requires a collection of personal data. States could just have someone write down your mileage every year along with an emissions inspection, but that would be unfair to rural drivers. From there the options range from checkpoints to putting automated mileage tracking devices on every vehicle. It isn't just a steamrolling of privacy rights, but expensive and unworkable. And the potential for shenanigans of all kinds — from cheating by savvy drivers to unauthorized uses of data by government agencies — looms large.

The better answer comes from the data. The biggest road costs come from two main causes; heavy trucks and congestion. Heavy trucks are only 4% of the nation's vehicle fleet — but they drive 10% of the total miles annually, and trigger about 25% of all highway costs, including nearly all costs for pavement damage. Unlike private automobiles, heavy trucks already face a welter of rules regarding emissions and miles driven. Putting a by-the-mile tax on them would pose far smaller technical and legal problems, while raising the taxes they pay closer to their costs.

Many parts of the country already have a government-supplied miles-counting device of sorts in their vehicles; on the East Coast it's called E-ZPass. States have been raising tolls on highways in urban areas, which sucks, but moves toward matching costs to users. New York City wants to impose a congestion fee, an extra charge for city driving during rush hours; it hasn't succeeded yet, but it's likely a matter of time, and other cities may follow suit.

All of which would be better than trying to invent an ever-more complex technology put on every car in America that would inevitably be ripe for abuse. Driving may not be in the Constitution, but the country was founded on the belief we have a right to move without the government looking over our shoulder.

UPDATE: After the original story hit, the White House disavoved the idea, with spokeswoman Jen Psaki saying the draft bill was:

...an early working draft proposal that was never formally circulated within the administration, does not taken into account the advice of the president's senior advisers, economic team or Cabinet officials, and does not represent the views of the president."

Noted.