Why I am opposed to a Vehicle Miles Traveled Tax

As I’ve said before, it is essential that we increase our tax revenue in order to maintain our existing highway infrastructure (already underfunded) while expanding our public and freight transportation systems.  Though Obama has publicly stated that there will not be a VMT tax, to counteract Ray Lahood’s floating of the idea, there exists nonetheless a substantial contingent of wonks who continue to agitate for the idea.  The idea of a VMT tax feels more like a high modernist scheme than a well-considered proposal.

Like a lot of people, my main worry is privacy.  Just as credit cards can be used, when necessary, to track someone’s movement, it is conceivable that GPS data recorded for taxation could be appropriated to similarly track and locate individuals.  Whereas a lot of conservatives assume that government officials love to sit around and scheme how to take away our rights, I don’t think that any sort of ulterior motive is driving the VMT movement.  I do not worry about a clerk at the DMV knowing where I buy my groceries, but it’s easy to see how this technology could be abused in times of emergency, i.e. post-9/11.  Moreover, we should also be afraid about the tracking system being hacked.  Containing, presumably, our addresses and other sensitive personal information, the system’s database would represent an irresistable target for hackers.  Though I trust that federal safeguards would be more stringent than that of states, the impact of a breach would be so great that we cannot assume away the possibility.  Our current crisis has taught us not to discount fat tails.

In addition, the logistics of implementing such a system are incredibly complex because we are not starting from scratch.  With millions of cars on the road, a clean switch to the VMT tax seems,from here, nearly impossible.  How do you get people to retrofit their cars?  (Presumably, new cars would have recorders built in.)  What if the address where a car is registered does not match the driver’s current address?  Who pays for the device’s installation?  These are all answerable questions, but none of the answers are easy (or inexpensive).

The benefit of more precise taxation seems negligable.  Oregon’s experiment, which proponents routinely herald, was imprecise (not differentiating on the type of car, time travelled, or road type travelled on) and had unclear benefits (aside from being a proof of concept).  As Matt Yglesias says, “A guy who drives an SUV along a 25-mile stretch of the Beltway at peak morning rush hour is imposing a lot more negative externalities on his fellow citizens than is a guy driving a Prius 50 miles in the middle of the night on the outskirts of Albuquerque.”  In other words, the standard fuel tax currently performs most of what a VMT tax would.  Since a heavier car burns more fuel, it charges owners of heavy cars more; since you burn more fuel sitting in traffic, it is an indirect (and very imperfect) congestion tax; and you burn more fuel the farther you drive, so you pay a form of a vehicle miles traveled tax.  I see two obvious benefits: a VMT tax could charge drivers less for taking side streets and less used highways and for travelling on certain types of roads.  Yet those two benefits do not seem worth the cost of implementing a VMT.

Finally, supports of the VMT argue that gas tax revenue will go down as the gas tax shifts consumers into more fuel-efficient cars.  This argument is like saying that we should lower tobacco taxes because it causes people to smoke less.  Driving a car has tremendous external costs for which we do not account, just like tobacco.  If increasing taxes on a packet of cigarettes means less people smoke but overall tobacco tax revenue also declines, that is an acceptable trade off.