Taxing cars by the mile, are you kidding?

With all levels of American government, Local, State and Federal pitching reductions on fuel consumption, reductions in emissions, and the use of public transportation, hybrids and electric cars the effect has been to reduce the amount of gasoline Americans consume, and in return the amount of revenues collected from the per-gallon gasoline taxes used to help maintain our roadways. Accordingly, as you might expect, government is looking at a new way to increase revenues which sounds like a horrible idea. That’s right you guessed it, taxing cars by the mile!

The federal government reportedly gives approximately $35 billion dollars a year to the States and Local governments to help build and maintain the highways. Tax attorneys claim that represents approximately twenty five percent (25%) of the total amount States and Local governments spend providing such services. These same tax lawyers point out that the combination of State and Federal fuel taxes is approximately forty eight ($.48) cents per gallon for gasoline and about fifty three ($.53) cents per gallon for diesel and that it already falls short of fully paying current road maintenance costs.

The Congressional Budget Office (CBO) is projecting, based on anticipated future fuel standards, that in order to cover the cost of road maintenance without imposing additional new fees, the government would have to raise the gasoline tax to two dollars and ten cents ($2.10) per gallon.

So do you see why the government is now looking at taxing you for every mile you drive? But is that really fair? Tax lawyers suggest a per-mile tax would have to recognize not all miles are equal if it is going to be fair. Large trucks put much more wear and tear on our roadways as compared to smaller passenger cars. And rural drivers don’t put nearly the wear and tear on the roadways (because much of their driving is often off road or on unimproved roadways) as compared to urban drivers. What’s more, tax attorneys tell us that the gasoline tax is a type of tax which is known as a “regressive tax.” Which means it disproportionately affects lower and middle income families and therefore is already an unfair way to pay for roadway construction and maintenance.

Many tax attorneys point out that a per-mile tax on all vehicles inevitably creates collection concerns. They suggest that trying to tax the miles on every person’s car, truck, R.V., motorcycle, tractor-trailer, bus…etc. would be an administrative nightmare. Just imagine if everyone ran to their mechanics and paid them under the table to roll back their odometers? Tax lawyers are asking would the IRS start inspecting odometer readings, and examining the counters to see if the mileage had been fraudulently altered, as part of a new audit procedure? Most IRS audits these days are done over the phone, so would you have to take your car to a certified IRS inspection station to have your mileage report validated?

Some advocate there is a better solution than taxing all vehicles by the mile. They point out the biggest contributors to wear and tear on the roadways are heavy trucks and congestion. While they reluctantly appear to embrace the notion of charging heavy trucks a per-mile tax (and perhaps overlook the effect on increasing the cost of shipping consumer goods), they suggest just charging the heavy trucks would increase revenues while at the same time helping reduce the difficulties of enforcement and minimize legal wrangling. They believe any short-fall in covering roadway maintenance expense from taxing the heavy trucks could be made up with roadway toll stations and electronic mile-counting devices like E-Z pass (used on the East Coast). While this may seem to be a fairer way to pay for maintaining our roads, the truth is in the end it will be the consumers who ultimately foot the bill for another ill-conceived tax.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

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