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Is Obama Going to Tax Drivers?

May 10th, 2011 . by Daryl

Q: Does President Barack Obama support taxing motorists based on the number of miles they drive?

A: No. But it is one idea being studied as a way to replace the federal gasoline tax.

FULL QUESTION

Is this true? Just received today from Newsmax.

White House Wants to Track and Tax Your Mileage

Read more on Newsmax.com: White House Wants to Track and Tax Your Mileage

FULL ANSWER

The idea of taxing motorists based on the number of miles they drive — known as a vehicle miles traveled (VMT) tax or fee — has been a matter of policy discussion in Washington for several years. The Obama administration has yet to endorse it, but the Department of Transportation has requested $ 20 million in next year’s budget to establish the Surface Transportation Revenue Alternatives Office. The office, which would be located within the Federal Highway Administration, would look at a “range of revenue-generation alternatives,” not just a tax on miles traveled.

FHWA website: The proposed office will lead a phased research and demonstration effort to analyze a range of revenue-generation alternatives with the potential to replace the petroleum-based system currently used to fund surface transportation programs.

Although there are other financing schemes, such as expanding toll roads and bridges, the VMT has gotten the most attention, because policy experts consider it to be the most reliable funding source for future highway projects. Why? The number of vehicle miles traveled increases at a faster rate than the consumption of gasoline, because of the introduction of more fuel-efficient cars. Transportation policy experts are concerned that taxes on fuel are not keeping pace with the demand for surface transportation projects, and there is not the political will to raise the gasoline tax.

A 2006 report commissioned by the federal Department of Transportation called a mileage tax “the most promising technique for directly assessing road users for the costs of individual trips within a comprehensive fee scheme that will generate revenue to cover the costs of highway programs.”

In 2009, the National Surface Transportation Infrastructure Financing Commission — a bipartisan commission created by Congress — issued a report that concluded “the most viable approach” for financing highways “is based directly on miles driven (commonly referred to as a vehicle miles traveled (VMT) fee system).” That report (page 91) said a 3.3 cents per mile charge could raise $ 1 billion annually. For a car that travels 15,000 miles a year, the cost would be $ 495 a year.

More recently, the nonpartisan Congressional Budget Office released a report in March that reviewed alternative funding methods at the request of Senate Budget Committee chairman Kent Conrad. That report suggested financing highways through a combination of taxes on fuel and miles traveled.

There are obvious downsides to taxing motorists based on the number of miles they drive, however. There are concerns about privacy rights and the cost of administrating a new program that would rely on GPS technology and on-board monitoring devices. A VMT tax imposes “larger burdens relative to income on people in low-income or rural households,” as the CBO noted when it released its report.

Is the Administration on Board?

Conservative commentators, bloggers and websites — including Newsmax.com — recently criticized the Obama administration for supporting the new tax, citing a May 5 story in The Hill, a Capitol Hill newspaper. The Hill article carried the headline, “Obama administration floats draft plan to tax cars by the mile.” The newspaper said that the tax proposal was included in draft legislation proposed by the administration to reauthorize highway funding that is due to expire Sept. 30. It cited a section of the draft bill that would create the Surface Transportation Revenue Alternatives Office:

The Hill, May 5: That section would create, within the Federal Highway Administration, a Surface Transportation Revenue Alternatives Office. It would be tasked with creating a “study framework that defines the functionality of a mileage-based user fee system and other systems.”

In that story, White House spokeswoman Jennifer Psaki strongly rebutted the idea that the new tax is being actively considered by the administration or supported by the president. She made similarly strong statements in an e-mail to us, saying “a plan to tax automobile drivers by miles … isn’t an option under consideration.”

Psaki, May 9: This was not an Administration proposal because it was a draft memo that was never formally circulated at the White House and is not a part of any proposal that has been or will be submitted to Congress. So it is false because the story made it sound like this was a proposal submitted from the Administration to Congress. When in reality there are dozens of memos on nearly every issue and this never even made it past the cutting room floor.

The Hill story mistakenly said that the draft bill “would require the study and implementation of a plan to tax automobile drivers based on how many miles they drive.” It would not have required implementation of such a plan. The draft bill — which, as Psaki said, never went anywhere — would have required the proposed Surface Transportation Revenue Alternatives Office to “provide recommendations regarding adoption and implementation of a mileage-based user fee system or other system.” Requiring recommendations is very different from requiring implementation. Newsmax.com took it even further, claiming that the White House “wants to track and tax your mileage.”

DOT spokeswoman Jill Zuckman stressed in an e-mail to us that the proposed office is being charged with analyzing a range of alternatives, not just one.

Zuckman, May 9: The 2012 DOT budget proposal includes a Surface Transportation Revenue Alternatives Office that would ‘analyze a range of revenue-generation alternatives.’ The explicitly stated purpose of the office is to research a wide range of possible revenue models, so it is completely false to imply that the DOT or the Administration has in any way proposed any new revenue model.

This is not the first time that the administration has had to announce that it does not support a VMT tax. In 2009, DOT Secretary Raymond LaHood told the Associated Press that the administration “should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled.” Robert Gibbs, the president’s press secretary at the time, stated unequivocally the next day that the president did not support such a tax. “It is not and will not be the policy of the Obama administration,” Gibbs said.

The fact remains, though, that the administration has taken a step toward creating this office, and the vehicle miles traveled tax is the policy option preferred by the experts. So this won’t be the last we hear of this. But at least you now have the facts.

–Eugene Kiely

Patten, David A. “White House Wants to Track and Tax Your Mileage.” Newsmax.com. 5 May 2011.

Research, Technology and Education Program, FY2012 Budget Request. Federal Highway Administration. Undated, accessed 10 May 2011.

Transportation Research Board of the National Academies. “The Fuel Tax and Alternatives for Transportation Funding.” 2006.

National Surface Transportation Infrastructure Financing Commission. “Paying Our Way.” 26 Feb 2009.

Congressional Budget Office. “Alternative Approaches to Funding Highways.” Mar 2011.

Rahim, Saqib. “Tax on Vehicle Miles Traveled Gains Support, but Raises Orwellian Questions.” ClimateWire. 7 Oct 2010.

Alternative Approaches to Funding Highways.” Congressional Budget Office Director’s Blog. 23 Mar 2011.

Obama Regime Floats Car Mileage Tax.” Rush Limbaugh Show. 5 May 2011.

Obama Wants to Tax Us by the Mile.” Heritage Foundation. 5 May 2011.

Kasperowicz, Pete. “Obama administration floats draft plan to tax cars by the mile.” The Hill. 5 May 2011.

President’s Signature Extends Highway & Transit Programs for 7 Months.” AASHTO Journal. 4 Mar 2011.

LaHood’s Talk of Mileage Tax Nixed.” Associated Press. 20 Feb 2009.

Psaki, Jennifer, spokeswoman. White House. E-mails sent to FactCheck.org. 9 May 2011.

Zuckman, Jill, spokeswoman, Department of Transportation. E-mails sent to FactCheck.org. 9 May 2011.

White House. “Briefing Remarks by Press Secretary Robert Gibbs.” 20 Feb 2009.

FactCheck.org

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