Avoidable Contact #112: Uncle Sam prepares to pick your pocket, and you’ll let him do it
Patrick Bedard is known to be many things: club racer, IndyCar cup-of-coffee crash survivor, Hagerty contributor—but relatively few of us remember his tireless advocacy for motorists of all types, not just the ones who know the difference between an F355 and an F-350. In particular, Patrick liked to point out that the American motorist, as a class of human being, has long been considered to be a source of almost limitless revenue by both government and corporations.
The taxes and fees paid by the average motorist are so numerous and wide-ranging that it’s impossible to list them all. Start with the big hitters: every new car arrives at the showroom having been taxed at several points in its creation, transportation, and delivery. Many states like to wet their beak by requiring initial inspections of new cars. Most of them charge a full sales tax rate on the purchase price of the car, which is faintly ridiculous since it’s the second-largest purchase most people make—unless they are of the younger generations who will never be able to afford a single-family home, in which case it’s their largest purchase. The states charge to register the car, to inspect the car, to “smog” the car.
Having paid thousands of dollars for the privilege of buying and operating a car, the motorist must then put fuel in it, at a tax rate of between 31 and 82 cents per gallon depending on the state. If the car is electric, the buyer has to pay a state-licensed monopoly for the power, which is also taxed. What do you get for your 82 cents a gallon? Not much. If you want to drive on a decent freeway, most states will charge you a toll for the privilege. You’re required in every state to purchase insurance; I personally think you’d have to be an exceptionally stupid person to drive without insurance, but state-mandated coverage is, as Bedard once said, “shooting fish in a barrel” for the companies that provide it.
All of this taxation is, to use a fancy political-policy phrase, regressive, which is to say that it falls hardest on the people who can least afford it. The total annual tax burden on my 2018 Lincoln MKT is about the same as the total annual tax burden on that 1996 Taurus blue-smoking its way between an apartment, a daycare center, and a fast-food job; it’s also about the same as what one of my friends pays on his LaFerrari, which gets similar gasoline mileage in daily use to the MKT. In almost any other situation, this kind of regressive tax strategy would have “The Squad” et al. screaming from the rooftops about the unfairness of it all—but here’s the catch: motorists, as a group, tend to be a suburban and rural bunch. Most of the policy in this country appears, to my ignorant eyes at least, to be written around the needs and desires of someone living on the Upper West Side.
Best of all for the people who make these policies, the motorist never votes as a motorist, something else Bedard noted long ago. Most people don’t remember that one of the original purposes of the AAA was to protect drivers against taxation, selective enforcement, punitive legislation, that sort of thing; it was like the NRA of cars. There was once a time when you could lose votes by preying on what L.J.K. Setright called “T.C. Mits: The Celebrated Man in the street.” Such is no longer the case. When was the last time you voted for someone based on how they treated the motorist? Was it Reagan, because he appeared willing to roll back the “double-nickel”? Or was it never?
Our current Presidential administration may be good or bad; that’s not for me to say in these electronic pages. What is not up for debate, however, is the unprecedented nature of its fiscal, monetary, and tax policies. All of this stuff is going to cost money. A lot of it. Where’s that money going to come from? Well, a lot of it will be printed, or borrowed, or invented out of thin air—but some of it will be taxed.
Buried in the 511th page of the current infrastructure bill (hat tip to our tireless contributor Ronnie Schreiber for finding it) is the following text to create a per-mile taxation “pilot program”:
The objectives of the pilot program are—
(A) to test the design, acceptance, implementation, and financial sustainability of a national motor vehicle per-mile user fee;
(B) to address the need for additional revenue for surface transportation infrastructure and a national motor vehicle per-mile user fee; and
(C) to provide recommendations relating to the adoption and implementation of a national motor vehicle per-mile user fee.
How would the fee be assessed? Well, the pilot program will offer volunteers the following options:
(A) Third-party on-board diagnostic (OBD-II) devices.
(B) Smart phone applications.
(C) Telemetric data collected by automakers.
(D) Motor vehicle data obtained by car insurance companies.
(E) Data from the States that received a grant under section 6020 of the FAST Act (23 U.S.C. 503 note; Public Law 114–94) (as in effect on the day before the date of enactment of this Act).
(F) Motor vehicle data obtained from fueling stations.
(G) Any other method that the Secretary considers appropriate.
Now, it should be noted that the results of the pilot program will be presented to the Biden Administration in three years, at which point the Administration will decide whether or not to implement said tax. Those of us who are married and who buy classic cars—probably a lot of you, I’d imagine—are familiar with this kind of strategy. “Oh, honey, I’m just going to wander over to that dealership with all the ’60s Corvettes and look around. I’m not actually going to buy one. I’m just taking a look at the market.” Believe it or not, after hearing this line your spouse is not surprised when you come home with a big-block ’66 convertible.
Similarly, it seems highly unlikely that the Federal Government will go to the effort of developing a comprehensive per-mile tax strategy and just, you know, leave it in the showroom. Of course there will be a per-mile tax. The states are looking at it as well; Pennsylvania is talking about replacing its gas tax with an eight-cents-per-mile tax. Currently, PA charges 58 cents per gallon, so if you drive anything that gets better mileage than a ’76 Eldorado, congratulations! Your taxes just went up.
Don’t be naïve or hopeful enough to think that the federal per-mile tax would actually replace today’s 18-cent federal gas tax, because that money has already been allocated and spent six ways to Sunday on things that have very little to do with roads or infrastructure. It would just be more icing on top of the federal tax cake. To make matters worse, this might be one of those taxes where the method of collection is more punitive than the actual molestation of your wallet. Every one of the methods listed in the infrastructure bill to actually calculate your per-mile tax would be remarkably disrespectful to your privacy. I can’t quite figure out which one of them is the worst of the bunch. Probably C), “telemetric data collected by automakers.”
Nor should you bury your head in the sand and say, “This kind of thing will never make it through the legislature.” Let me explain something to you: this per-mile tax is a classic case of being able to vote money out of other people’s pockets. The City Mice among us will cheerfully back any tax that falls exclusively on Country Mice. Even the Suburban Mice will hold their noses and agree; they’re only commuting what, 500 miles a month, on average? Eight cents a mile, that’s 40 bucks. Who cares?
As for me and my house, however, we will fight this one a bit. In the past three months, I’ve driven almost 11,000 miles with my son, visiting bike parks from New Hampshire to New Mexico and parts between. We’d be looking at maybe $1500 in combined per-mile charges on a federal and (projected) state level, over and above everything else. We’re not alone out there; tonight we are in Fraser, Colorado, and I see license plates from Tennessee to California on the town’s streets.
Will my opposition matter? Not one bit. Very few people will change their vote based on a per-mile tax. Most of the Country Mice are already voting against this administration for other reasons; many of the City Mice view anything that hurts Country Mice as a public and social good, so they’d be fine if the per-mile tax were 80 cents a mile, or eight dollars, or one-eighth of a pint of blood. The only statistic that matters is this: Americans drive more than three trillion miles a year. At eight cents a mile, that’s $240 billion. Admittedly, the federal government runs a $200 billion deficit pretty much every month—but, to coin a phrase, $240 billion here and $240 billion there and pretty soon you’re talking real money.
What can be done about this? I have no idea. Write your representative. Tell a pollster you don’t like it. Uh, vote harder or something like that. Or you could start thinking of yourself as a motorist in addition to being a Democrat or a Republican or a gun owner or a property owner or an agent of social change or whatever else you’ve adopted as a political identity. The concept of political motorist is a little dusty, when you open the barn door there’s a strong whiff of Model T about it. That doesn’t mean it’s not worth cranking over to see how it runs. I think Patrick Bedard would approve.