Transportation Secretary Pete Buttigieg said on Friday that, among the avenues on the table being considered to help pay for a massive infrastructure proposal, is the possibility of vehicle mileage tax.
Since the passage of the $1.9 trillion COVID relief bill, there has been talk of a multi-trillion spending plan for infrastructure.
Buttigieg said, “When you think about infrastructure, it’s a classic example of the kind of investment that has a return on that investment. That’s one of many reasons why we think this is so important. This is a jobs vision as much as it is an infrastructure vision, a climate vision and more.”
One of the ways to pay for it could be to tax drivers for every mile they drive.
“A so-called vehicle-miles-traveled tax or mileage tax, whatever you want to call it, could be a way to do it,” Buttigieg said.
“I’m hearing a lot of appetite to make sure that there are sustainable funding streams.”
Biden will travel to Pittsburgh next week to lay out what is expected to be a $3 to $4 trillion proposal. He stated during his first press conference on Thursday that infrastructure, “both physical and technological,” would be his next major initiative.
Biden will detail his plans on a potentially $3-4 trillion infrastructure bill in a speech next Wednesday in Pittsburgh, and that will remain the top White House priority for weeks to comehttps://t.co/QIk9dmmkqO
— POLITICO (@politico) March 26, 2021
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Biden’s Infrastructure Plan
Biden’s infrastructure plan could include, according to Business Insider:
- Clean energy deployment and the development of 5G
- Rural broadband
- One million “affordable and energy-efficient” housing units
- $1 trillion in spending on roads, bridges, electric vehicles, rail lines, and improvements to the grid.
President Biden wants to spend another 3 trillion dollars on “infrastructure” and “climate change.”
How does he pay for that?
By raising your taxes.
— Rep. Jim Jordan (@Jim_Jordan) March 23, 2021
Build America Bonds?
Another possible funding source Buttigieg and the President might be looking at is an Obama-era idea called Build America Bonds.
Per CNBC, these are a special class of municipal bonds where the interest costs are subsidized by the U.S. Treasury.
The federal government used these in the 2008 bailout era, and phased them out in 2010.
Buttigieg also mentioned the idea of a national infrastructure bank.
A mileage-based tax shows a lot of promise, @SecretaryPete says about funding President Biden's infrastructure package. Revenue generation will most likely come from several different sources. "We've got to think big; it's got to be transformative." https://t.co/QY1JvWXXOA pic.twitter.com/4R2CD6KaZV
— CNBC (@CNBC) March 26, 2021
Mileage Tax Pros And Cons
When it comes to pros and cons, there are a few of each.
For some, this type of use-tax is more fair. After all, those who use a resource most should pay more for it, right?
A mileage tax would also bring electric vehicle drivers into the mix, since those vehicles do not pay into the highway trust fund.
On the con side, many Americans don’t want the government to track a driver’s whereabouts and movements.
There’s also questions of fairness. Should people be punished if they live further away from their work?
And even for those on the right who prefer use-taxes (as opposed to general levies, which are paid even if an individual doesn’t partake in the associated services), the question may be one of federalism.
One could prefer a state-based use tax – after all, then the funds go to the roads in their state. But is there any guarantee the federal government will use the revenue fairly, or will some areas receive more benefits and others are left high and dry?
Another maybe not so readily seen consequence, COVID-19 has proven to a lot of employers that their employees can work from home. At a time when Americans are getting vaccinated and feel safe to leave their homes to physically go to a job, school, etc., a mileage tax might have many people rethinking work-from-home as an alternative to paying to drive.
This can also be a pro argument for environmental advocates. Generally, if you want less of something, you tax it. If you tax travel, you will get less of it. That means less vehicle exhaust.
In his comments to the House Transportation and Infrastructure Committee, Buttigieg said, “There is near-universal recognition that a broader recovery will require a national commitment to fix and transform America’s infrastructure.”
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