I recently summarized the various ideas on funding transportation being batted about by legislatures and Congress. Some of these were unremarkable, such as raising the gas tax. Some made so much sense that it was hard to understand why they haven’t already been embraced, as with indexing the gas tax to inflation. Some could be viewed as intrusive, as in the case of assessing taxes based on how many miles you drive. However, one option appears to have been overlooked: taxing all vehicles according to their weight.
Many trucking companies pay registration fees that can vary by weight, but these tend to be rather nominal amounts. Missouri’s annual fees for single unit trucks range from $15.75 to $100.75. Alabama’s fees vary from $23 to $845. Virginia charges a flat fee of $13, then adds a range of $2.50 to $12 per 1000 lbs. Basically, no two states are alike.
For personal cars, Alabama, Missouri, and Virginia assess registration not just at different rates, but also with different standards. Missouri uses horsepower, apparently in an effort to punish Corvette owners. Alabama charges a flat rate of $24.25. Virginia uses vehicle weight for a range from $26.50 to $31.50. Virginia’s paltry amount probably just covers repaving the Governor’s driveway.
However, Missouri and Virginia go further by charging a personal property tax assessed according to the market value of the vehicle. Missouri uses 1/3 of the market value with the actual amount varying according to locality. Virginia uses the National Automotive Dealers Association Official Used Car Guide to establish the market value, then divides that number by 100, multiplies that by the tax rate ($4.57 in Fairfax County, a prosperous suburb of Washington, DC), then reduces the amount via a personal property tax relief measure enacted by a Republican governor in 1998. Clearly, simplicity in the tax code is not a high priority in Virginia.
Rather than these complicated maneuvers, what if we just used the weight of each and every vehicle to determine the tax to be paid? In fact, what if we dispensed with fuel taxes altogether and relied on weight alone? Let’s look at the positives first:
1. Heavier vehicles, which inflict the most punishment on road surfaces, would be liable for the most tax. Essentially, it makes this into a use tax. Use up the road; pay to replace it.
2. Lighter vehicles are more fuel efficient. It’s hard for a heavy Range Rover to get more than 20 miles per gallon, unless it’s rolling downhill with a hurricane pushing it along. A small Toyota Yaris can get twice that mileage, unless you drive angry. So, by taxing according to weight, we encourage the use of light vehicles that happen to be fuel efficient.
3. Encouraging more fuel efficiency decreases the necessity to either import oil or extract it from shale formations (via the infamous “fracking” process). The former reduces the strategic importance of the Middle East, where much of our defense budget disappears. The latter could protect shale-rich Appalachia from, believe it or not, earthquakes (the National Research Council found that pumping water into the ground can cause minor seismic events---fun!).
4. Growth in the economy and population will automatically yield growth in revenue. Both increase traffic, so more vehicles will be hitting the road. That means more revenue, though it could be slightly offset by declining vehicle weights as car buyers opt for lighter vehicles. A side benefit could be that revenues will increase fastest in those states experiencing rapid growth. These states typically find that they can’t keep up with rising transportation demand, as in the case of Virginia, Georgia, and several other Sunbelt states. But, with basing taxes on weight, that very demand growth generates an ever-growing revenue stream.
5. It’s fairer this way. Does it really make sense to tax the driver of a Lexus CT hybrid (curb weight 3146 lbs) more than the driver of a Toyota Tacoma pickup (curb weight 3250 lbs)? The hybrid weighs less, so the road damage will be less. Plus, the hybrid uses less gas, thus making it more environmentally and geopolitically friendly. However, Missouri and Virginia will hit the hybrid owner with a higher tax bill because the car’s value is $10,000 higher than the pickup’s.
Alas, every list of positives must be followed by a list of negatives:
1. The trucking industry will cry foul. Trucks weigh more than cars, so guess who the greatest burden will fall upon? However, their business is also highly dependent on the good health of the crumbling interstate highway system.
2. Owners of large SUVs and pickups will be rather unhappy. They already are pretty unhappy with the fuel bills. It’s always a bit of a shock to pull up at a gas pump and see that the previous customer racked up over $100. Tell that same person their tax may go up, and they vent their anger at the polls. Eliminating the fuel tax in return might take some of the sting out, though.
3. Many states don’t charge a personal property tax. Any politician who attempted to introduce one without an offset like fuel tax elimination will feel considerable voter anger. This happened in Virginia, which is why officials introduced the partial rollback I mentioned earlier.
4. The federal government and state governments would have to work together to apply this approach across all states. Otherwise, chaos will reign as individual states opt for extremely high tax rates on vehicle weights while others opt out entirely.
So, is taxing by weight and removing all other fees the way forward? Or, is it a political dead-end like all of the other revenue proposals currently circulating? It’s something to think about the next time you drive across a long, rusty highway bridge.