An Argument for an Auto Mileage Tax

This article deviates from most posted here. In it I present an argument for a vehicle mileage tax.

The Conversational Impetus

I had a conversation recently when the topic of an auto mileage tax bubbled up. The reactions of my interlocutors to mileage tax proposals were resistant, at best. My own opinion is somewhat less so.

Presently, we pay federal gasoline taxes at the pump; the more mileage we accrue, the more fuel taxes we pay. Here, I should note that motor fuel taxes often go toward road maintenance, although that allocation varies by jurisdiction. My point is that what we pay in motor fuel taxes most often go toward roads. However, if one pays little or no motor fuel taxes, one’s individual contribution toward federal road maintenance dollars is less than fully powered internal combustion (IC) vehicles, varying from somewhat less for hybrid vehicles, or none for fully electric vehicles.

Ostensibly, the federal motor fuel taxes are designed to be relative to one’s road usage: More miles (which equates to more wear on roadways) means more gas (assuming a conventional IC vehicle), which means more in motor fuel taxes. If one pays little or no motor fuel taxes, one is not contributing to the federal portion of road maintenance.

Presuppositions

Perhaps the first is that vehicle owners have an obligation to contribute fairly to the maintenance of the roads they use. A second especially relevant to this argument is that there is no “carbon tax” imposed simply because vehicles are internal combustion types. “Carbon footprints” are notoriously hard to assess in manufacturing processes, and contribute to uneven treatment at the owner/operator level.

Methodology

Starting from the assumption that motor fuel taxes were designed to be relative to road usage, I begin my methodology in that motor fuel taxes are proportional to mileage driven. The problem then became one of determining the average motor fuel tax per mile driven (again, assuming an IC vehicle).

Step One: Fuel economy standards. I began with federal fuel economy standards. Since standards vary roughly by year, and by vehicle type (passenger vehicle v. light duty truck), I averaged the federal automobile fuel economy standards (49 CFR Part 531) for passenger vehicles from 1978 (18 mi./gal) to 2010 (27.5 mi/gal). I then averaged the federal fuel economy standards (49 CFR Part 533) for 2-wheel drive light trucks from 1979 (15.8 mi./gal) to 2010 (23.5 mi./gal). The final step was to combined the two averages, which yielded roughly 21 miles per gallon.

Step Two: Federal Motor Fuel Taxes. Motor fuel excise tax data was a bit easier to gather. It is currently at 18.4 cents per gallon, which also includes a 0.1 cent per gallon administrative handling fee.

Step Three: Calculating Motor Fuel Tax per Mile Driven. The final step is simply working out the math: MFT/GAL; AVGAL/MI; TAX/MI.
MFT/GAL * MI/AVGAL = MFT/MI 0.184 * 0.047619 = 0.008. Or, roughly 0.8 cents per mile.

MFT: Motor Fuel Tax; GAL: Gallon; AVGAL: Average fuel economy in gallons; MI: Mile

(Updated 10/9/2021) Of course, added to the federal 0.8 cents per mile driven would be the state motor fuel taxes. In New York, for example, the current motor fuel tax is 43.12 cents per gallon. Extrapolating that out to cents per mile using my previous example equates to 2.05 cents per mile. Thus, the combined federal and state fuel excise tax levy in New York state would be 2.85 cents per mile. By way of contrast, California’s combined federal and state levy would be 3.77 cents per mile. Alaska’s combined levy would be 1.46 cents per mile.

Conclusions

From my calculations, operators of light vehicles already pay about 0.8 cents per mile driven. Thus, a mileage tax based on that amount would not unduly burden operators of conventional vehicles, since they already pay at the pump. A mileage tax of 0.8 cents per mile levied against electric and hybrid vehicles would ensure the operators/owners of such vehicles would contribute fairly to road maintenance based on the miles driven rather than the amount of motor fuel consumed.

However, for a mileage based tax rate to be entirely fair, the current federal (and state) motor fuel excise tax would have to be eliminated. Further, methods for accurately capturing mileage data would have to be devised. One suggestion is to capture, and report mileage data during the vehicle’s annual inspection cycle.

The methodology used for this analysis is extremely crude, but it does grant a valid point: Owners of internal combustion light vehicles contribute more to federal road maintenance coffers than owners of electric and hybrid vehicles. A mileage based tax system would level that disparity.