Muh Roads and Mileage Taxes

Editor’s Note: Originally published at The Roots of Liberty July 2017. Biden’s proposed gas tax holiday offers an opportunity to reconsider how we pay for the roads we use. Per the “user fee” philosophy of taxation, the current system is incredibly unjust - with some bearing undue burden and others essentially freeloading. Lightly updated from the original.

If you’re a libertarian who’s wallowed in that political sandbox for a while, you know the “Muh roads!” gag. The rest of you – the normal people who may even know a fair bit about libertarianism but haven’t spent endless hours wallowing in its depths? You’re probably puzzled.

That’s OK.

In fact, it’s probably a good thing.

Libertarianism is usually picked at by its detractors by presuming a much higher level of “purity” than most other -isms get. People deconstruct libertarianism by pondering its apotheosis, its complete implementation, and finding things about that end-state that are less than perfect. Among the most common forms of this is the question “who will build the roads?” Anti-libertarians think it’s a “gotcha.” Libertarians, who have heard this so often that they have a full spectrum of long-developed answers, mock them by shortening the question to “muh roads!”

The thing is – we as a society are SO far removed from a situation where government would have no involvement in the roads that raising “muh roads!” as a problem with libertarianism is just straw-man argumentativeness. You and I will never see an America where the government does not have at least some involvement with public roads.

Meanwhile, the government that is supposedly necessary for public roads to even exist has been failing at keeping them up. Trump has even gone so far as to promise a trillion dollars worth of spending on “our crumbling infrastructure.” While the facts say that the “crumbling” bit is an exaggeration, and the reality is that, other than interstates, roads and other ground transportation should be handled at the state level, lets just go with the “crumbling roads” bit and discuss the money aspect.

The Federal government imposes a tax of 18.4 cents per gallon on gasoline and 24.4 cents on diesel fuel. These tax rates, in place since 1993, are not adjusted for inflation. If they were, those taxes would be 31.6 and 41.9 cents per gallon. Furthermore, they do not reflect improvements in average vehicle mileage over the years, which for light duty vehicles, climbed 15% from 1993 to 2015. Had they been adjusted accordingly, the gas tax would be 36.3 cents per gallon. Further-furthermore, even as mileage figures have been increasing, average vehicle weight has been increasing. The latter implies greater wear and tear on the roads. All this combines to suggest that, as a means of paying for road use, as a usage fee, the gasoline tax is only half what it should be if the original 1993 rate were applied to today’s realities.

There are other problems with gas tax revenue, not the least of which is that much of what’s collected isn’t actually spent on federal roads, bridges and tunnels, despite the fact that it’s “earmarked” to do so and is funneled directly into a Highway Trust Fund. Various sources suggest that 25% to 40% of gasoline tax revenues are spent on other things (and, to make up for the raiding, the feds have to, from time to time, add money back into the Trust Fund). Still, if we have a cash shortfall and crumbling infrastructure, we can look at inflation and mileage improvements as primary culprits.

But, merely indexing the gas tax for inflation (and adjusting it for improving mileage), and locking the trust fund tighter so that it doesn’t get raided, doesn’t get us all the way to making the gas tax a fair and equitable way to pay for the roads. Consider: A Toyota Prius gets up to 60 mpg on the highway, while a Toyota Camry gets about half that. Should the driver of the Prius pay half what the Camry driver pays for using the roads? The cars’ respective weights are only 10% apart, so road wear is similar. Take it a step farther: electric cars contribute nothing to the maintenance of the roads they travel on.

Since this is about roads and libertarianism, I’ll leave off the preferential-taxation-as-social-policy argument, and truth be told, if we want to charge users for the externalities (e.g global warming, diesel particulates) impact of high-mileage vs low-mileage cars, that’s something that would be properly addressed with a separate tax.

So, if we want to consider the best “present day” approach to paying for roads in an equitable manner reflective of evolving technology, an approach that would be a real “user fee,” we might want to look at something other than a gas tax.

The alternative is simple and just: a mileage tax, indexed for vehicle weight. There are matters of implementation to deal with here, including the question of federal vs state vs local roads, and the related question of whether it’s proper to underwrite public transportation with some of this revenue, under the rationale that more and better buses and subways get cars off the road and make life better for drivers. Those issues also exist with gasoline taxes, and as they are merely matters of implementation (already, NYC bridges are becoming “cashless” where even those without EZPass tags are billed via license plate readers). And, yes, there are people concerned about privacy matters (e.g. if mileage is tracked via plate scanners, GPS or some similar system rather than an odometer check every year, Big Data can figure out your life based on where you drive), but this doesn’t refute the premise that a mileage tax is better and more equitable than a gasoline tax.

Libertarian thought can be broken into two broad categories. One is what the aforementioned “muh roads” critics choose to harp on, and what the basement neck-beard-and-fedora boys like to spend their hours theorizing: the functioning of the ideal libertarian state. The other is what I call A to B, how we would transition from the current state of affairs to that idealized libertarian state. I add a caveat to the latter: We’re never going to get there – no political system will ever be executed in a “pure” form. The theoretical workings of Libertopia are most useful for what they teach us about incorporating more liberty into our real lives, teachings that flow into A to B.

Getting people to think about taxation in terms of “user fees” is an important element of A to B. When people grow accustomed to thinking of taxes as money to be spent so that the foundational elements of society function, they’re more likely to question taxation that merely moves money from person to person, and more likely to grow suspicious of wasteful or pointless government spending.

Mileage-based taxation makes it clear that “muh roads” are being paid for when being used.

But – and this is an important “but” – mileage-based taxes are not the end-all of libertarian roads. People who believe that roads wouldn’t happen without government usually haven’t given it much thought, or simply don’t want it to be true. To see how prevalent the “muh roads” plaint is (and ideas of how Libertopia would handle it), just Google Image search the phrase. One suggestion that even I, who’s been wallowing in the libertarian mud for decades, hadn’t heard was found here. To generalize, businesses that relied on vehicle traffic would have a financial interest in funding roads. The market would take car of things from there.

You don’t have to blindly believe me here. Space considerations suggest I leave in-depth for another day, but don’t be reflexively dismissive of the idea either. Private businesses building roads and other infrastructure has happened around the world and throughout history, including, as one political friend shared, Microsoft building its own highway off-ramp to serve its needs.

Meanwhile, the reality is that, despite transportation infrastructure being managed by government at the federal, state, and local levels, we are dissatisfied. We hear it’s crumbling, we see that, oftentimes, it stinks. Why would we assume that government has to keep this as one of its own responsibilities? It’s done a craptastic job, especially in the last few decades (when it has gotten bigger and more powerful).

The current system of paying for the roads isn’t working, and is full of inequities. It’s time to consider a major change, to mileage taxes, to balance the inequities and convert funding to something more akin to a user fee. That’s a step in the direction of freedom, and even though it doesn’t take roads out of the government’s hands – it moves us a bit closer to that possibility.