over the decades that they are not a good means of raising highway money. Would a VMT on passenger cars be any better? Much of what follows is hypothetical,
since, as applied to private cars, a VMT is only a concept – none exists today anywhere in the world. Still, a VMT is a tax, and the criteria for evaluating taxes should apply as well to VMTs. Speaking generally, a tax should be, among other things, effi cient – easy and cheap to administer and collect; eff ective – capable of raising the revenue needed; enforceable – not unreasonably open to evasion; equitable – falling equally on similarly situated taxpayers; and unintrusive – observant of taxpayers’ concerns over privacy. Some types of taxes will fail one or more of these criteria just because of the kind of tax they are – an income tax, for instance, is quite intrusive. Other taxes, which could be successful, fail because of the way they are administered. We might point out that the traditional fuel tax is, by these criteria, a good tax. T e fuel tax has performed so well in
large part because government collects it up-front from very few taxpayers. Both state and federal fuel taxes are collected from fuel suppliers, who pass the tax down the chain of distribution. At most, there are only a few hundred suppliers per state, they are mostly large entities, and government knows who and where they are. As a result, the fuel tax is easy and cheap to collect, and hard to evade. T e personal income tax provides another example of this eff ect. As far as wages to which withholding requirements apply, the IRS believes it collects about 95% of the tax due. On income which is neither withheld on nor subject to reporting requirements, the collection rate drops below one-third. A weight-distance tax, the closest thing
to a VMT we’ve experienced in this country, is oſt en considered to be widely evaded, and the structure of such a tax lends itself to evasion. A weight-distance tax is not subject to withholding, and government must try to collect it from a multitude of taxpayers, most of them small. Estimates of weight-distance tax evasion, depending on the state involved, range up to 50%. How would a VMT fare
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Q4 WINTER 2017 TENNESSEE TRUCKING NEWS • 27 TENNESSEE TRUCKING NEWS
from this perspective? Such a tax would have to be collected somehow from millions of taxpayers – all those driving cars in the taxing jurisdiction. We cannot conceive of such a tax being collected successfully, let alone cheaply. But, say VMT proponents, modern
technology can help here! On-board recorders can compile mileage accurately, and broadcast it automatically to the taxing authorities for assessment. Cars can be fi tted with GPS tracking units,
so their operators leave a trail of their travels, for later audit. While we are not confi dent that any amount of fancy technology can overcome human nature in this respect, the prospect of requiring black boxes in private cars raises more serious questions of the effi ciency and intrusiveness of a VMT. How much would the chosen technology cost? Would drivers
t Jim & Susan Mosby, Firstbank
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Chr
Pled Jeff an Omnit
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