Congress and a “miles driven” tax

The Recap

In recent weeks, social media has claimed that Congress has "passed" a new federal tax based on how much you drive. Some posts say that you will be charged 6 to 9 cents a mile. But the reality of the situation is much less extreme. Congress has authorized federal pilot work to study a per-mile road fee, but has not enacted a nationwide mandatory per-mile tax. Several states, such as California are advancing bills that study the “road usage charges” that could potentially become mileage-based fees, but these reports emphasize that these actions are studies.

The Significance

The tax is not merely to take more money out of the pockets of citizens, but to fund road infrastructure like potholes, bridge repairs, freight delays, and long-term maintenance. The backbone for federal highway and transit funding is called the Highway Trust Fund, which is financed by fuel taxes. But Congress last raised the federal in 1993, and taking into account that the tax was not indexed to inflation and cars have become far more fuel-efficient (both an increase in MPG and electric vehicles), the traditional “pay at the pump” system collects significantly less revenue per mile driven since the Highway Trust Fund was passed.

The Context

This debate is not new. A mileage-based fee, often called a Vehicle Miles Traveled (VMT) fee, has been studied for years because the fuel-tax model is slowly becoming obsolete. The Highway Trust Fund has consistently faced revenue gaps, and federal transportation spending has needed to pull from other areas rather than a stable growing user-fee stream.

The studies being conducted also indicate that the Federal Government is not near to making a design, as they are a way to test design options and gather data to support future policy debates. The idea that Congress just “passed” a new tax is thus very far from the truth.

The Stakes

If a mileage-based model were eventually implemented, it would change who pays, how much, and the public experiences of “normal” road funding.

Potential benefits proponents emphasize:

• Revenue stability over time. If fuel taxes are no longer an accurate measure, a per-mile base can better track how much roads are being used, and better allocate funding for repairs or maintenance.
• A clearer user-fee link. People who drive more would generally pay more, which supporters describe as fairer across gas, hybrid, and electric vehicles.

Potential concerns critics emphasize:

• Privacy risk. If mileage measurement relies on technology that can infer location, there may be potential surveillance issues that can arise.
• Equity and geography. Rural drivers and long commuters can end up paying more simply because their lives require more miles. It may penalize people who have few alternatives.

The Next Steps To Watch For

Watch federal transportation reauthorization. The U.S. periodically rewrite and renews major transportation funding law. When that process begins, the revenue question becomes unavoidable. If the mileage-based options are seriously being considered, they will appear there.

The Takeaway

The U.S. is actively studying the potential change from gas to mileage-based taxes, but no new nationwide federal per-mile tax was passed in recent weeks.

The Question

Before reading this, what did you think Congress had done about a “miles driven” tax?