Monday, March 14, 2016

Pay by mile is flawed

A large number of states are planning on switching from a gas tax to a pay by mile with the advent of electric cars and higher efficiency which is eating into state revenues. The issue with this is it bypasses the major issue. Pay by mile is a regressive tax, because a millionaire is not going to drive 20 times more than the average person, and doesn't address the issue of our lacking mass transit infrastructure in our country. People are not going to reduce the amount they drive significantly due to such a tax, because people need to get to work. (Economists call this inelastic supply) To reduce the wear and tear on our roads we should make traveling by mass transit free, increase the cost of parking in dense areas, increase the number of park and rides on the outskirts of cities for rural people (which would be well served by free mass transit), and then we will see the amount of people driving decrease. We should match the lost revenue from gas taxes etc. with a more progressive income tax which treats capital gains as regular income which will be a much better society. Pay by mile however is not the right answer to our crowded streets. Roads would be paid out of the general fund if gas taxes do not make up enough to take care of our infrastructure.

No comments:

Post a Comment