Tax the Guzzler, Not the Gas

A recent poll suggests that concern for the environment is taking a back seat to concerns about the economy. No surprise there. But it does mean that various proposals for a gas tax surcharge could easily meet furious resistance that could all too easily become divisive.

Taxing gas is like taxing food -- it's purely regressive, hitting the poorest hardest for what is -- in most of the country where there is no public transportation -- a necessity of life. Even worse, not only are lower income people often powerless to buy a new vehicle but they are also more likely to own older, increasingly inefficient, ones.

A pure mileage tax is no better -- at a time when the job market is shrinking and houses can't be sold, people are going to be driving longer distances for lower wages.

On the other hand, there is no downside to taxing the gas-guzzlers themselves. If applied to new cars, that tax would only hit those people who make an affirmative decision to buy low-mileage vehicles.

Any car that exceeds a targeted mpg would be taxed at an annual rate which would bring its gas price to either five dollars a gallon or two dollars a gallon above the average gas price in the state in which it's registered. The tax could easily be computed based on either an annual inspection during registration renewal or a declaration made under penalty of perjury.

Those who need low-mileage vehicles for work could be given a full or partial exemption. That way, a farmer or gardener could buy a truck without penalty while a recreational owner of the same vehicle would be subject to a hefty yearly surcharge.

Some portion of the revenue raised by the tax would be remanded to the states as payment for its administration (thus avoiding a new unfunded mandate).

Because it would only apply to new vehicles, those who can't buy a new car don't pay the penalty. But car manufacturers would be forewarned: any low-mileage model they produce will have a hard time moving off the showroom floor.

This would do nothing, of course, to reduce guzzlers now on the road. But nothing about this proposal precludes additional measures, such as a government buy-back or trade-in subsidy aimed at replacing low-mileage vehicles with efficient ones while stimulating car sales. That's a separate debate. In the meantime, we'd have a program that protected the financially vulnerable while creating a strong financial incentive to prevent new guzzlers from reaching the road.

Comments

[mbolack]

You also have to do something for the people who buy flex-fuel vehicles, which inherently get lower mileage, but are, hopefully, going to eventually benefit the economy. I bought one 5 years ago, spending extra money to do it... and have yet to put my first tank of E85 into it, because it isn't available here! But it is an issue, and has potential to benefit the environment once a better source for ethanol is in the system.

[houstonobserver]

There's nothing wrong with making it progressive on a sliding scale and/or timescale, which would move the pain threshold over a set period.

i.e. gas guzzler sales tax based on how the mpg on new vehicles fall below the mandated average and annual tax every year based on mileage and/or age of vehicle after that.

I agree that there should be a way to exempt legitimate uses, but even then, the rebates should be limited and phased out as the vehicle ages.

[AddictedToHope]

Great idea, but I think there's a flaw in the statement

"Any car that exceeds a targeted mpg would be taxed...."

Shouldn't that be "car that falls BELOW a targeted mpg?"

[AddictedToHope]

"Those who need low-mileage vehicles for work could be given a full or partial exemption. That way, a farmer or gardener could buy a truck without penalty while a recreational owner of the same vehicle would be subject to a hefty yearly surcharge."

Have to be careful with that one. I believe it was a tax credit for "trucks" that was redefined so things like Hummers, etc. would qualify that led to many businesses purchasing these vehicles that they had no real use for.

So if you're not hauling hay or horses (or the equivalent), it's a luxury.

[Halsey]

addicted...I cut and was going to paste the same paragraph you did...YES...it was the "small" (HUH?) truck loophole that allowed the wealthy to buy an $80,000 Hummer....give it to their 17 year old trust fund baby (for safety...give me a break)....that did indeed help lead to the plague of these behemouths!.

"if" the tax were truly just cut and dried...it would be good...I'd like to add this...why do NOT we charge..ok­ay...movie stars in 40,000 sq. ft. houses on a sliding scale for THEIR electricity...use "my" use as the base line...single person...probably 400 sq ft. single apt..then..as usage (also includes heating the pool and jacuzzi unless solar is used 100%)....on a progressive scale...I mean..Candy Spelling has a room for friggin WRAPPING paper...

so...vehicles, homes, 2nd and 3rd homes (I'd tax them even MORE)...luxury boats...etc etc etc...hey..if you HAVE the money...it will not affect your standard..you will just pay for your indulgence­...nothing un-American about that.

[AddictedToHope]

Sounds like a "Carbon Footprint" tax. Works for me. I might pay a bit for driving 40 miles to work, but in a small car it wouldn't amount to much.

As for MY 400 sq ft. studio, I should get a credit for living that frugally.

[mergina]

And I thought I was one of the only people screaming for this. Paying more for the gas guzzler you choose to drive would certainly curb sales and any thought of future production of such vehicles. Just imagine paying the norm in a vehicle that gets oh, say 35 mpg, but in a gas guzzller you would pay much more at the pump. There is not much time left to start making HUGE changes in the vehicles produced and sold in this country. The day of the gas guzzler ended years ago. One can only hope that Real Change comes to force us all to re-evaluate how we get ourselves from this place to that.

[ksyellowdog]

What we used to call "tax the gas guzzler" was a luxury tax. Luxury taxes went out of style as ronnie raygun economics became vogue. So, yes, I agree that I should pay more for a lurury item than those who can't afford even the basics to get by on. That should betrue for all high end products, not just cars. It dovetails nicely with carbon offset taxation too. If the wealthy paid more luxury taxes, a very progressive tax, we could back off their income tax a bit to placate the poor republicans who still think the way to wealth is osmosis.

[Donkslayer]

Great article! Not only your points, but the target Mpg (and let's advance reasonably so we don't need to loan the car companies more money) will encourage companies to produce new cars that will align with those standards.