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Pay-Per-Mile Tax Proposals As the push for more fuel efficient transportation intensifies, U.S. officials are warning of major future deficits for the Highway Trust Fund, established in 1956 to support the construction and maintenance of the Interstate Highway System. The Highway Trust Fund is financed through transportation-related excise taxes, the most significant of which is the federal gasoline tax. However, as fuel efficiency standards become stricter and Americans head to the pump less often, gas tax collections are expected to decrease over the next decade, and federal transportation funds could face substantial long-term deficits. A May 2012 report from the Congressional Budget Office showed that at 2012 spending and taxation levels, the Highway Trust Fund is looking at a $147 billion shortfall by 2022. After factoring in a 21-percent reduction in gas tax receipts due to increased fuel efficiency standards, that deficit increases to $204 billion. The CBO determined that the government has 3 options to address the looming problem:
As part of the BillTally project, NTUF analyzed legislation introduced by Rep. Earl Blumenauer (D, OR) in the waning hours of the 112th Congress that opts for the third course of action. H.R. 6662 would authorize $154.5 million to study the impact and feasibility of a mileage-based user fee system. Such a system taxes drivers by the number of miles they travel rather than the gallons of gas they consume. A report conducted by the Government Accountability Office (GAO) in the same month examined some of the costs and benefits of three different types of mileage tax methods: GPS, "pay-at-the-pump," and prepaid systems. GPS systems use satellite technology and cellular transponders to track the number of miles a registered vehicle travels over a given time, which is then processed at a central location and billed to the driver. Obvious concerns include the cost of implementing such technology in the over 200 million registered passenger vehicles across the country, as well as the perceived invasion of privacy a tracking system of that magnitude is likely to provoke. Germany currently uses a similar system to tax commercial trucking industries. "Pay-at-the-pump" methods require a wireless transponder be installed in every vehicle, which transmits mileage information to a central database when drivers go to gas stations across the country. Based on that data, fees are automatically adjusted for each driver before billing at the pump. Again, cost and logistical challenges are a major impediment to making this system viable, and some high-efficiency electric vehicles do not require trips to the gas station, making it difficult to enforce the fee collection for some drivers. Prepaid systems require drivers to purchase "mileage licenses," which allow travel over a certain number of miles before the license must be renewed. Such a system is already in place in New Zealand, where it applies to diesel-fueled vehicles (mostly commercial trucks, but some passenger cars as well). The GAO noted that this system is prone to equity issues, as drivers can tamper with odometers to avoid paying fees. Any of the three proposed systems would generate additional revenue over the long run, but they pose major logistical and financial challenges (both in implementation and administration), create privacy concerns for many Americans, and would significantly increase transportation costs. The GAO report modeled the effect of a 0.9 to 2.2 cent per mile tax on a typical American driver, and found that even at those levels, taxpayers could expect to pay $108 to $248 per year in fees. Currently, the average driver pays about $96 in gas taxes each year. That would mean an increase of at least 12.5% in annual transportation expenses for the typical driver if Congress decides to follow through on these proposals. NTUF does not endorse any candidate or position. For more information on BillTally, please visit http://www.ntu.org/ntuf/. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: January 14, 2013 Today’s Taxpayer News! Pete Sepp explains why property owners are getting hammered hard as local governments attempt to bridge budget shortfalls, but offers tips for how to reduce your tax bill in this Kiplinger article. Thomas Hazlett, a Reason contributor and professor at George Mason University, weighs in on the FCC, net neutrality, and the future of internet regulation in this short video. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Speaking of Taxpayers, Jan. 11 (AUDIO): CEI’s Ryan Radia Breaks Down Anti-Trust Decisions on Google Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
Competitive Enterprise Institute's Ryan Radia joins the podcast once again to explain the significance of the FTC's recent decision on Google's search engine, and what we can expect going forward as the government continues to hover around the tech/online industry. 1 Comments | Post a Comment | Sign up for NTU Action Alerts
A Tale of Two Tax Plans Louisiana Governor Bobby Jindal emerged as a taxpayer hero this week, while Virginia Governor Bob McDonnell rightly faces heavy criticism from all sides thanks to his tax hike plan unveiled Monday. Yesterday, Jindal boldly proposed a complete elimination of the Pelican State’s income and corporate taxes, a job-creating move that would keep more taxpayer dollars where they belong – in people’s wallets. These reforms would quickly give the State’s economy a boost and make Louisiana one of the most business-friendly places in the Nation. Virginia, on the other hand, is stuck with McDonnell’s burden-shifting tax hike that attempts to address the State’s transportation financing woes. On behalf of taxpayers everywhere, the National Taxpayers Union applauds Governor Jindal for his excellent proposal and urges other governors (we’re looking at you, Gov. McDonnell) to take notes. The straightforward, transparent reforms laid out by Jindal are the stuff taxpayer heroes are made of. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Why Virginia Gov. McDonnell’s Tax Hike Plan is a Bad Idea This week, Virginia Governor Bob McDonnell unveiled his transportation funding plan that would eliminate the State’s 17.5 cents-per-gallon gas tax and impose significant hikes on the sales tax and vehicle registration fees. Under the Governor’s proposal, the Virginia sales tax would jump from 5 to 5.8 percent, car registration fees would spike $15, and Virginians with cars that run on alternative fuels would be hit with a brand new $100 fee. In truth, these new “fees” are actually taxes because they wouldn’t be dedicated to road construction, but instead would fund mass transit projects, such as building passenger rail between Lynchburg and Roanoke and lengthening the Norfolk light rail service into Virginia Beach. An additional $300 million would be set aside for the Metro’s Silver Line, a costly project that began nearly four years ago. If all goes according to McDonnell’s plan, weary taxpayers (who are already getting pummeled by a lousy fiscal cliff deal and rising health care costs) will be on the hook to help the Governor reach his goal of raising an additional $3.1 billion by 2018. Though, as the Tax Foundation pointed out, the Governor’s math is fuzzy to say the least. True, Virginia’s transportation financing is in desperate need of restructuring, but McDonnell’s plan is a burden-shifting tax hike at its core. Not to mention, it relies on Congressional passage of dangerous online sales tax legislation to reach even deeper into Virginia taxpayers’ wallets to the tune of $1.1 billion. Banking on the so-called Marketplace Equity Act would make Virginia part of a predatory tax collection scheme that will ultimately hurt small Internet-based businesses and, undermine the principles of tax competition that have benefitted the Commonwealth. Also, can we really expect the Virginia Department of Transportation to be good stewards of billions in new revenue? In 2010, an audit of VDOT uncovered hundreds of millions in unspent funds. Governor McDonnell’s plan thankfully avoided an income tax boost, but there are other positive approaches that could be taken instead of his burden-shifting sales tax hike. The way in which Virginia’s transportation funding is allocated should be given more attention, and lawmakers should look to strengthen public-private partnerships made possible through the Public Private Transportation Act (PPTA) of 1995. Thanks to the PPTA, the $1 billion I-95 Express Lanes project, which began in July 2012, required only $70 million in state funding. Policymakers should increase the number of these partnerships in the Commonwealth, which have saved the State billions of dollars and years of construction time. Virginia should also look to states like Missouri for better ways to deliver transportation improvements under budget and on schedule. In 2006, the Missouri Department of Transportation saved taxpayers $91 million through “radical cost controls” such as keeping bids for construction jobs low, asking contractors to propose innovative solutions, and slashing administrative costs. For even more inspiration, VDOT should examine this Texas Department of Transportation report for 49 highway construction and maintenance cost control ideas. It is likely that Virginia officials have considered some of these proposals, but until they have provided demonstrable evidence that these ideas have been considered and implemented to the maximum amount possible, overburdened taxpayers will continue to oppose schemes such as the one proposed by Governor McDonnell this week. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: January 10, 2013 Today’s Taxpayer News! NTUF’s Demian Brady and NTU’s Brandon Arnold address the necessity of spending reform in this Townhall op-ed. This Real Clear Politics article examines President Obama’s lackluster stance on cutting spending. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Harper on Spending Transparency in Committees Via the Washington Examiner, the Cato Institute's Director of Information Policy Studies, Jim Harper, asks why the Appropriations Committees in both federal chambers don't use technology to better convey their spending intentions when considering legislation: "For better or worse, the movement of money is a reflection of our values, but the appropriations process is the cloudiest mirror America ever gazed into. More than a trillion dollars move each year based on appropriators' instructions, but Congress's spending decisions are so cloistered in arcane language and inaccessible documentation, the appropriation committees might as well be a pair of mountain monasteries. "Why not publish proposed spending in appropriations bills using digital formats and uniform codes to indicate what agencies, bureaus, programs, and projects would get the money, as well as what they're supposed to do with it? So far, appropriators have deeply lagged their colleagues in Congress and the rest of the government. There's no sign they plan to change that." Props to Jim in his efforts to not only change the way government releases information for taxpayers to better understand government but to be active in allowing Americans to voice their opinions on proposed legislation through his WashingtonWatch.com website. Check it out & you’ll see some NTUF BillTally figures there! 0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: January 9, 2013
Tips to make up for the payroll tax hike, and a look at the complexity of the tax code.
Posted By: Manzanita McMahon
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January 9, 2013
Today’s Taxpayer News! This article from Time offers ten tips to recoup the money you’re losing each week as a result of the payroll tax hike. The Washington Post examines the issue of tax complexity and its ill effects. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Payroll Tax Hike Highlights Hypocrisy of Refusal to Reform Entitlements The Fiscal Cliff package ushered through Congress last week has left just about every taxpayer with a holiday hangover, thanks in large part to the temporary Social Security payroll tax cut that was not extended. Aside from any worthy debate over the wisdom of the two year relief on payroll tax rates, what the demise of this policy highlights is the absurdity of those in Washington who refuse to reform the entitlements that these taxes fund. The end of the holiday, and shock of the payroll tax hike, makes clear the pain workers feel when they lose money from their paychecks. Particularly in the midst of a recession, even $50 a week can be sorely missed when it comes to utility bills, groceries, or supporting an out-of-work spouse. Yet, it is the complete lack of entitlement reform, or even a discussion of Social Security retirement age adjustment or means testing for Medicare, that makes the sacrifice workers are now making an even more bitter pill to swallow. Absent reform, the new revenues are essentially futile – dumped into programs that are bound to collapse under their own weight, and unlikely to do much good for those sacrificing their hard-earned money right now. In fiscal year 2012 alone, Social Security spending totaled an incredible $773 billion, almost 5 percent of the nation’s GDP. Using Congressional Budget Office (CBO) numbers, the Heritage Foundation explains just how dire the issue is: “In 2011, Social Security incurred a $45 billion deficit. According to the 2012 trustees report, the expected average annual gap between Social Security spending and the program’s payroll tax revenue is $66 billion between 2012 and 2018.” When revenues taken in cannot possibly cover the growing expenditures of the program, Americans who have worked and paid into the system could be left out in the cold. The CBO warned in October: “By 2030, Social Security outlays will be about 6 percent of gross domestic product and will exceed dedicated tax revenues by about 20 percent. As a result, under current law, resources available to the Social Security program will become insufficient to pay full benefits in about 20 years.” Reforming Social Security is something that makes lawmakers tremble, but it is absolutely vital. Fortunately, creative ideas for reducing costs and expanding choice for prospective retirees are being offered by some leaders in Congress. In the House, Paul Ryan’s proposal would enact the following reforms:
In the Senate, Sens. Rand Paul (KY), Mike Lee (Utah), and Lindsay Graham (SC) have brought forth the Social Security Solvency and Sustainability Act, which they assert could create a solvent social security system by lowering benefits for those with higher incomes, and gradually increasing the retirement age, among other initiatives. What simply cannot continue, is forcing taxpayers to throw their earnings away into programs politicians refuse to properly manage, when they could do better saving and investing on their own. In the 133th Congress, it will be imperative that lawmakers put in the time to fix Social Security so working men and women have a fighting chance to get back the money which gets taken out of their paychecks every week. 1 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: January 8, 2012 Today’s Taxpayer News! As the debt ceiling approaches, cutting unnecessary government spending needs to be front and center in Washington. This opinion piece from the Washington Post examines the history of farm subsidies and their burden on taxpayers. Because the debt deal to avert the Fiscal Cliff failed to specify the spending cuts that will need to take place in coming months, states are left unsure about how to manage their budgets. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
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