Infrastructure Bill Floats National Mileage Tax Despite Biden’s $400,000 Tax Hike Red Line
The $1.2 trillion bipartisan infrastructure accord would institute a multiyear “national motor vehicle per-mile user fee pilot” program that, without future intervention from the White House, could potentially violate one of President Joe Biden’s previously stated red lines.
Top White House officials emphatically stated for months that paying for the infrastructure investments by indexing gas taxes to inflation or instituting new electric vehicle mileage fees were hard red lines for the president on the grounds that they would raise taxes on people earning less than $400,000 per year.
BIDEN WON’T SIGN INFRASTRUCTURE BILL THAT INCLUDES NEW GAS OR MILEAGE TAXES, WHITE HOUSE SAYS
Yet, the new per-mile user fee pilot, outlined in section 13002 of the bill, does leave those people open to tax vulnerabilities pegged to personal vehicle mileage. Transportation Secretary Pete Buttigieg and Treasury Secretary Janet Yellen are directed to provide recommendations to Congress three years into the pilot’s life cycle, at which time Congress could choose to pass new legislation implementing national per-mile fees fully as an established funding source for infrastructure improvements.
Still, White House officials disputed the idea that the inclusion of the pilot program in the infrastructure bill guarantees the establishment of a future, nationalized mileage fee and suggested that, depending on how Buttigieg and Yellen’s recommendations shake out, the White House could oppose legislation implementing the tax.
“There is literally nothing in the bill that is counter to the president’s pledge. This refers to two provisions about research. One gives grants to states if they want to apply to do their own research. The second involves a federal pilot program based on individual volunteers, who receive full refunds, for studies that would then only be the basis for recommendations about future legislation,” one White House official elaborated. “The administration will evaluate all legislation, including any bills relevant to these pilot programs, against the $400,000 pledge.”
The mileage fee pilot program was first raised by Democratic Sen. Tom Carper of Delaware and Republican Sen. Shelley Moore Capito of West Virginia in a separate infrastructure proposal introduced in March.
The program itself directs Buttigieg and Yellen to “establish, on an annual basis, per-mile user fees for passenger motor vehicles, light trucks, and medium- and heavy-duty trucks, which amount may vary between vehicle types and weight classes to reflect estimated impacts on infrastructure, safety, congestion, the environment, or other related social impacts.”
The Cabinet officers must also provide annual reports to Congress on the program’s progress and the viability of full-national implementation and “establish a mechanism to collect motor vehicle per-mile user fees” with or without the help of third-party vendors. The bill explicitly states that any fees collected would not be considered “tolls,” which transportation law specifically states are not taxes.
“The Secretary, in coordination with the Secretary of the Treasury, and consistent with the recommendations of the advisory board, shall establish a pilot program to demonstrate a national motor vehicle per-mile user fee to restore and maintain the long-term solvency of the Highway Trust Fund and to improve and maintain the surface transportation system,” the infrastructure bill’s text reads. “The objectives of the pilot program are to test the design, acceptance, implementation, and financial sustainability of a national motor vehicle per-mile user fee, to address the need for additional revenue for surface transportation infrastructure and a national motor vehicle per-mile user fee; and to provide recommendations relating to the adoption and implementation of a national motor vehicle per-mile user fee.”
As written, the pilot program would be funded through 2026 and enlists volunteer drivers “from all 50 States, the District of Columbia, and the Commonwealth of Puerto Rico” to test “any of the following vehicle-miles-traveled collection tools,” including:
Third-party on-board diagnostic (OBD-II) devices
Telemetric data collected by automakers
Motor vehicle data obtained by car insurance companies
Data from the states that received a grant under section 6020 of the FAST Act
Motor vehicle data obtained from fueling stations
Any other method that the secretary considers appropriate
Those volunteers will have their data shielded by the federal government and will be compensated out of an initial allocation of $10 million that can be supplemented in the future.
Furthermore, the bill establishes a “Federal System Funding Alternative Advisory Board” to provide “recommendations related to the structure, scope, and methodology for developing and implementing the pilot program” and help run a “public awareness campaign” about the per-mile fees program.
White House press secretary Jen Psaki and other top administration officials have maintained for weeks that “any tax on vehicle mileage” violates Biden’s $400,000 red line.
“Well, first, let me say that, you know, the president’s pledge was not to raise taxes on Americans making less than $400,000 a year,” Psaki said on June 26, just days before Biden gave his blessing to the initial, bipartisan infrastructure framework. “The proposed gas tax or vehicle mileage tax would do exactly that. So that is a nonstarter for him. I’d also note, for the mathematicians in the room: That only raises $40 billion, which is a fraction of what this proposal would cost.”
She explained on July 6 that “one of the core reasons why the president was opposed — vehemently opposed — to a gas tax and any tax on vehicle mileage” was “because he felt that would fall on the backs of Americans, and that was a bottom line, red line for him.”
On July 9, Psaki, discussing rising gas prices, told reporters that “the president is quite focused on ensuring that we are doing everything we can to keep prices low for the — to keep the cost of living low for the American people, including the cost of gas. That’s why he was against, vehemently against a gas tax, why he was against a vehicle mileage tax.”
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She additionally reiterated to reporters on July 19 that Biden’s “fundamental base point is that we can’t raise taxes for individuals making less than $400,000 a year.”