Oregon mileage tax is a drag

Would you volunteer for Oregon’s new experimental program to tax drivers by the mile as a substitute for the gasoline tax? I wouldn’t.

The state started testing this month a system in which drivers pay 1.5 cents per mile driven. The program, known as OReGO, is defended as necessary to make up for gas tax revenue that the state is losing as consumers shift to more fuel-efficient vehicles.

I generally prefer use taxes because, when properly designed, they place the cost of public goods on those who consume them. But in this case, I have four objections.

First, the rationale is bizarre: The gas tax has successfully nudged people toward purchasing more fuel-efficient vehicles. Therefore we need to find a way to tax them as much as we did before they changed their habits.

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But what kind of an argument is that? By the state’s figures, the annual tax for driving a hybrid Toyota Prius would on average increase by about 150 percent. The tax on the driver of a Ford F-150 light truck would decline slightly. By decoupling the driving tax from fuel efficiency, the program, at the margin, might reduce the incentive to purchase smaller cars.

My second objection to OReGO: the potential for invasion of privacy, if as originally proposed, GPS devices are used to track mileage as opposed to just reading a car’s odometer. Why is privacy even an issue? Because an important concomitant of the right to privacy is the right to anonymity.

As my colleague Jed Rubenfeld has explained, “Walking the streets, you’re not in private, but you may be anonymous if no one recognizes you. … and that anonymity might be very important to you.”

My third reason: As much as 40 percent of the revenue generated by the tax will go to the private vendors who operate the system. According to the Organization for Economic Cooperation and Development, the usual cost of administering the tax system in the United States runs about 0.6 percent.

All of which leads to the final reason that I wouldn’t volunteer for Oregon’s experiment. The more volunteers, the more likely the state makes the program mandatory – and the more likely others are to copy this bad idea. n

Stephen L. Carter, a Bloomberg View columnist, is a professor of law at Yale University. •

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