Pay-as-You-Go Surprise: GOP Backs VMT Fees While Democrats Balk
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The debate over how to pay for the nation’s roads, bridges and transit systems is leading some normally anti-tax Republicans to embrace higher levies on motorists — even a new one based on miles driven instead of fuel purchased.
But some Democrats who have supported the idea of charging a mileage fee are now opposed. They see infrastructure as an economic stimulus measure and want it paid for by corporate taxes.
That change of positions has Washington observers scratching their heads.
“If you took the positions and went back 10 years, you would say, ‘What?’ ” said Adrian Moore, vice president of policy at Reason Foundation, a libertarian think tank.
The debate about whether motorists or corporations should foot the bill is threatening to scuttle negotiations between President Joe Biden and Senate Republicans for a massive infrastructure plan. Biden pulled out of one-on-one talks with Sen. Shelley Moore Capito (R-W.Va.), but the White House has said he still is engaged with a separate, bipartisan group of senators despite some Democrats agitating for their party to go it alone.
The bipartisan Senate group has agreed to pitch a $1.2 trillion, eight-year infrastructure spending package to Biden, according to people familiar with the deliberations. That’s an amount that still is well below the $1.7 trillion Biden had proposed in his direct talks with Capito.
Although the president is in the U.K. for the Group of Seven summit, the Democrats in the bipartisan group went to the White House on June 10.
“Questions need to be addressed, particularly around the details of both policy and pay-fors, among other matters,” White House Spokesman Andrew Bates said.
Indexing the gasoline tax — currently 18.4 cents per gallon — to a measure of inflation has been discussed by the bipartisan group working on a compromise plan, according to Mitt Romney (R-Utah), who has taken a prominent role in those talks. He said it wouldn’t raise much money.
Dick Durbin, the No. 2 Senate Democrat, said June 10 he’s in favor of indexing the gas tax. Still, it’s unclear whether the White House would endorse such a move.
Buttigieg at a news conference near the I-40 Hernando de Soto Bridge in Memphis, Tenn., June 3. (Houston Cofield/Bloomberg News)
As recently as two months ago, Transportation Secretary Pete Buttigieg said the so-called vehicle-miles-traveled tax was under consideration in the Biden administration as a way for all motorists to pay for the upkeep of roads. The advantage of the VMT is that it would offset losses in the federal gas tax brought on by the growing sales of electric cars.
But the White House has since reversed course, saying it would violate Biden’s pledge not to raise middle class taxes.
“I’m working hard to find common ground with Republicans when it comes to the American Jobs Plan, but I refuse to raise taxes on Americans making under $400,000 a year to pay for it,” Biden tweeted June 8. “It’s long past time the wealthy and corporations pay their fair share.”
Democrats have leaned into the idea of raising taxes on large corporations, including some that saw their taxes lowered during the Trump administration.
“This view that lowering taxes on the rich people is good for the economy … there’s no evidence that it is,” Sen. Sherrod Brown (D-Ohio) said June 9. “They would rather increase for the $60,000-per-year person the gas tax, than for a $300 million-per-year person raise their income tax.”
Republicans have balked at the idea of raising corporate taxes to pay for roads.
“If you look at the last 30 years where we have passed in a bipartisan way, infrastructure bills here in Congress, they’ve always been predicated on user fees of some sorts,” Rep. Darin LaHood (R-Ill.) said during a May 19 House Ways and Means Committee hearing.
“But instead, today, we’re talking about a diversion of the tax code, talking about raising corporate rates to fund infrastructure,” he said.
Sen. John Cornyn (R-Texas) suggested last month that a 25-cent tax be imposed on every mile driven by heavy trucks to raise $33 billion a year — about as much as the fuel tax.
Truckers immediately raised objections.
“We’re not opposed to VMT,” said Bill Sullivan, executive vice president for advocacy at American Trucking Associations. “What we’re violently opposed to is this idea of ‘Let’s just do this for trucks.’ ”
Republicans who opposed previous efforts to increase the gas tax or a move to a mileage fee argued it disproportionately affects lower income people, said Greg Regan, president of the AFL-CIO’s Transportation Trades Department. Now, it’s Democrats making that argument and the GOP that’s suggesting user fees should be used to pay for roads and transit.
Ed Mortimer, the U.S. Chamber of Commerce’s vice president of transportation and infrastructure, attributed the shifting position among Republicans on user fees to their being accustomed to seeing electric vehicles as a Blue State phenomenon. So, he said, they ignored warnings about a gas tax shortfall — until Republican-led states began seeing their fuel levies decline.
“Some Republicans who maybe have been reticent about user fees, when it comes to a user fee or corporate tax increase, maybe they’ve gotten a different perspective,” Mortimer said.
Graves
Sam Graves of Missouri, the top Republican on the House Transportation and Infrastructure Committee, has argued a VMT could easily be implemented by using a formula assessed at the gas pump, similar to how the fuel tax is paid.
Such a fee also would help shore up highway funds. Gas and diesel taxes leave out a whole new category of motorists on the road — electric vehicle drivers. Backers say it would help close the gap in federal highway funding. The gas tax brings in $34 billion per year while federal spending on highways and public transportation has topped $50 billion annually.
“The suggestion is, middle-class workers are going to pay what megacorporations will not,” Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, said during the panel’s hearing on funding infrastructure in May. “That’s not a step toward fairness.”
Wyden said he would look at any gasoline-tax indexing proposal such as the one Romney said was under consideration before commenting. He pointed out that Biden has a “reservation about this as a regressive tax” and highlighted the Democratic view that corporations are underpaying taxes now.
Sen. Chuck Grassley (R-Iowa) remarked June 10 about indexing the levy that “it’s better than increasing the gas tax and it has a better chance of getting done.” He also said that if that had been done in the early 1990s “we wouldn’t be in the situation we are in now.”
While highway funding is expected to be part of the infrastructure plan, Congress still is working on a stand-alone bill to take the place of a five-year, $305 billion act that was extended until Sept. 30. The House passed a five-year, $494 billion surface transportation bill in July 2020, but the measure has not been approved by the Senate. Democrats in the lower chamber have introduced a $547 billion surface transportation bill. House Republicans countered with a smaller $400 billion measure.
— With assistance from Erik Wasson and Laura Litvan.
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