Proposed Mileage Tax

[Koss]

This is not an actual bill in Congress. According to the CNN article, legislators are just "looking into it."

The concept is to replace or supplement the gas tax with a tax that is determined by the number of miles driven.

http://money.cnn.com/2011/05/18/news/economy/gas_tax_drivers/index.htm?hpt=T2

The government wants to know where your vehicle is.

Hmmmmm??

Or maybe...

To avoid even the appearance that the federal government is physically tracking the location of a taxpayer's vehicle, maybe they'll hand off the data collection process to tax professionals.

How much do you think we could charge to do a mileage tax return? Or maybe it'll just be Schedule V, for Vehicle Use Tax. (Schedule M is already is in use, remember?)

What would you charge if you had to go out to the taxpayer's vehicle and get an odometer reading in February?

"Reading it" probably won't be enough. You may have to crawl under the dashboard and hook up a device that records the data... you know, like those machines that read engine light diagnostic codes...



BMK

[Jiggers]

I think it would be reported on a Schedule PITA.

Idiots that even think of such stuff.

[Snaggletooth]

Loss of Revenue

As vehicles get better and better gas mileage, and consumers respond to higher gas prices by buying smaller and more efficient cars, the govt stands to lose revenue because the proverbial tax on a gallon of gas takes the driver further and further without having to pay it at the pump again.

A loss of revenue. If they can jump through the administrative hoops of getting a "mileage tax" in place, consider this to be a serious option for them.

And then of course the states, not willing to launch out on their own with administrative solutions, will let the feds do all the dirty work. After that's been done, they'll jump on the bandwagon and say "me too!!"

[erchess]

Mileage Tax

This idea seems a bit much even to me...... I doubt it will go anywhere.

[JohnH]

So we're thinking they probably won't get much political mileage out of the proposal...?

[Koss]

Enforcement Process?

How in the world would they identify those who don't file and pay the tax?

Any reasonable, practical, and efficient enforcement mechanism would take years to implement.

Here in Ohio, like many other states, we have a "use tax" that applies to most retail purchases made by individuals, when the product is purchased in another state, but will be used in Ohio. This tax dovetails with what we normally think of as sales tax. In most cases, the tax should be paid by the final retail purchaser, whether it is an individual or a business entity, if the product was purchased online or by mail order from an out-of-state merchant, because that usually means that the purchase was not subject to Ohio sales tax.

No one ever files this return or pays the tax. At least not individuals.

How would a federal agency identify and deal with an individual who owns an auto, and uses it only for personal use and commuting, and simply fails to comply with whatever voluntary reporting and payment process they invented?

Is the IRS going to use data from the Bureau of Motor Vehicles in each state to identify vehicle owners who did not file the proper return? Good luck with that. Sure, it could be done. The IRS has been pretty successful at exchanging data with state agencies for collection of delinquent child support, and, in some cases, even delinquent state income taxes. But motor vehicle data lives in a very different world. It would be a massive undertaking to get each state's BMV to provide complete and accurate data to the IRS, in a format that the IRS could actually use.

And then what? Send out nonfiler notices? Boy, that would be a hoot...

I wouldn't mind the extra work, and the additional compensation.

To give the law any real teeth, they would have to have a mechanism that would require the state BMV to suspend the vehicle's registration, or suspend the owner's driver's license, if the owner failed to respond to a nonfiler notice.

You would hear the governors and the state legislators screaming unfunded mandate all the way up in Saskatchewan.

And even then, people would just lie, and make up arbitrary numbers about how many miles they put on the vehicle in a given year. Unless they developed a mechanism in which the tax return could not be filed without odometer data certified by a third party. And even then, for a nonfiler, how do you go back and determine the mileage for an earlier year without a reference point, or a previous year-end reading?

Black box data recorders built into the vehicle?

Yes, some newer cars already have them. But most do not.

This is all just an entertaining mental exercise. As erchess noted, this is unlikely to become a reality. It's just too much baggage.

BMK

[DonPriebe]

... You would hear the governors and the state legislators screaming unfunded mandate all the way up in Saskatchewan. ...

It's probably easier than you think. The feds let the state DMV collect the tax, and give them a cut. Your unfunded mandate is now a new free revenue source.

And in New York, we're all set with the technology. We must get our vehicles inspected every year. Part of the inspection is the on-line transmission to Albany of the vehicle's vitals - owner, emission test results, probably mileage, etc. Tack the new tax on our registration fee (which we pay two years in advance because the state needs the cash) and you're done.

If anyone notices the new tax, the state can blame the fed, so there's no political downside there. The fed promises better roads, or high-speed trains, or something else we really need. It would be an easy sell to people who believe that the lottery is for education.

[taxxcpa]

Mileage verification

Most states require an auto safety inspection once a year. At that time the mileage could be checked and the fee for the inspection would also include the mileage fee. You might be allowed to pay it off on an installment plan.
Probably they would keep the tax per-gallon and add this to make up for the better mileage the government is trying to encourage. They just don't want to encourage it to the point of letting you pay less tax.

[Jiggers]

Most states require an auto safety inspection once a year. At that time the mileage could be checked and the fee for the inspection would also include the mileage fee. You might be allowed to pay it off on an installment plan.
Probably they would keep the tax per-gallon and add this to make up for the better mileage the government is trying to encourage. They just don't want to encourage it to the point of letting you pay less tax.

They are not considering small towns in the middle of nowhere that you have to travel from to the big city to shop, just for the basics.

I put about 27,000 miles on two vehicles in a year.

I have farmers that put in that much on just one vehicle.

Next the farmers will want an exemption for their farm use.

And who is going to collect this money?