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State withholding and the stimulus

Brakes applied to mileage tax

Calm down commuters and other folks who spend a lot of time on the road. Uncle Sam is not going to start taxing you based on how many miles you log.

Fears, dare I say panic, about the possibility of such a driving for tax dollars program ran rampant after Transportation Secretary Ray LaHood told the Associated Press, "We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled."

Odometer (2) LaHood, a former Republican Congressman from Illinois who's part of Obama's attempt to include more political diversity in his cabinet, made the comment as part of a discussion about ways to help make up the federal highway funding shortfall.

Fuel excise tax collection falling: Currently, the bulk of highway funds comes from the federal fuel excise tax, which is 18.4 cents per gallon for gasoline, 24.4 cents per gallon of diesel. But more fuel-efficient cars and changes in driving patterns have meant that the total amount of that tax being collected has been shrinking.

With a vehicle miles traveled, or VMT, tax program, GPS units would allow the government to keep track of how much each car is driven and where.

Whoa there, Big Brother. If you think teenagers are upset about mom and dad having such oversight, just wait until you hear from the entire driving population.

The Transportation Department got just a little taste of such opposition after LaHood's interview and quickly threw even thoughts of the plan into reverse.

"The policy of taxing motorists based on how many miles they have traveled is not and will not be Obama administration policy," according to a written statement issued late last week.

State idea first: It's no surprise that state officials were the first to kick around the idea of a VMT.

Massachusetts officials told CNN that there has been talk of proposing such a mileage-based tax system for that state. Colin Durant, a spokesman for Gov. Deval Patrick, said "privacy would be our top priority."

Gas can However, reports CNN, Patrick on Friday announced a more traditional plan to help raise highway funds: a 19-cent increase in the state's gas tax.

Oregon also has been exploring a VMT for years. The most recent consideration came in January, when word got out that Democratic Gov. Theodore R. Kulongoski's upcoming budget calls for a highway tax based on mileage, not gasoline purchases.

As expected, the reaction in the Pacific Northwest has not been warm. Among the kindest descriptions of the VMT idea comes from About.com's Mike Moffatt, who called the Oregon proposal "a truly bad idea."

Bad idea or innovative tax policy? Depends on just how badly your governmental jurisdiction needs cash.

And while this proposal might be facing some pretty big roadblocks right now at both the state and federal levels, don't be surprised to see it continue to idle for a while as lawmakers struggle to raise revenue.

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Imee

I'm no Republican, but I don't really oppose the idea of VMT/mileage-based taxes... Gas taxes aren't really working out that well lately from what I can observe, and I think the Obama administration shouldn't have turned it down that easily.

taxrascal

A mileage tax shouldn't really upset drivers. There are lots of reasons (www.taxrascal.com/why-drivers-should-love-a-mileage-tax/323/) that it could actually be good for drivers.

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