Transportation Secretary Buttigieg mulling ‘mileage tax’ to fund infrastructure spending

Transportation Secretary Pete Buttigieg strongly suggested the Biden administration is considering a new levy on drivers that tax them by the mile in order to help finance a multi-trillion dollar infrastructure spending bill.

“When you think about infrastructure, it’s a classic example of the kind of investment that has a return on that investment,” Buttigieg told CNBC on Friday. “That’s one of many reasons why we think this is so important. This is a jobs vision as much as it is an infrastructure vision, a climate vision, and more.”

Increasingly, Democrats have said the current model of relying strictly on gasoline and diesel fuel taxes to fund federal highway and bridge construction and maintenance is outmoded as vehicles become more efficient and large companies, as well as the federal government, are moving to convert their fleets from gas to electric.

“A so-called vehicle-miles-traveled tax or mileage tax, whatever you want to call it, could be a way to do it,” Buttigieg, the former mayor of South Bend, Ind., said.


(Video: CNBC)

“I’m hearing a lot of appetite to make sure that there are sustainable funding streams,” he said. Taxing drivers per mile “shows a lot of promise if we believe in that so-called user-pays principle: The idea that part of how we pay for roads is you pay based on how much you drive.”

“The gas tax used to be the obvious way to do it; it’s not anymore… So, a so-called vehicle miles traveled tax or a mileage tax, whatever you want to call it, could be the way to do it,” he continued.

He added: “You’re hearing a lot of ‘maybe’ here because all of these things need to be balanced and could be part of the mix.”

The mileage tax is being floated as one way to finance the White House’s proposed $3-$4 trillion infrastructure bill, which, if it were to pass, would come on top of more than $8 trillion in deficit spending on federal budgets and several trillion more in additional deficit spending for COVID-19 relief.

During his first press conference on Thursday, President Biden made note of his desire to rebuild U.S. infrastructure to include technology in order to keep up with major rival China.

Another idea being floated — reviving Build America Bonds, “a special class of municipals bonds first introduced in the Obama administration with interest costs financed by the U.S. Treasury,” CNBC reported.

Those show “a lot of promise in terms of the way that we leverage that kind of financing,” said Buttigieg. “There have been ideas around things like a national infrastructure bank, too.”

On Thursday, Buttigieg urged the House Transportation and Infrastructure Committee to commit to making a “generational investment” in infrastructure, while also dealing with climate change and fighting racial inequality.

“There is near-universal recognition that a broader recovery will require a national commitment to fix and transform America’s infrastructure,” he said.

Meanwhile, Biden is also planning to introduce major tax increases on so-called wealthy earners as well as U.S. corporations to help finance the infrastructure spending.

In a separate report, CNBC noted that tax reform groups on the left and right are gearing up to fight the White House tax push.

One person who spoke to the network said the fight was shaping up to be the “Super Bowl of tax reform.”

Biden said during his campaign and since that he wants to raise taxes on Americans earning $400,000 or more a year while boosting the corporate tax rate back to 28 percent from its current 21 percent rate, which was set by former President Donald Trump’s tax reform law passed in December 2017.

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Jon Dougherty

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