There’s a saying that anytime you hear a politician claim they’re going to raise taxes, “believe them!” Now six months into his presidency, Joe Biden has talked a lot about raising taxes, “only on those making more than $400,000 a year,” but without noticing, the nation may have just taken a big step toward new taxes, regardless of income, becoming a reality.
Buried on page 508 of the recently released 2,700-plus page $1.2 trillion Bipartisan Infrastructure Deal, is the National Motor Vehicle Per-Mile User Fee Pilot. While the pilot itself does not institute a tax, it sets in motion the process whereby one could soon follow.
For years, lawmakers have wrestled with various transportation taxes, none more consistently than an increase to our current gas tax, which by all standards is significantly less than found in other comparable nations throughout the world. However, the conflict of raising the tax, and thus fuel prices, has kept the politically motivated at bay, and the gas tax has stayed unchanged for nearly 30 years.
A per-mile usage tax provides a workaround, however, for those reluctant to change the gas tax and at the same time may provide Uncle Sam with much more than just revenue all at your expense.
The first major concern with a per-mile tax is in how the data would be collected. In section 13002 of the bill, the “pilot” outlines that data can be collected in a multitude of ways, including:
- On-Board diagnostic devices
- Smartphone applications
- Telemetric data collected by automakers
- Motor vehicle data obtained by auto insurers, and
- Data collected by fueling stations
But the scariest option of collecting data is the last one which outlines that data can be obtained by, “any other method that the Secretary considers appropriate.”
Seriously?
Regardless of this being a “pilot program,” that level of government intrusion and data gathering sounds terrifying, but at this point shouldn't surprise us. The government already knows a lot about us, and now they want to know more.
As if all this weren’t enough, the second major concern with this part of the infrastructure bill is that it may be just another move in the massive D.C. chess game to collect and spend more of our money on pet projects, all while taking steps to protect a political agenda.
Political gamesmanship can be found in what they are planning to call the tax, I mean fee. In a move not seen since the dance around what to call the ACA-imposed health insurance mandate penalty, I mean tax (thanks for clearing that Chief Justice Roberts), the infrastructure bill specifically states that the per-mile tax should be called a “fee.”
This move provides an avenue for the government to collect revenue (what we used to call taxation) while maintaining political cover. This leads to the second reason this program can be used effectively by the swamp — circumventing the Byrd Rule.
In the new era of avoiding the filibuster by passing legislation via budgetary reconciliation, the Byrd Rule that outlines what can and cannot be done under this simple majority process must be considered. One key aspect of complying with the Byrd Rule is that there cannot be an increase in the national deficit.
In other words, if Congress wants to spend money, via reconciliation, they have to show how they're going to pay for it. While the math of generating “enough” revenue to cover spending can be quite suspect, doing so is required to pass a bill by way of reconciliation.
And while Democrats want to pass this infrastructure deal, they are really eyeing the $3.5 trillion package that has nothing to do with infrastructure, but rather is a massive left-led spending frenzy. The $3.5 trillion “human infrastructure” bill has little chance of passing through any means other than reconciliation, so new revenue will be a must and a per-mile fee paves the way for just that.
The third and possibly greatest cause for concern is that this move may sustain what we are being told is “transitory inflation.” Following the “bullwhip effect” caused by the pandemic and massive liquidity due to government monetary policy, the U.S. finds itself at the precipice of an inflationary period that has not been seen in decades.
This has already led to increased costs for goods and services, and a per-mile fee will only cause costs to remain higher as suppliers will have to offset transportation costs.
While this bill and included “pilot program” have a long way to go before they become law, the field has been set and the players are in motion. The chess game is afoot and let’s hope we find leaders in D.C. who know how to maneuver the board before the American people find themselves in checkmate.
Seth Denson is a Business & Market Analyst, Author and Entrepreneur. He co-founded one of the nation's most successful consulting firms and authored the best-selling book, "The Cure: A Blueprint for Solving America's Healthcare Crisis." Read Seth Denson's Reports — More Here.