The administration is floating–re-floating, actually–a proposal to levy a tax based on mileage driven. From an economic perspective, this is a puzzler. If the objective is to reduce CO2 emissions or pollution, it would be far preferable to do so via fuel taxes because (a) pollution is a function of fuel consumption, and (b) fuel consumption depends not just on mileage driven, but on vehicle size, age, maintenance, etc. Any system that attempts to adjust the tax rate based on vehicle type and weight, etc., would still be less effective at taxing pollution than a fuel tax. Not to mention that this would require an entirely new monitoring and enforcement mechanism that isn’t free. All this isn’t that hard to figure out. So what gives? Social control comes to mind. Any other suggestions?
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