Why Motorists Should Pay by the Mile

Reconsidering a vehicle miles traveled tax

Today’s USA Today article provides a brief overview on the gradual decline of motor fuel taxes as the principal method of funding U.S. highways. It repeats a by-now familiar litany of reasons.

First, the gas tax is based on gallons of fuel consumed, rather than the number of miles driven. So as vehicles’ MPG has doubled over the past two decades, people go twice as far per gallon used-but highways still need at least as much maintenance. (And as MPG doubles again over the next 15 years, the problem will get much worse.)

Second, federal policy is actively promoting alternatives to petroleum-based mobility-hybrids, fuel cells, all-electric cars, etc. That means a growing fraction of vehicles will be paying little or nothing toward the cost of maintaining, expanding, and rebuilding our highways.

Third, except in a handful of states, gas taxes are not indexed for inflation, so when politicians go for decades without increasing the gas tax rate, the real value of the revenues declines. In a new Cato Institute paper, Randal O’Toole estimates that the real value of federal + state fuel taxes today (in terms of purchasing power) is one-third of what it was at the beginning of the Interstate highway era.

But there are several other reasons to switch from paying for highways based on petroleum use to paying based on road use. First, the fuel tax at the federal level and in many states has gradually shifted from being a pure user tax (i.e., paid only by highway users and spend solely to benefit highway users) to becoming a general-purpose public works tax spent on anything that is remotely related to “transportation”-bike paths, scenic trails, mass transit, billboard removal, transportation museums, etc. No wonder the average taxpayer rejects proposals to increase gas tax rates. The only thing she can be sure will happen if they go up is that she will pay more, but she can hardly count on any “investment” that will actually ease her congested commute.

Second, even when spent only on highways, fuel taxes result in a mass of cross-subsidies. Everyone pays the same rate per gallon, regardless of whether they drive exclusively on inexpensive-to-build two-lane country roads and neighborhood streets or drive mostly on multi-billion-dollar urban freeways and long-distance Interstate highways. A system of per-mile charges could be tied to specific highways (as tolls are today), so that those who use mega-project highways would pay accordingly.

Third, highways are the only major network utility that is paid for by this roundabout “user tax” rather than by direct payment for the amount of service you consume. For electricity, you pay for every kilowatt hour you use (and soon most of us will be paying more during peak periods when the system turns on very costly peak generators and less at other times when cheap baseload power can do the whole job). Likewise, most of us pay for water and sewer, natural gas, cable television, and telecoms services based on how much we use. Moreover, we pay the provider directly, in the form of monthly bills.

Thus, replacing fuel taxes is not just about ensuring adequate, sustainable funding for the highways we all depend on. It is also the key to transforming what is now a poorly managed, non-priced, government-run system into a 21st-century network utility.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.

Surface Transportation

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office, and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since.

California Gov. Pete Wilson appointed Poole to the California's Commission on Transportation Investment and he also served on the Caltrans Privatization Advisory Steering Committee, where he helped oversee the implementation of AB 680.

From 2003 to 2005, he was a member of the Transportation Research Board's special committee on the long-term viability of the fuel tax for highway finance. In 2008 he served as a member of the Texas Study Committee on Private Participation in Toll Roads, appointed by Gov. Rick Perry. In 2009, he was a member of an Expert Review Panel for Washington State DOT, advising on a $1.5 billion toll mega-project. In 2010, he was a member of the transportation transition team for Florida's Governor-elect Rick Scott. He is a member of two TRB standing committees: Congestion Pricing and Managed Lanes.


Poole is a member of the Government Accountability Office's National Aviation Studies Advisory Panel and he has testified before the House and Senate's aviation subcommittees on numerous occasions. Following the terrorist attacks of Sept. 11, 2001, Poole consulted the White House Domestic Policy Council and the leadership of the House Transportation & Infrastructure Committee.

He has also advised the Federal Aviation Administration, Office of the Secretary of Transportation, White House Office of Policy Development, National Performance Review, National Economic Council, and the National Civil Aviation Review Commission on aviation issues. Poole is a member of the Critical Infrastructure Council of the Los Angeles Economic Development Corporation and of the Air Traffic Control Association.

Poole was among the first to propose the commercialization of the U.S. air traffic control system, and his work in this field has helped shape proposals for a U.S. air traffic control corporation. A version of his corporation concept was implemented in Canada in 1996 and was more recently endorsed by several former top FAA administrators.

Poole's studies also launched a national debate on airport privatization in the United States. He advised both the FAA and local officials during the 1989-90 controversy over the proposed privatization of Albany (NY) Airport. His policy research on this issue helped inspire Congress' 1996 enactment of the Airport Privatization Pilot Program and the privatization of Indianapolis' airport management under Mayor Steve Goldsmith.

General Background

Robert Poole co-founded the Reason Foundation with Manny Klausner and Tibor Machan in 1978, and served as its president and CEO from then until the end of 2000. He was a member of the Bush-Cheney transition team in 2000. Over the years, he has advised the Reagan, George H.W. Bush, Clinton, and George W. Bush administrations on privatization and transportation policy.

Poole is credited as the first person to use the term "privatization" to refer to the contracting-out of public services and is the author of the first-ever book on privatization, Cutting Back City Hall, published by Universe Books in 1980. He is also editor of the books Instead of Regulation: Alternatives to Federal Regulatory Agencies (Lexington Books, 1981), Defending a Free Society (Lexington Books, 1984), and Unnatural Monopolies (Lexington Books, 1985). He also co-edited the book Free Minds & Free Markets: 25 Years of Reason (Pacific Research Institute, 1993).

Poole has written hundreds of articles, papers, and policy studies on privatization and transportation issues. His popular writings have appeared in national newspapers, including The New York Times, The Wall Street Journal, USA Today, Forbes, and numerous other publications. He has also been a guest on network television programs such as Good Morning America, NBC's Nightly News, ABC's World News Tonight, and the CBS Evening News. Poole writes a monthly column on transportation issues for Public Works Financing.

Poole earned his B.S. and M.S. in mechanical engineering at Massachusetts Institute of Technology (MIT) and did graduate work in operations research at New York University.