In her Potomac Watch column this week, the Wall Street Journal’s Kimberley A. Strassel notes the policy and political foolishness of the proposed federal car tax in the House transportation bill. The provision attempts to force state governments to collect a federal tax.
Strassel writes:
Campaign slogans can be catchy, clumsy or clever. Few are as crazy as the one Republicans are setting themselves up for this fall: “Vote GOP. The party that brought you a national car tax.”
The House Transportation and Infrastructure Committee laid the groundwork last week in passing a five-year reauthorization of transportation programs. Greedy for more “infrastructure” dollars to shower on home states in a midterm and unwilling to raise the gasoline tax, Republicans conjured up a new revenue stream: the first-ever federal “annual registration fee” for vehicles. How bad is this policy, and how big a political trap? All but one committee Democrat voted for the bill—with unrestrained glee.
Such is the blindness that accompanies Washington’s lust for earmarking dollars for home-state pork. It wasn’t five years ago that Congress used the excuse of the last transportation reauthorization to enact Joe Biden’s Infrastructure Investment and Jobs Act. That $1.2 trillion extravaganza showered dollars on every bridge, water, metro, bike-path and pothole-filling project in the country. It was sold as the ultimate fix for our ailing apparatus. Only, now it’s an election year, apparently everything is still ailing. The new bill would spend nearly $600 billion more.
The GOP’s problem: How to pay for this? Bipartisan spenders have long moaned that the Highway Trust Fund, financed by the 18-cent-a-gallon federal gasoline tax, isn’t keeping up with their insatiable needs. But with the Iran conflict hiking gas prices, the GOP knows raising the federal gas tax is political hara-kiri. It instead talked itself into a gentler death: A new “fee” on electric vehicles and hybrids, to be presented to MAGA crowds as an overdue levy on “freeloading” Tesla owners who pay no gasoline tax.
Specifically, the bill would establish a $150 annual fee on EVs and $50 annual fee on plug-in hybrids—a $30 billion new tax. Equally disturbing, it would create a whole new infrastructure for collecting the money, requisitioning state departments of motor vehicles to become the feds’ new tax collectors. States that refuse would lose federal funding.
Policywise, this idea is as short-sighted as they come. The GOP will bleat that its new Frankenstein targets only EV and hybrid owners. True, until it doesn’t. What Republicans build, Democrats will supersize. As Americans for Tax Reform’s Grover Norquist warned: “As soon as the Democrats get into power, they’ll say, ‘Oh my goodness, there’s the gas-car loophole. We must have the car tax on all cars.’ . . . It won’t take them two weeks to do it.”
And don’t think it will stop there, not after every local DMV has become a branch of the Internal Revenue Service. With that plumbing in place, Democrats can expand (or exempt) the “fee”—and plenty of new climate-related taxes—with infinite creativity. Greater and varying annual amounts for gas-guzzlers, luxury rides, vehicles that choke metro centers. Lower fees based on income, profession or government-favored safety features. Hedge-fund owner car tax: $2,000. Union teacher car tax: $11. What could possibly go wrong?
Politically, it’s even more foolish. Millions of Americans have bought electric and hybrid vehicles in recent years, and Congress paid them mass subsidies to do so. Republicans—who say they want to run on “affordability”—want to penalize these households with a brand new bill on Oct. 1. (Yes, these geniuses would impose this tax one month before the election.) Does the GOP fail to realize this pool contains any number of would-be (but won’t be) GOP voters?
Democrats won’t bother making distinctions over who pays the tax now—or under their own plans. They will brand their opponents tax hikers and, worse, creators of a “national car tax.” How much do Americans like car taxes? They loathe them. Ask the residents of deep-blue Oregon, 83% of whom this month voted down a new car tax and gas tax hike.
Click here to read the rest of the column.
