In negotiating the bipartisan infrastructure bill, Republican Sens. Susan Collins and Rob Portman argue that electric vehicles should be taxed equivalent to what other vehicles pay to maintain the infrastructure we drive on. As Collins put it, EV drivers are “literally free riders, because they’re not paying any gas tax.” Democrats should realize that these Republicans are right.
But are they? Indeed, four arguments oppose their tax. EV use fights climate change. As temperatures shatter records repeatedly, this “Ford-F150 tax,” as White House press secretary Jen Psaki cleverly skewered it, feels like a disincentive designed by a lunatic. Second, why prey on a nascent industry?
But when Republicans pull out of their lane to propose a tax increase – on American manufacturing, no less – Democrats should check their own political blind spots. Collins is not being predatory but prescient. EVs may have a 3 percent market share today, but they are the future. When auto giants like Ford and General Motors invest billions in manufacturing EVs and pledge to abandon the very vehicles that generated their profits for over a century, the transition won’t be slowed by a use tax.
Sen. Bernie Sanders objects that an EV tax is regressive. But today, it would be a wealth tax because EV owners are, largely, wealthier. This is partly because EVs are so new that the secondhand market is minuscule, and because some manufacturers are initially building higher-priced models to capture the fatter profits that well-heeled customers will pay. Though this is a side effect that Collins surely did not intend, those favoring wealth distribution should champion her proposal. We could even tune up her complaint: EV owners are wealthy free riders.
Nonetheless, as EV adoption spreads, Sanders could eventually be right: An EV tax might become regressive. But he could applaud that; the Scandinavian countries he lauds as models all have gas taxes. If Sanders wants to rev up “our revolution,” as he calls his mission, he could advocate for a higher tax on luxury models. Although today’s gas tax is flat, an EV tax need not be regressive.
Furthermore, passing some version of the Collins-Portman tax proposal is urgent. Many people hope EVs will displace their fossil fuel-belching kin entirely. But those guzzlers contribute some $36 billion to funding infrastructure annually. As gas vehicles fade away, taxing EVs will constitute an increasingly vital funding source. To oppose a tax on EVs is to unwittingly advocate for defunding infrastructure. That’s a position opposed by all Democrats and most Republicans.
Sen. Collins wants to scale back the charging network in the infrastructure bill, suggesting we fund electric buses instead. When a Republican senator advocates spending on public transportation, I smell a bipartisan deal.
And yet, even if an EV tax won’t discourage adoption, won’t hurt the industry and doesn’t have to be regressive, a fourth objection remains. President Biden pledged not to raise taxes on anyone earning less than $400,000 a year, and he believes the Republican senators’ proposal breaks his promise. But red lines draw trouble.
Biden must avoid deriding the proposal as a sin tax and instead upgrade his syntax. He could defend the Collins-Portman idea by arguing that, far from being a tax increase, it merely plugs a loophole. EV owners should not evade costs long intended to be borne by every driver. Biden can deflect the inevitable attack that he is breaking his campaign promise by saying he embraces the Republican-initiated funding in the interests of bipartisanship and building back better.
Finally, paying taxes creates commitment. Just as those paying Social Security taxes demand their benefits, EV owners will be likewise demanding. “OK, we pay our EV tax, now where is our charging network? Where is our smart grid? Where are the solar panels and wind turbines to fuel our future?” A levy replacing the gas tax will engender entitlement in EV owners across every class – and do us all a world of good.
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