(HT Drudge) Hasso Hering of the Albany Democrat-Herald reports that Governor Ted Kulongoski of Oregon is considering a new tax on mileage driven to fund highway infrastructure.
The governor's website gives insight to his logic, which I have to say, isn't bad.
As Oregonians drive less and demand more fuel-efficient vehicles, it is increasingly important that the state find a new way, other than the gas tax, to finance our transportation system.
I am not sure that the Governor Kulongoski's belief that Oregonians will continue to drive less and demand more fuel-efficient cars is correct. Those two trends may be the result of high gas prices that eased after July 2008 and the recession, but whether temporary or long-term they do highlight a dilemma.
High gasoline prices, the desire of drivers to save money no matter the price of gasoline, cafe standards and other government policy have increased the demand for fuel efficient cars. The Toyota Prius and other hybrids damage infrastructure and cause congestion, like all vehicles, inflicting worse driving conditions on others. In economics, this is known as an externality--imposing cost on someone else without compensating the harmed party.
Fuel efficient cars largely avoid gasoline taxes that fund road construction and repair. In economics, this is known a the free-rider problem--acquiring a benefit without paying for it.
These problems will only deepen if we are fortunate enough to see even greater improvements in technology that allow us to forego gasoline entirely. Most states would lose their biggest source of tax revenue for highway maintenance. Governor Kulongoski's mileage tax would help solve both problems.
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In class, we were told that vaccines had positive externalities and I can see that. If these people don't get sick, they go to work, are more productive as a whole and pay more taxes compared to if they were on sick leave (for which the employer would have to pay), people around them are less likely to get sick and the previous applies to them. So, yes, positive externalities... in the present. In the long run, however, vaccinations make humanity as a whole weaker because people who would have died without vaccines go on and pass their 'weaker' genes onto another generation.
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