Taxed for driving

[ET21]

Update: Illinois drops the driving tax idea, after it was used to spark debate over how to pay for the infrastructure

http://www.nbcchicago.com/news/local/Illinois-Lawmakers-Drop--376210181.html?_osource=SocialFlowTwt_CHBrand

[paulthemapguy]

The tax-for-mile discussion will be revived, though.  I guarantee it.  The closer we get to emission-free cars, the farther we are from a gas tax that's worth anything.  Our roads have to be paid for somehow.  I think it'll come down to getting our cars annually inspected like some states already require.  Odometers will have to be hack-proof and adherent to some kind of government standard.  Maybe they can lump an annual inspection process in with getting our license plate stickers every year.

[Max Rockatansky]

Update: Illinois drops the driving tax idea, after it was used to spark debate over how to pay for the infrastructure

http://www.nbcchicago.com/news/local/Illinois-Lawmakers-Drop--376210181.html?_osource=SocialFlowTwt_CHBrand

So what did "on a base of 30,000 miles" mean?  Does that mean they were planning in the proposal to charge for 30,000 miles regardless if you drove that much or not?  $0.015 per mile is a lot more sensible than the $0.05 that was being thrown out earlier in the thread....privacy issues aside of course.

[ET21]

Update: Illinois drops the driving tax idea, after it was used to spark debate over how to pay for the infrastructure

http://www.nbcchicago.com/news/local/Illinois-Lawmakers-Drop--376210181.html?_osource=SocialFlowTwt_CHBrand

So what did "on a base of 30,000 miles" mean?  Does that mean they were planning in the proposal to charge for 30,000 miles regardless if you drove that much or not?  $0.015 per mile is a lot more sensible than the $0.05 that was being thrown out earlier in the thread....privacy issues aside of course.

I assume the 30,000 miles was a base number in order to calculate the tax per mile. I sure as hell don't drive 30,000 a year

[kalvado]

The tax-for-mile discussion will be revived, though.  I guarantee it.  The closer we get to emission-free cars, the farther we are from a gas tax that's worth anything.  Our roads have to be paid for somehow.  I think it'll come down to getting our cars annually inspected like some states already require.  Odometers will have to be hack-proof and adherent to some kind of government standard.  Maybe they can lump an annual inspection process in with getting our license plate stickers every year.

Somewhat psychological problem: paying $5 tax per tank is easier than one time payment of $200  (on top of what qualified mechanic would find in the average car during that inspection. Which can be pretty substantial - like "somewhat worn tires" may become "no, you cannot pass inspection with THAT. And your "check engine" needs to be fixed. No inspection sticker otherwise") 

[paulthemapguy]

I assume the 30,000 miles was a base number in order to calculate the tax per mile. I sure as hell don't drive 30,000 a year

I drive a pretty absurdly high amount, road tripping and all, and I only reach about 22,500 miles each year

[US 41]

I assume the 30,000 miles was a base number in order to calculate the tax per mile. I sure as hell don't drive 30,000 a year

I drive a pretty absurdly high amount, road tripping and all, and I only reach about 22,500 miles each year

Same here. I only drove 25,000 miles from February 2015 to February of this year, and that included my Ontario / Washington DC trip and two trips to the southwestern US. Although I'd happily drive more miles if I were able to.

[kalvado]

Same here. I only drove 25,000 miles from February 2015 to February of this year, and that included my Ontario / Washington DC trip and two trips to the southwestern US. Although I'd happily drive more miles if I were able to.

They say long haul truck driver can easily get 100k miles a year. Sound like a plan?

[US 41]

Same here. I only drove 25,000 miles from February 2015 to February of this year, and that included my Ontario / Washington DC trip and two trips to the southwestern US. Although I'd happily drive more miles if I were able to.

They say long haul truck driver can easily get 100k miles a year. Sound like a plan?

Sounds like a plan to me. I actually plan on starting my trucking career in less than 2 years.

[Max Rockatansky]

I assume the 30,000 miles was a base number in order to calculate the tax per mile. I sure as hell don't drive 30,000 a year

I drive a pretty absurdly high amount, road tripping and all, and I only reach about 22,500 miles each year

Maybe 30,000-35,000 for me but that's over two cars I own traveling a lot in addition to whatever I take for rental on trips that I have to fly out to.

A couple years back though I was hitting 60,000 to 80,000 in a POV since my company did only mileage.  Basically laws like that would have eaten hugely into my net profit from mileage reimbursement.  Granted I was netting about 60% net profit after gas, insurance and maintenance...great to get a little compact with cheap parts and good fuel economy for that purpose.

[Sykotyk]

Same situation here: I bought a brand new car at the very end of July last year and only have 20,500 on it and probably won't put another 2000-3000 on it before the end of July. Fall is my big driving time. Last year it included a trip to Iowa, a trip to Detroit, a trip to Syracuse, a trip to New Orleans/Houston, and also a trip to eastern TN/KY.

As for the discussion of first/second car. That's the way everyone in my family buys cars. Get a new car every 3-4-5 years and demote the previous 'first car' to second car status and either trade in the old second car or junk it or sell it to a third party. This means a car won't be 'younger' than about 7-8 years before it's replaced. Giving you a few years of payment free driving, and with its demotion, it tends to last the last 3-4-5 years a lot better than when it was the primary car. If you have kids, sometimes that second car turns into the kid's car and then they keep it upon graduation, etc.

Not everyone has a his & hers car and replace them regularly. And this isn't counting pickups, that have a specific purpose. But, even then, sometimes they are second-car status or, in my case, a 1987 F-150 that drives maybe 1,000-2,000 miles a year and is used as a truck is intended. Hauling stuff. It's not a passenger vehicle.

[kalvado]

Your numbers don't make any sense. 5,000 miles/year (50000/10 or 35000/7) is 13.7 miles a day; hardly even a one-way commute for most people. I already mentioned upthread an article from AAA which clearly states that most Americans travel around 29 miles/day, which is well within the range of most electric vehicles anyway. Even 15,000 miles/year is 41 miles/day, which is, again, still well within the range of most electric vehicles.

Oops, I missed that reply
FHWA lists average commute as 12.5 miles one way. 250 days a year ~ 6.5 k miles/year.
Show me these "commute only" cars on the second hand market, I'll gladly buy one.

Average annual mileage will be higher - and, to a large extent, due to longer trips which can easily add 500-1000 and more miles per run - and 3000 miles difference between average commute and average annual distance is largely that.   

[kkt]

Your numbers don't make any sense. 5,000 miles/year (50000/10 or 35000/7) is 13.7 miles a day; hardly even a one-way commute for most people. I already mentioned upthread an article from AAA which clearly states that most Americans travel around 29 miles/day, which is well within the range of most electric vehicles anyway. Even 15,000 miles/year is 41 miles/day, which is, again, still well within the range of most electric vehicles.

Oops, I missed that reply
FHWA lists average commute as 12.5 miles one way. 250 days a year ~ 6.5 k miles/year.
Show me these "commute only" cars on the second hand market, I'll gladly buy one.

Average annual mileage will be higher - and, to a large extent, due to longer trips which can easily add 500-1000 and more miles per run - and 3000 miles difference between average commute and average annual distance is largely that.   

Many commuters get a car primarily to commute in, it's not that unusual.  They're often leased and traded after 2-3 years.  If they're getting a car specifically to commute in, it'll probably be an economy car and not very special, so they won't mind too much if it gets dinged or rusted or faded from the sun from parking outside.  They're saving that mileage on their lower MPG luxury or sports car that they use on weekends.

[Max Rockatansky]

The problem with the second hand market on electric and hybrid vehicles is that you are running much closer to having to replace the battery then when it was new.  Even the battery in a Prius is still going to run at least $3,000 dollars to replace which is why you don't really see them for sale too often after five years of life.  For the money the city cars like the Spark and Fortwo in addition to sub-compacts like the Sonic, Fiesta, Fit, Versa, Yaris, ect are still going to be the better bet either new or second hand until the price of replacing batteries becomes completely nominal.  Looking at the entry price of a Yaris it's about $15,000 vs about $24,000 for a new Prius....so how long does it take to get an ROI on that $9,000 dollars in hybrid technology.  Assuming gas spikes back up to $4 dollars a gallons, your commute is 40 miles that comes out to 10,400 a year at 35 MPG with the Yaris which comes out to roughly 297 gallons a year or $1,188 dollars roughly.  Now lets assume that the Prius manages to run on electric for 20 of those commute miles, you are now still driving 5,200 miles a year on gas.  So basically your gas savings is going to be to $594 dollars a year which would take you 15 years to make up the difference between the conventional gas Yaris and hybrid Prius.  Basically about 8 years in you are going to have to replace the battery and it's going to cost $3,000 dollars making the ROI even worse.

Now that's not to say that someone living in a highly urban area that never exceeds speeds of 40 MPH wouldn't benefit from a hybrid or electric car but the initial markup still isn't going to make it worth in the short run vs conventional combustion engine.  The main issues with hybrid and electric in the long term is that they aren't maintenance free as everyone assumes them to be, worse the parts cost more.  Now say that gap between the Yaris and the Prius was about $3,000 dollars and replacing the battery cost $1,000 we're talking a much different ball game.  But that's going to take decades for the price of hybrid/electric to dwindle down to the neighborhood of a gasoline engine.  Leasing might make a difference too on the gas/hybrid price variance too...that is if you live close enough to your place of work to take advantage of that.

[Sykotyk]

Arguing for hybrids or electrics as being 'beneficial' despite the increased initial costs, less resale value, and potential maintenance expenses the longer you own it is the same argument made for ETC tolls to be higher than cash tolls because you're paying for the 'convenience'.

In the end, until electric or hybrid cars are cheaper for someone owning the car for 8 years and about 150k miles, it's not going to be worth it for many people.

[Sykotyk]

Your numbers don't make any sense. 5,000 miles/year (50000/10 or 35000/7) is 13.7 miles a day; hardly even a one-way commute for most people. I already mentioned upthread an article from AAA which clearly states that most Americans travel around 29 miles/day, which is well within the range of most electric vehicles anyway. Even 15,000 miles/year is 41 miles/day, which is, again, still well within the range of most electric vehicles.

Oops, I missed that reply
FHWA lists average commute as 12.5 miles one way. 250 days a year ~ 6.5 k miles/year.
Show me these "commute only" cars on the second hand market, I'll gladly buy one.

Average annual mileage will be higher - and, to a large extent, due to longer trips which can easily add 500-1000 and more miles per run - and 3000 miles difference between average commute and average annual distance is largely that.   

Many commuters get a car primarily to commute in, it's not that unusual.  They're often leased and traded after 2-3 years.  If they're getting a car specifically to commute in, it'll probably be an economy car and not very special, so they won't mind too much if it gets dinged or rusted or faded from the sun from parking outside.  They're saving that mileage on their lower MPG luxury or sports car that they use on weekends.

Most leases only cover 12,000 miles, tops. If you're driving 250 trips at 50 round trip miles and nothing extra, that's 12,500 with overmileage charges. Secondly, they're far more likely to care about dings, dents, and other problems because they'll be charged back to the leasee. Not exactly a situation you want to be driving someone else's car. Purchasing it and then trading it in after 5-6 years is a much more economical idea.

The other thing is, leasing is still a minimal portion of car sales and new car sales.

http://www.edmunds.com/about/press/leasing-is-shifting-the-new-car-market-but-it-isnt-the-best-choice-for-everyone-says-edmundscom.html

From 2013, New cars make up 29% of all car sales, and only 25% of new car sales are lease cars. So, roughly 7% of all cars sold in the country in the year would be leases.

They're not popular. What are they then? Price hooks. A lot easier to advertise a new car for $149 a month (and quietly list it as a lease) and not the $250-$300 so the outright purchase might be. And in the end, it doesn't work out for most people. It's the payday loans of car sales. Trick them into getting a 'good deal' when it fails to pay off after the 2 or 3 years are up. Mileages, damages. The fact that you have zero equity in the money you've spent the past two or three years.

No different than arguing for renting a house instead of buying it because you can move in a few years without strings attached. Most would find that proposition troublesome.

[Max Rockatansky]

Arguing for hybrids or electrics as being 'beneficial' despite the increased initial costs, less resale value, and potential maintenance expenses the longer you own it is the same argument made for ETC tolls to be higher than cash tolls because you're paying for the 'convenience'.

In the end, until electric or hybrid cars are cheaper for someone owning the car for 8 years and about 150k miles, it's not going to be worth it for many people.

Usually the angle most people go for on hybrids and electrics is that it is some sort of eco-friendly production compared to conventional gas or diesel.  While that is certainly true while the vehicle is operating through it's service life it certainly isn't true about all the pollutants caused by mining for all the metals that go into lithium-ion production.  Basically during the building process the pollution produced to build a hybrid or electric is much higher than it would be for something much more conventional.  I'm not saying that isn't offset down the line but it's interesting that most people who are into environmentalism tend to overlook the production of a vehicle and what it entails.

Now....if someone can build a steamer with a small enough boiler that somehow meets crash regulations then we would be onto something.     Still doesn't eliminate the problem with gas tax though...  I guess it goes back to buy what you like and what you want...but if you on a budget, buy smart and hope that some of these more outlandish mileage tax plans never come full fruition.

[kkt]

Your numbers don't make any sense. 5,000 miles/year (50000/10 or 35000/7) is 13.7 miles a day; hardly even a one-way commute for most people. I already mentioned upthread an article from AAA which clearly states that most Americans travel around 29 miles/day, which is well within the range of most electric vehicles anyway. Even 15,000 miles/year is 41 miles/day, which is, again, still well within the range of most electric vehicles.

Oops, I missed that reply
FHWA lists average commute as 12.5 miles one way. 250 days a year ~ 6.5 k miles/year.
Show me these "commute only" cars on the second hand market, I'll gladly buy one.

Average annual mileage will be higher - and, to a large extent, due to longer trips which can easily add 500-1000 and more miles per run - and 3000 miles difference between average commute and average annual distance is largely that.   

Many commuters get a car primarily to commute in, it's not that unusual.  They're often leased and traded after 2-3 years.  If they're getting a car specifically to commute in, it'll probably be an economy car and not very special, so they won't mind too much if it gets dinged or rusted or faded from the sun from parking outside.  They're saving that mileage on their lower MPG luxury or sports car that they use on weekends.

Most leases only cover 12,000 miles, tops. If you're driving 250 trips at 50 round trip miles and nothing extra, that's 12,500 with overmileage charges.

But that would be twice the length of the average commute quoted above.

Secondly, they're far more likely to care about dings, dents, and other problems because they'll be charged back to the leasee. Not exactly a situation you want to be driving someone else's car. Purchasing it and then trading it in after 5-6 years is a much more economical idea.

In general, that's good advice.  However, not all lease deals are the same.  Some allow the driver to buy the car at the end of the lease at a reasonable purchase price.  And some people have their hearts set on a new car every 3 years and don't mind not getting the equity even if it costs them money.

The other thing is, leasing is still a minimal portion of car sales and new car sales.

http://www.edmunds.com/about/press/leasing-is-shifting-the-new-car-market-but-it-isnt-the-best-choice-for-everyone-says-edmundscom.html

From 2013, New cars make up 29% of all car sales, and only 25% of new car sales are lease cars. So, roughly 7% of all cars sold in the country in the year would be leases.

I never said leases were a majority, I just said there were a significant number of them.  7% is a pretty good sized minority.

They're not popular. What are they then? Price hooks. A lot easier to advertise a new car for $149 a month (and quietly list it as a lease) and not the $250-$300 so the outright purchase might be. And in the end, it doesn't work out for most people. It's the payday loans of car sales. Trick them into getting a 'good deal' when it fails to pay off after the 2 or 3 years are up. Mileages, damages. The fact that you have zero equity in the money you've spent the past two or three years.

Not all leases are bad.  Some allow purchase at the end.  Some drivers just gotta have that new car every few years, and leasing can be a good deal.  I wouldn't assume that everyone who leases is a fool, any more than I'd assume that everyone who rents their house is a fool.

No different than arguing for renting a house instead of buying it because you can move in a few years without strings attached. Most would find that proposition troublesome.

But if you rent and something goes wrong, it's the landlord's problem.  Or if you have to move often for your job, buying would be silly.  Don't assume the conventional wisdom is right for all people.

[jakeroot]

They're not popular. What are they then? Price hooks. A lot easier to advertise a new car for $149 a month (and quietly list it as a lease) and not the $250-$300 so the outright purchase might be. And in the end, it doesn't work out for most people. It's the payday loans of car sales. Trick them into getting a 'good deal' when it fails to pay off after the 2 or 3 years are up. Mileages, damages. The fact that you have zero equity in the money you've spent the past two or three years.

Who gives a shit about paying off the car? People who lease are the people who've worked a car payment into their permanent budget. They like having new cars, they don't like being responsible for maintenance, and they don't drive a ton (and even if they do, they offer leases with 15k+ miles these days). Especially if you're someone who likes buying from the same company, there's usually good benefits for re-leasing a new car. Hyundai-Kia, for example, don't make you pay for the extra miles on the lease if you lease another Hyundai or Kia after the first lease expires.

Don't assume the conventional wisdom is right for all people.

I think that's the moral of the story.

[Sykotyk]

Your numbers don't make any sense. 5,000 miles/year (50000/10 or 35000/7) is 13.7 miles a day; hardly even a one-way commute for most people. I already mentioned upthread an article from AAA which clearly states that most Americans travel around 29 miles/day, which is well within the range of most electric vehicles anyway. Even 15,000 miles/year is 41 miles/day, which is, again, still well within the range of most electric vehicles.

Oops, I missed that reply
FHWA lists average commute as 12.5 miles one way. 250 days a year ~ 6.5 k miles/year.
Show me these "commute only" cars on the second hand market, I'll gladly buy one.

Average annual mileage will be higher - and, to a large extent, due to longer trips which can easily add 500-1000 and more miles per run - and 3000 miles difference between average commute and average annual distance is largely that.   

Many commuters get a car primarily to commute in, it's not that unusual.  They're often leased and traded after 2-3 years.  If they're getting a car specifically to commute in, it'll probably be an economy car and not very special, so they won't mind too much if it gets dinged or rusted or faded from the sun from parking outside.  They're saving that mileage on their lower MPG luxury or sports car that they use on weekends.

Most leases only cover 12,000 miles, tops. If you're driving 250 trips at 50 round trip miles and nothing extra, that's 12,500 with overmileage charges.

But that would be twice the length of the average commute quoted above.

Secondly, they're far more likely to care about dings, dents, and other problems because they'll be charged back to the leasee. Not exactly a situation you want to be driving someone else's car. Purchasing it and then trading it in after 5-6 years is a much more economical idea.

In general, that's good advice.  However, not all lease deals are the same.  Some allow the driver to buy the car at the end of the lease at a reasonable purchase price.  And some people have their hearts set on a new car every 3 years and don't mind not getting the equity even if it costs them money.

The other thing is, leasing is still a minimal portion of car sales and new car sales.

http://www.edmunds.com/about/press/leasing-is-shifting-the-new-car-market-but-it-isnt-the-best-choice-for-everyone-says-edmundscom.html

From 2013, New cars make up 29% of all car sales, and only 25% of new car sales are lease cars. So, roughly 7% of all cars sold in the country in the year would be leases.

I never said leases were a majority, I just said there were a significant number of them.  7% is a pretty good sized minority.

They're not popular. What are they then? Price hooks. A lot easier to advertise a new car for $149 a month (and quietly list it as a lease) and not the $250-$300 so the outright purchase might be. And in the end, it doesn't work out for most people. It's the payday loans of car sales. Trick them into getting a 'good deal' when it fails to pay off after the 2 or 3 years are up. Mileages, damages. The fact that you have zero equity in the money you've spent the past two or three years.

Not all leases are bad.  Some allow purchase at the end.  Some drivers just gotta have that new car every few years, and leasing can be a good deal.  I wouldn't assume that everyone who leases is a fool, any more than I'd assume that everyone who rents their house is a fool.

No different than arguing for renting a house instead of buying it because you can move in a few years without strings attached. Most would find that proposition troublesome.

But if you rent and something goes wrong, it's the landlord's problem.  Or if you have to move often for your job, buying would be silly.  Don't assume the conventional wisdom is right for all people.

I'll sum up the issue with purchasing your leased vehicle: it means you pay more for the same car over a longer period of time. They're not going to take total payment for the car less than they would just selling it outright. That 'purchase option' at the end is a scam. Hopeing to snare people with extensive cosmetic issues (interior or exterior) who will face a large fee and instead choose to buy it, or those not good with math to realize their decision to purchase it in the first place.

Secondly, buying a car, a secondary car, just for a commute of less than 25 miles a day for 250 days is absurdly expensive. Either lease or purchase. It's like buying a second house so you don't have to clean your primary house as often.

The people with the means to just buy a commuter car aren't the ones with short drives and they're not the ones financially strapped to buy a cheap car. Why spend hundreds of dollars a month for a vehicle used sparingly for consistently small trips when you already own a primary vehicle designed to handle the rigors of a regular family? If it's secondary, and not for status, it's utilitarian in nature. The leftover usage of your old primary car demoted to secondary status. It saves you money, instead of an added expense for a rather narrow purpose.

Maybe there are a lot of people conned by the idea of a new car for status or the 'joy' of a new car. But they're probably the same ones complaining they don't have enough money to live, complaining about a gas tax that (as calculated above) becomes a very small part of your annual household budget.

[vdeane]

In my case, I'm leasing my car because I couldn't afford the loan payments to buy it (if only it weren't for student loans, there would have been room in the budget...).  I plan to buy it at the end of the lease, which will probably involve a loan since I don't want to use the entirety of my savings to pay for it.

[Duke87]

Not all leases are bad.  Some allow purchase at the end.  Some drivers just gotta have that new car every few years, and leasing can be a good deal.  I wouldn't assume that everyone who leases is a fool, any more than I'd assume that everyone who rents their house is a fool.

Indeed. This is why my parents have been doing nothing but leasing cars for the past 20+ years. They are quite aware that this costs more money in the long run, but it means they never have a car that's more than 3 years old, and they have made a conscious decision that they want to pay a premium for that.

No different than arguing for renting a house instead of buying it because you can move in a few years without strings attached. Most would find that proposition troublesome.

But if you rent and something goes wrong, it's the landlord's problem. Or if you have to move often for your job, buying would be silly. Don't assume the conventional wisdom is right for all people.

Not only that, but homes, unlike cars, do not significantly degrade in condition after only a few years. And homes, unlike cars, typically have a higher resale value than what they were purchased for.

And you get tax deductions for the interest on your mortgage if you buy a home. Those same deductions do not apply to car loans.

There are real benefits to buying a home instead of renting that do not apply to cars.