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New Technology Belies Tax Justification

Over the weekend, the New York Times had a fascinating piece about the quick development of driverless cars, and the implications for urban areas:

Imagine a city where you don’t drive in loops looking for a parking spot because your car drops you off and scoots off to some location to wait, sort of like taxi holding pens at airports. Or maybe it is picked up by a robotic minder and carted off with other vehicles, like a row of shopping carts… Inner-city parking lots could become parks. Traffic lights could be less common because hidden sensors in cars and streets coordinate traffic. And, yes, parking tickets could become a rarity since cars would be smart enough to know where they are not supposed to be. As scientists and car companies forge ahead — many expect self-driving cars to become commonplace in the next decade — researchers, city planners and engineers are contemplating how city spaces could change if our cars start doing the driving for us.

The new technology raises other questions, which the paper addressed in a follow-up article:

In Washington, an average of six parking tickets are issued every minute of a normal workday. That is about 5,300 tickets on each of those days. Those slips of paper have added up to $80 million in parking fines a year, according to a report by AAA Mid-Atlantic… Mr. Walker Smith said that while traditional revenue sources from tickets, towing cars and gasoline taxes could dry up, cities and states will come up with new ways to make money on vehicles.

Automation will also impact the insurance industry, technology writer Nick Bilton reports, as well as taxis and meter maids. Such costs should not be lamented: Cities and states like to maintain the fiction that they ticket for safety, not revenue, and they should have to live by that fiction. Some professions do not stand the test of time. Spare a moment for the poor typewriter factory workers; they deserve more public sympathy than the meter maids.

Already, new technologies are challenging traditional tax policy. After years of pushing higher fuel standards for environmental reasons, states now complain that they derive less revenue because cars require fewer gallons of gas. Certainly, states want revenue for roads, but it is also true that fuel efficient cars cause less wear and tear because they are lighter; fuel efficiency comes at the expense of weight and, too often, safety.

Automobiles are not the only technology whose advancement has challenged justification for tax collection. It took more than a century to get rid of the telephone excise tax whose original justification was to help fund the Spanish-American War. Pennsylvania still has an occupation tax, a legacy of the colonial period in which occupations were granted by writ and often considered property. The Internet has also challenged traditional tax collection, especially from brick-and-mortar stores.

The government may make myriad excuses for taxation, but new technologies and the evolution of society should force governments to acknowledge both the basic and the obvious: Tax is about revenue, not safety, and the government’s increasingly insatiable appetite for new and expensive programs. Putting lipstick on a pig does not make it more palatable. When governments lie about their motivation for taxation and fines, it only breeds cynicism and resentment about government, moods corrosive to both community and citizenship.


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