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Have you ever stood in front of the shelves of toilet paper at your local market and tried to figure out the best deal? Jumbo rolls, super jumbo rolls, mega rolls, 8-packs, 12-packs, one-ply, two-ply. It’s maddening. I’m an economist, and I can’t figure it out, so I choose not to waste the brain cells on it. I just pay whatever and go my way. It’s called “rational ignorance” — I choose not to spend the effort to figure it out. We’ll come back to this.
Jumping to the recent $1-trillion infrastructure bill , one can find buried deep inside it — page 508, to be exact — a proposal to test a new tax for driving. It’s a mileage tax — essentially, a user fee for roads. Drive X miles, pay Y cents per mile to the government. Unlike most tax proposals, surprisingly, there may be some logic to this idea. Not much logic, and we should all be leery, but let’s break it down and see what’s really going on.
First, drivers of vehicles that run on gasoline or diesel already pay a per mile tax. It’s not calculated that way, and nobody figures it out that way — […]
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