Impose an Excise Tax on Overland Freight Transport

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of Dollars 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021–
Change in Revenues 17.2 32.0 35.6 36.4 37.1 37.2 37.7 38.5 39.2 39.9 158.3 350.9

Data source: Staff of the Joint Committee on Taxation.
This option would take effect in January 2021.
An offset to reflect reduced income and payroll taxes has been applied to the estimates in this table.

Under current law, federal taxes related to overland freight transport by truck consist of a tax on diesel fuel; excise taxes on new freight trucks, tires, and trailers; and an annual heavy-vehicle use tax. Rail carriers pay a small per-gallon assessment on diesel fuel. There is no existing per-mile federal tax on freight transport.

This option would impose a new tax on freight transport by truck and rail. Freight transport by heavy-duty trucks (Class 7 and above in the Federal Highway Administration’s classification system) would be subject to a tax of 30 cents per mile and freight transport by rail to a tax of 12 cents per mile (per railcar). The tax would not apply to miles traveled by trucks or railcars without cargo.