Abstract
Cities and states must shape tax policy to directly confront the range of impacts autonomous vehicles will have over the next several decades. Autonomous vehicles will hurt cities’ and states’ revenue base by potentially rendering the gas tax obsolete over time, reducing vehicle ownership and removing registration fees, and eliminating most fees related to parking, traffic, and other infractions. However, there will be benefits to offset these losses. Autonomous vehicles are expected to decrease emissions overall and strengthen productivity. But much uncertainty surrounds whether vehicle miles traveled will increase on the nation’s roads as children and the elderly gain newfound vehicular access. Cities and states could benefit from adopting improved tax policies to better reflect the future of transportation, including: (1) a vehicle miles traveled tax, (2) congestion pricing, and (3) a luxury tax. If these changes are not made, cities and states risk devastating effects on their budgets.