Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124

Tag gas tax

When are user fees just redirected sales taxes?

Ben Ross at Greater Greater Washington has an excellent post about the pernicious habit of states (and maybe the federal government?) mislabeling sales taxes as user fees. Sorry for pulling such a long bit, but it’s good: Maryland is considering raising its gas tax. This long-overdue measure would allow some of the general revenues now subsidizing highways to go to the Purple Line, the Baltimore Red Line, and MARC expansion instead. This need has unfortunately gotten mixed up with a proposal, originating mostly from the highway lobby and its supporters, to put transportation money into a “lockbox.” The concept is to amend the state constitution to forbid transfers from the trust fund into the general fund. However, there’s a big hole in the bottom of the “lockbox.” Contrary to what some say, the money in the transportation trust fund mostly come from revenue sources that would have otherwise have gone into the state’s general fund, where it wouldn’t be locked. If I buy a bicycle in Maryland, I pay 6% sales tax and the money goes into the general fund where it pays for education, public safety, the governor’s salary, and other state expenses. Cars and gasoline are exempt from the sales tax. Instead, if I buy a car, I pay the same 6%. but it’s called “titling tax” and the money goes into a separate trust fund that is used only for transportation. It’s essentially the same when I buy gasoline, where the tax rate of 23½ cents a gallon comes to a little over 8% of the pretax price. […] The idea behind the lockbox amendment is that drivers pay for the roads they drive on. This idea is mistaken, but it’s widely held, and it’s an enormous obstacle to sensible transportation planning. The danger lurking in the […]

Links

1. Systemic Failure calls out the Bay Area for giving an award to a textbook example of greenwashing in urbanism: Ironically, this project was recently promoted on the SF-Streetsblog website by “New Urbanist” developer Peter Calthrope for its “highest level” of green technology. What does it say for the Bay Area environmental community, that such stupendously ugly, auto-oriented architecture can win “sustainable community of the year” awards? I love how vociferous and blunt Systemic Failure’s criticism is – it’s something that’s sorely missing in the overly self-congratulatory planning blogosphere. 2. LA rushes to get another giant hulking parking lot in before Jerry Brown turns off the “redevelopment” tap. 3. Interesting charts on the gas tax throughout history.

The origin of user fees?

I just started reading Paving the Way: New York Road Building and the American State, 1880-1956by Michael R. Fein, and though I don’t have time to talk as much about it as I’d like, I will say that I’m only a couple pages in and I can already tell it’s going to be great. Its thesis is essentially that the development of the road building bureaucracy was as important as the New Deal, if not more so, in shaping 20th century political development (this may be something that liberal urbanists, who otherwise support the expansion of the state, don’t want to hear). There’s much I’d like to excerpt, but I’ll stick with this paragraph in the introduction: Engineers framed their decisions in the language of scientific rationality and professional expertise. But these were merely forms of political expression that advanced their traffic-service vision of highway planning. Though New York’s road-building program predated mass automobility, engineers quickly seized on the phenomenon as a means of cementing their political legitimacy. Traffic censuses became the main foundational beam to engineers’ authority, a scientific measurement of public demand for highways that was difficult to contest [ed. note: reminds me of the Texas Transportation Institute]. As long as state highway construction focused on the improvement of existing roads, dissent was weakly expressed. As engineering projects increased in scale, impact, and potential for controversy, resistance spiked. It was in the process of responding to increased opposition that strong tensions developed between engineers’ service to their professional agenda (building a better highway system) and their responsibility to the public (balancing highway construction with other aspects of social development). These interests, once operating in tandem and instrumental to the engineers’ rise to power, began over time to feed conflict and meet with cross-purposes. The engineers’ solution to this […]

Making-driving-more-expensive link minilist

These seemed not quite fleshed-out enough for their own post, but too important to be buried along with other links. 1. San Francisco is considering a congestion charge plan that would either cover the whole city during rush hour, or just the northeastern quadrant (or possibly a mix of the two), for what looks like a maximum of $6/day. Considering that local roads are rarely paid out of user fees, at this point any move towards making local roads more expensive would be a move towards a market equilibrium. The fact that much of “this money” would be spent on transit and non-road improvements is an irrelevant accounting trick, since money is fungible and so much road spending is already coming out of general revenues. And yet, I wouldn’t hold your breath for libertarian or small-government conservative support of this plan. 2. Sens. Tom Carper and George Voinovich have called for a 25¢ increase of the federal gas tax, which is 10¢ higher than the maximum increase recommended in any of the Bowles-Simpson plans. Voinovich, the token Republican signing the letter, is retiring from the Senate in 2011. The Hill notes that the proposal “seems likely to face staunch opposition from Republicans, many of whom ran on a firm anti-tax increase pledge.” Nevermind that the gas “tax” is technically a user fee and not a tax, and that keeping it artificially low without reducing road spending amounts to a subsidy for automobile drivers – Tea Partiers obviously don’t think with that level of nuance.

News and thoughts on the gas tax

An influential highway group has called for replacing the flat tax on gas with a percentage tax, according to the Wall Street Journal. They want to replace the current 18.4 and 24.4 cent taxes on gasoline and diesel, respectively, with more flexible 8.4% and 10.6% tax rates. At current gas prices that would be about a 2-cent increase (at least on the gasoline side of things), and it would at least allow for automatic increases with inflation. It is a bit awkward for road funding to rise and fall with the cost of fuel, but it may be the only politically feasible way to raise the gas tax – to pass it off as an unintended consequence. Of course, there’s the possibility of the price of gas falling, although I don’t know how likely that is over the long-run. As you can imagine, the political reaction was quite hostile, with Rep. John Mica, who’s on the soon-to-be Republican-controlled House Transportation and Infrastructure Committee, saying that anything that would raise gas prices is a “non-starter.” It’s unfortunate that the gas tax is seen as just another tax and not the explicit cost of the road infrastructure, but it looks like it’s going to be a casualty of the Tea Party’s anti-tax mantra. In any case, the issue will be dealt with after the midterms when hopefully politicians will be a bit more clear-headed. The WSJ suggests that politicians are reluctant to keep borrowing from the general fund for road projects, but I’m afraid that their fear of budget deficits will be overpower by their fear of raising the cost of driving. And as much as I resent Obama and this Congress for refusing to raise the gas tax, it could have been worse – both McCain and Hillary Clinton were in […]

Friday links

1. Miller-McCune (what a bad name for a magazine) has an article about a possible VMT tax, and points out that more fuel-efficient vehicles will lead to less gas tax revenue. 2. Streetsblog has an extremely unflattering profile of Republican nominee for NY Governor Carl Paladino. He made a name for himself politically by detolling a major highway near where he was a real estate developer, and has continued to oppose new tolling projects throughout the state. He’s promising to cut the gas tax rate, and apparently once said, “It’s time we started looking at parking as a public service.” I should note that his Democratic opponent Andrew Cuomo ain’t no slouch when it comes to encouraging sprawl – Wayne Barrett at the Village Voice fingered his tenure as HUD Secretary as one of the “starting points for the mortgage meltdown.” 3. Paul Barter at Reinventing Parking has a guest post about parking reform in Bogotá that was concurrent with their much-vaunted TransMilenio BRT system, and he promises us more about it in the future. 4. Quoteth the Los Angeles Times: “At least 120 municipalities [in California] — nearly one in three with active redevelopment agencies — spent a combined $700 million in housing funds from 2000 to 2008 without constructing a single new unit, the newspaper’s analysis of state data shows. Nor did most of them add to the housing stock by rehabilitating existing units.” 5. Vancouver learns the hard way that luxury public housing is a bad idea. You could call it inclusionary zoning at its finest.

O’Toole Under More Fire

At Streetsblog, Ryan Avent presented a scorching attack on the most notorious free-market impostor – Randal O’Toole: Taking Liberties With the Facts for his consistent hypocrisy: The Cato Institute’s Randal O’Toole gets under the skin of many of those interested in building a more rational and green metropolitan geography, but in many ways he’s an ideal opponent. It would be difficult to concoct more transparently foolish arguments than his. The man is an engine of self-parody. The requisite identification of “libertarian” contradictions: This is one thing I’ve never understood about the libertarian love affair with highways; they seem utterly blind to the fact that it has required and continues to require massive government action to build and maintain the road network. The interstate highway system is perhaps the single largest government intervention in the economy in the 20th century. Reading O’Toole you’d think it was a wonder of the free market. And with ease, Ryan points out the data needed to take O’Toole to task on his persistent assertion the “roads pay for themselves”: The source of his blindness on the issue seems to be due to his belief that roads pay for themselves, and that congestion exists only because governments shift gas tax revenue to pay for transit and other smart growth projects. Nothing could be farther from the truth. In the first place, gas tax revenue comes nowhere near paying for roads. Federal gasoline tax revenues cover barely half of the annual budget of the Federal Highway Administration. Add in diesel tax revenues and you’re still short. And that’s just the federal budget picture. In response, Randal replies to critics in the comments of his latest post of his “Antiplanner” blog: The Antiplanner sees the American dream as freedom of lifestyle choices and opportunities to realize those choices […]

Free Market Impostors

I subscribe to the CATO Institute’s Daily Dispatch email. I enjoy ready the daily briefings of current events from a free-market perspective. But, once in a while, my capitalist stomach turns when they mention transit, usually accompanied by a quote from Randal O’Toole. Usually he bashes some transit plan, and gives some statistics about the inferiority of transit. Here’s a quote form the most recent Dispatch: Cato senior fellow Randal O’Toole writes: “A mile of rail transit line typically costs more to build than a four- to eight-lane freeway and typically carries fewer than half as many people as a single freeway lane mile. Federal funding for rail transit comes out of gasoline taxes and other highway user fees, and in most cases those funds would be more cost effective if spent on other transportation facilities.” Does this sound particularly “free market” to you? He’s just saying one socialist system is better than the other. On top of that he consistently presents only half the facts. You don’t even have to dig into his sources of data to know he is pulling a trick on the reader. Can you detect the deceptions? Yep, he discusses construction costs and completely neglects land costs, then focuses on cost/mile (as opposed to the more relevant cost/trip), while falsely inferring that the costs of automobile use is fully paid by fees and gas tax. Out in the country, land may be cheap and costs can be neglected. But, in urban areas where transit becomes more competitive, land is significantly more expensive. If one neglects land costs, one could justify tearing down several 60 story, $1000/sf office buildings Midtown Manhattan to build a 10 lane highway instead of an underground subway. I have a hard time respecting anyone who willingly neglects real costs (not just […]

Mixed Incentives and the True Costs of Driving

From the Freakonomic Blog – Mixed Messages on Auto Use: We wrote not long ago about the various negative externalities produced by driving — congestion, pollution, accident risk, etc. — and how pay-as-you-drive insurance might help impose the true cost of driving on each driver. … And here’s another case of mixed messages on auto use, or at least mixed incentives: The U.S. Department of Transportation has issued a press release saying that Americans have started to drive considerably fewer miles than before. And here’s another case of mixed messages on auto use, or at least mixed incentives: The U.S. Department of Transportation has issued a press release saying that Americans have started to drive considerably fewer miles than before. This post and the comments made me think about how little people actually think about the full costs of driving. People don’t typically think about the wear and tear on their car or the depreciation as they put on miles. The IRS’ mileage rates are intended to reflect these costs on top of the costs of gas, but many people think they are getting reimbursed extra for their mileage. Sure, if you are driving an older, fuel-efficient car, you’ll make money on your business travel… What if drivers were to pay the full costs of the roads they use? Would they start to look at the full cost of driving choices?

Trending now

A self-defeating argument
Texas MUD
gentrification
Only 2 Ways to Fight Gentrification (you’re not going to like one of them)
The problem with “public” transportation
OSZAR »