Most of the research in transportation and social welfare concerns distributional outcomes, or more prosaically, the question of who gets what out of transport finance policy. The research on distributive social justice in transportation occurs primarily in three, largely separate fields: social inclusion, environmental justice, and the major topic of this manuscript, tax incidence. The research on social inclusion addresses the extent to which mobility limitations—either physical or financial—affect the distribution of individuals’ access to social and economic opportunity. Because taxes and user charges can raise the costs of gasoline or transit fares, they can create (or lower) financial barriers to mobility, and by extension, to social inclusion (1). The research on social inclusion in the US is perhaps best represented by the enormous amount of research on spatial mismatch.
Environmental justice research and activism has raised awareness about the distributive consequences, particularly for impoverished communities of color within metropolitan regions, of the external costs from transportation-related pollutants and environmental health costs associated with auto usage (3-9). Other types of external costs, like noise and pedestrian crashes, have also been shown to be higher in low-income communities than in more affluent neighborhoods (12). These costs can be measured by additional sick days or expenditures on things like air conditioner or air filters. Because of these types of costs, the social equity question arises from failing to expect motorists, low and high-income alike, to consider the external costs of their choices and enabling travel over and above a social optimum in a way that decreases the welfare of others.
The tax incidence research, by contrast, asks how much individuals and groups pay under different finance methods relative to other groups. This research examines the regressivity or progressivity of tax payments and revenue allocations (2). Regressive taxes or fees ask low-income individuals to sacrifice a comparatively larger percentage of their resources, usually measured in income, to pay for taxes than is required of those with higher incomes. Progressive taxes, like a graduated income tax, take an increasing percentage of income as income increases overall. These definitions are inverted in the case of tax allocations rather than costs. Incidence research tends to ask a very different question than social inclusion research: do socially marginalized groups, particularly class minorities, pay a disproportionate amount of their income for a tax? Most taxes, save for graduated income, are regressive in terms of out-of-pocket costs. It is possible for a tax to be regressive, while revenue distribution may be progressive, so that low-income individuals may pay in disproportionately and benefit disproportionately. It is important to maintain the distinction between social exclusion and tax incidence because regressivity and progressivity are general measures of tax fairness, not proxies for whether mobility is affordable. Gas taxes have been found to be regressive, in general, but with an out-of-pocket cost estimate of $25 to $28 a year per household per car, the Federal gas tax is hardly a prohibitive sum.
However, tax and finance structures affect relative prices among modes and thus can influence both the overall affordability of mobility—the social inclusion concern—and the amount/type of driving going on—the environmental justice concern. The policy goals surrounding all of these issues can and do conflict, depending on the context and the policy design. Among the most significant equity concerns over congestion pricing is that low-income motorists will have to forego trips. With tolls, mobility on congested roadways would become less affordable, creating a barrier to social inclusion for low-income motorists and their families. But by protecting low-income motorists from financial barriers to mobility by undercharging everybody, policy may burden communities with excess emissions and surface traffic. The results from the environmental justice research suggest that that these costs are born unequally as well, so that by not pricing trips off the road, policy burdens low-income communities and families within them.
Though most of the studies in tax incidence examine the distribution of the out-of-pocket costs associated with pricing, the very best studies acknowledge the role that prices play in altering both the distribution mobility overall and the external costs associated with that mobility. Unfortunately, there are very few studies that take such a comprehensive view.
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