In what I guess is supposed to be a take-down of the Reason Foundation folks, the normally interesting and reflective Alex Marshall explains that gas taxes are not user fees in Governing.
Marty Wachs wrote my favorite piece on how gas tax taxes mirror user fees about a decade ago: A Dozen Reasons to Raise the Gas Tax.
No, gas taxes are not perfect proxies for car usage. They vary by vehicle make. But in reality, gas taxes are the closest thing we have to proxying for a pollution tax or carbon tax. We may wish for policy reasons to tax gasoline consumption more than we wish to charge for system usage. For system usage, our major externalities are congestion and accidents, and while it would be really nice to charge based on mileage or time of day for either of those, I’ll just not hold my breath and wait for that public policy to develop.
Even though most analyses show that gas taxes are regressive, these taxes are pretty low in the US, and thus are pretty socially responsible even though low income people do pay proportionately more.
In other words, gas taxes are use-based taxes, and they work an awful lot like user fees, even if they are not strictly user fees. And making this distinction isn’t really as useful as Marshall would like it to be.
Ultimately, Marshall wants to use this issue to argue that car users don’t pay their own way, and so Reason Foundation people should stop criticizing Federal money for high speed rail and sidewalks. By all means, go ahead and make that argument–as if anybody really cares because it’s not like we haven’t been listening to this “cars get subsidized” argument for the last 25 years.
But come on. Do we really think that cities would be better off without surface streets paid for out of property taxes? What are bicyclists supposed to bike on without streets? What are buses meant to run on? And is it really the case that we need federal money for sidewalks? Why can’t local property taxes pay for sidewalks?
Even though gas taxes may not cover the full costs of roads, the gas tax has paid for a lot of public transit in the US and–more significantly–around the world.
It’s pretty clear that Alex Marshall really knows little about finance and budgeting and that he’s used to preaching to a choir over at Governing because he’s not bothering with research for his posts:
I went to the grocery store today and bought an apple. While eating it, I complained that proceeds from the sales tax I paid were used for other things than agricultural support programs.
Ok, again–do some research. Food at grocery stores is only subject to sales taxes in a really small number of places. All of which are evil places, like Mississippi and Alabama.*
(I suspect that Marshall lives in New York. So he’s wrong. He doesn’t pay sales taxes on apples from the grocery store, unless NYC has a special “Alex Marshall tax” on apples.)
He goes on:
Plus, once we pay the gas tax, we have no choice about where the money goes. When I fill up my car with gas, I can’t choose that the tax money goes to repair the potholes on my street instead of the brand new interchange on the other side of the state. However, once I do pay the gas tax, I can use one stretch of road or a bridge as many times as I like with no additional charge. That’s not a user fee. There’s a reason the gas tax is called a tax—because it is one.
Okay…but if you drive on that same stretch of road 100 times, you will, in fact, use more gasoline than if you drive on it once, and you will pay more tax related to your usage. No, the gas tax isn’t a perfect proxy for a mileage fee, time-of-day pricing, or a toll, but it’s not completely unrelated to use, either.
And it’s not like you have any real choice about where your user fee money goes either. There are plenty of cross-subsidies in the national park system. And why wouldn’t there be? If didn’t need cross-subsidies to run something, it’s probably a private rather than a public good. Governments exist to handle cross-subsidies and distributional conflicts.
And (again) just because a government service charges a user fee doesn’t mean that user fee covers the full costs of the program. Transit is everybody’s prime example of that: we pay fares, and most systems still require operating subsidies. But plenty of programs charge user fees and supplement services with general revenues, such as garbage collection. So whether the gas tax is a user fee isn’t really germane to what Marshall wants to say: we could undercharge drivers with user fees just as easily as we have undertaxed gasoline.
I repeat: the gas tax has served the US remarkably well for decades. It’s an easy tax to pay–drivers pay in small amounts at point-of-purchase, and even if it hasn’t paid the full freight of auto infrastructure–or any other infrastructure and even if it isn’t strictly a user fee.
I’m so tired of the “it’s not fairrrrrrrr that cars don’t pay their way but trains are expected to” whine.
Nobody among mainstream transport finance researchers actually expects transit users to pay their way based on some idea that car users somehow pay their own way. This shadowboxing about subsidies with the Reason Foundation is a waste of time, and it distracts transit advocates from doing what they need to do in order to get our transit infrastructure finance and subsidies in order: pursue a) prudential investment so that comparatively productive public transit investment take precedence over unproductive investments (e.g., light rail in Buffalo) and b) a responsible finance plan for high speed rail rather than the puff and smoke and amateurish general revenue grabs we’ve watched for the last year around high speed rail.
*With my apologies, but it is evil to charge sales taxes on food. It’s a regressive enough tax without charging on grocery store food. Some other states charge on groceries, but they rebate the tax. Still evil. Don’t do it.