The way we pay for roads is unfair and basically a welfare program

Eric Jaffe at The Atlantic Cities recently had a great piece on the growing road-funding crisis in America, which points out how our road-funding processes are basically a welfare system.

A freeway onramp in Provo.

A freeway onramp in Provo.

The problem is that we’re supposed to be funding roads through gas taxes, but because there’s no will to raise that tax we’ve pretty much run out of money:

But the core of the problem comes back to the federal gas tax, which hasn’t been raised since 1993 and loses purchasing power to inflation every day. These two lost decades of road taxes are the reason the Highway Trust Fund, which is supposed to cover road costs, is expected to fail in 2015.

Jaffe points out that we may also have built too many roads or too expensive roads, and that Americans pay less for their roads than Europeans.

But what makes this particular crisis stand out is the way we’ve made up for the missing money: income tax. As Jaffe points out,

General income taxes have subsidized the Highway Trust Fund to the tune of tens of billions of dollars in recent years.

This is fundamentally unfair. If roads are entirely subsidized through gas taxes, people pay in proportion to how much they drive; travel more miles, burn more gas, pay more money. Simple and fair enough.

But if we use income tax, everyone is subsidizing driving infrastructure, regardless of how much they drive. That means even people who chose not to drive — or who can’t drive! — are still paying to build roads they don’t even use.

So, if you and I have similar incomes but you chose to live in the city and not drive, while I chose to live in the suburbs and drive a lot, we’re paying similar income tax dollars for roads. That means you’re paying for me to get around. You’re money also allows me to take advantage of the lower costs of far-flung land. Ultimately then, I get cheaper costs of living (or operating, if I’m a business), while you’re money helps ensure I don’t really experience any tradeoffs for going out to the suburbs.

A freeway in Boston.

A freeway in Boston.

This is the definition of a government subsidy for driving. Usually we call this kind of thing “welfare,” though I don’t know why a bunch of people in McMansions need welfare handouts.

The situation also is especially disheartening because walkable places often have higher costs of living, which should be offset by lower transportation costs. In other words, if you walk or bike everywhere, you should be able to afford a slightly more expensive home.

But if those transportation costs are paid for in part by income tax, and you have to pay whether you drive or not, it eliminates a huge economic incentive to live in walkable places.

This is also literally wealth redistribution; everyone has to put money into the pot, but only some people — e.g. drivers — benefit. And sadly, the more you drive and the farther you have to travel, the more you take advantage of this subsidy. That means we’re not only encouraging sprawl, we’re throwing money at it.

In the end, I’m not suggestion that we defund roads. I’m not even suggesting we stop building roads to suburbs and other places. Rather, I’m just suggesting the people who use the roads actually pay for them. That’s how most other things work in life, and in such a fervently capitalistic society it’s bizarre that we’ve basically turned our roads into a welfare system.


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