If You’ve Got to Raise Taxes, at Least Do It Right

Gov. Timothy M. Kaine made an interesting remark Saturday to a gathering in Rockingham County, according to the Daily News Record:

Kaine said his proposal will put the burden of payment on users of highways by raising auto-sales fees, car-insurance premiums, registration fees and license-reinstatement fees for what Kaine termed “abusive” drivers: motorists with poor driving records, including habitual offenders.

It is encouraging to see that the Governor believes that the burden of maintaining and building Virginia’s roads (and transit projects) should fall upon those who use (and abuse) the roads — as opposed, say, upon the non car-owning population. It’s a baby step toward a rational transportation funding formula.

But Kaine could do a lot better. He proposes taxing car ownership, not car usage. Under his schema, it doesn’t matter if someone drives a car 6,000 miles a year or 30,000 — they pay the same. A rational transportation-funding system would make people pay on the basis of two main variables: (1) how much they drive, and (2) when/where they drive.

The more someone drives, the more wear and tear they put on the transportation system. People who drive more should pay more. The most practiical user fee in Virginia today is the gas tax. (An ancillary point: People who drive heavy vehicles, such as trucks, should pay more than those who drive small cars. The trucking lobby, it appears, has successfully fended off any move to make trucks pay their fair share. The Virginia Trucking Association needs to give Executive VP Dale Bennett a raise!)

Motorists who choose to drive during periods of peak traffic congestion cause more stress on the system than those, such as telecommuters, carpoolers or bus riders, who arrange their affairs to share rides or drive during off-peak periods. Peak drivers should pay more, and the others should pay less. The most effective way to ration scarce highway capacity is tolls and congestion pricing.

Kaine apparently has made a political calculation that it will be easier to convince voters to swallow a grab-bag of miscellaneous titling and insurance taxes than to raise the gasoline tax and move to a system of congestion pricing. Too bad. Kaine’s plan will raise taxes, but it won’t modify motorist behavior. The preferred method of raising taxes also would create incentives for people to change their behavior and, thus, reduce somewhat the need to build more roads.


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18 responses to “If You’ve Got to Raise Taxes, at Least Do It Right”

  1. kingfish Avatar

    Right on, Mr. Bacon!

  2. E M Risse Avatar
    E M Risse

    Jim:

    Could not have said it better myself!

    Pay by how much you drive, where you drive, when you drive and how many you take with you when you go.

    EMR

  3. Jim Bacon Avatar
    Jim Bacon

    Ed, Actually you just did say it better!

  4. James Atticus Bowden Avatar
    James Atticus Bowden

    EMR: I actually understood what you wrote! And I agree.

    The other problem with Kaine’s tax package is that the extra money is extra. There is a surplus. The problem is spending, not revenue.

  5. kingfish Avatar

    JAB- Here’s where we part company. There is not enough revenue in the House package to seriously address our transportation needs.

  6. James Atticus Bowden Avatar
    James Atticus Bowden

    Kingfish: Your math is off or you aren’t setting priorities. Or you aren’t willing to cut the growth of spending.

    And as EMR and Bacon point out – the present plans to pour concrete don’t reduce congestion. Amen.

    So, the House plan which is the best of a bad lot, isn’t the final answer, but a way to get things moving on some concrete that should be poured – and more details on fixing VDOT.

  7. Ray Hyde Avatar

    Gee, guys. Even I can agree with this. But I agree with Kingfish, there isn’t enough money in the house package: we have put this off for too long, and now we have to pay the piper.

    The other side of the coin is that those who commute during rush hour do so in order to support businesses which have chosen to locate in a way that magnifies our transportation problem. Our road system subsidises their choices no less than it does those who choose to live where homes are less expensive. By insisting on regular hours (and irregular hours), by minimizing telecommuting opportunities, by demanding business use of POV’s and many other business practices, these organizations also increasee the traffic load, and they should pay as well.

    If the gas tax was really a fuel tax it would affect truckers and other heavy vehicles, like backhoes and bulldozers, with regard to air pollution as well. Those with heavier vehicles would pay more. Seems fair to me.

    But congestion pricing won’t eliminate congestion: if it did you wouldn’t collect any money. It may reduce congestion, it may spread out the rush hour still more, but mostly it will make the congestion we have more expensive and cause more people and more businesses to avoid the core areas. And as JAB notes we may have some more money, but we will have mad no appreciable progress on agreeing about priorities.

    I’m still in favor of it, but I expect the results to be different from how it is being sold.

    Even if poring more pavement does not reduce congestion, it still offers more throughput. You can make the exact same arguement about Metro: it has not reduced congestion, but it has increased throughput. So the measure should not be if a policy reduces congestion, but if it produces throughput that makes it worth the cost. On that basis congestion pricing fails, since its purpose is to reduce throughput, however it may make up for that by increasing throughput, and causing more efficient usage of, our other road assets.

  8. Ray Hyde Avatar

    Oh, and by the way, even people who never use the roads benefit from them, and they should pay, too.

    Otherwise, I have no children, anyone want to suggest that I shouldn’t have to pay for schools?

  9. James Atticus Bowden Avatar
    James Atticus Bowden

    Reducing congestion, improving throughput – both are fine with me.

    But c’mon Ray, show me the numbers! What project will the Senate fund and the House not fund? How much is it in Year One?

  10. Ray Hyde Avatar

    I don’t understand your question. Are you saying that part of the problem is that we can’t agree on priorities? If so, I agree with you.

    But maybe it is because there are so many priorities, and so many clientele. For some it is getting dirt roads paved, for others it is PREVENTING dirt roads from getting paved, never mind the runoff and erosion problems. For some, no road is ever the right road, or it is the road to ruin; for others any road is better than the one they are stuck on.

    Until we agree on what land is really worth saving, and what land is better used, and until we are willing to pay similar amounts for each, we are nowhere near reaching an agreement on priorities.

    Until we agree that achieving a balanced, flexible, convenient and inexpensive transportation system is incompatible with maximum density (of either housing or jobs) we will always have congestion.

    I don’t know about you, but I generally feel I have more space available to me than I have time. If I had to set a priority I would prefer to waste space than time.

  11. Anonymous Avatar
    Anonymous

    He also goes after cars, to spend money on non-car transportation needs. SO those who buy cars provide even MORE subsidies for those who take the train.

    They’ll never ask the train people to pay their real costs.

  12. Ray Hyde Avatar

    Anonymous is one hundred percent correct. If train riders had to pay their own true location related costs, 99% of trains would stop tomorrow. Every day I rode the train I paid $5.50 and someone else (driving a car) paid $9.90.

    I felt so guilty, that I gave it up as soon as I could find a job closer to where I lived.

    QED

  13. James Atticus Bowden Avatar
    James Atticus Bowden

    Ray, here is the question. If the Senate plan provides enough money and the House plan doesn’t, then what does the Senate pay for – name the projects and their first annual costs – that the House doesn’t?

    Thanks,

  14. Anonymous Avatar
    Anonymous

    JAB, that last one is sophistry and you know it. The day that the General Assembly or the Governor start picking projects, pack up the kit bag and move because the decline will begin. The department and the transportation board are far from perfect, but I prefer them making those decisions to the politicians cherry picking like congress. Give the board another billion a year and the list of projects will be long and perhaps might tie into a rational multimodal plan (legislature can’t do that.)

    Oh, and JAB, yes, there was a surplus. BUT YOUR GUYS SPENT IT ALL. IT’S GONE NOW. They put $600 million in cash into transportation and spent about $5 billion (with a b) of money on something else. That is just as much a “broken promise” as any charge hurled at the Governor.

  15. James Atticus Bowden Avatar
    James Atticus Bowden

    Anon: So name the projects that VDOT will fund or not. If you can’t say where the money will go, then you have no idea what you are buying and, ta da, the claim that one plan is enough and the other isn’t – is sophistry.

    My guys? If you mean the GOP, I concur most heartedly that the Republicans spent the surplus this year. They will spend the surplus next year, etc. Roll back the unneccesary tax increase of 04 to stop them.

  16. Ray Hyde Avatar

    I don’t see that as sophistry. It seems to me a legitimate question. We ought to be able to know where our money is going. The budget website is a big improvement, but more clarity is still needed.

    There are only two real parties, and they can share the blame equally, I’m sure. I don’t care which side is at fault. As long as I feel like something is not right I’m going to continue the TAIO policy: Throw All Incumbents Out.

  17. Anonymous Avatar
    Anonymous

    I cannot tell you where all the extra money would go, project specific, should the Senate plan prevail. But I can tell you (or direct you to long reports) that show how much additional money would go to secondary, urban and primary projects in general, by district and even by locality. I can tell you how much more would go to interstates and how much more to airports, rail, and the other multimodal categories. And you can go now to the VDOT website and mine down deeply into that six year plan that is now in place to see the details if you want. I’m sure Ray Hyde has been there. I suspect VDOT does have a list of projects waiting to add to that next plan should additional money appear.

    Trust me, you know more want the General Assembly picking all those projects than you want them trying to manage other executive branch agencies — and why they seem to want to do it is beyond me.

  18. James Atticus Bowden Avatar
    James Atticus Bowden

    The issue isn’t the GA picking anything. The issue is knowing where the money goes and which plans buy what – when. If you can’t specify that then you can’t make the case that more is better or essential – and definitely not worth the cost in jobs that new taxes always burden the economy.

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