The One Consistent Principle in the Transportation Debate: Make the Other Guy Pay

Here’s the latest from Gov. Timothy M. Kaine has vowed to block a facet of the Republican transportation plan that would impose a tax of $.25 per $100 of assessed value on commercial real estate in Northern Virginia. The tax, which has sparked heavy opposition from local governments and business interests, is a “non-starter,” the Governor says. “Apartment building owners are very concerned about that because it would mean rent increases for many Virginians. It would have a devastating effect on affordable housing.”

You gotta love that NoVa business community. Those guys have never seen a tax hike they didn’t like — unless they have to pay it. Then they suddenly become concerned about the impact of the taxes — not on them, the magnanimous souls, but on the little guy.

As far as taxes go, the tax on commercial real estate in NoVa is relatively painless. The greatest part falls upon the major commercial tenants such as the federal government and government contractors who can pass on their costs to the federal government. Sounds perfectly reasonable to me. But some sliver of that tax would get passed on to apartment dwellers, and the Governor finds the prospect of higher rents to be unacceptable.

By contrast, Gov. Kaine does not find anything especially objectionable about higher motor vehicle sales taxes ($361 million in 2008), auto insurance premiums ($110 million) and auto registration fees ($108 million), all of which are included in his currently favored road-funding package.

Could someone please explain how paying higher rent is any more onerous than paying higher sales taxes, insurance premiums and auto registration fees? It all comes out of the same pocket. (As an aside: Is anyone besides me concerned about making auto insurance more unaffordable? Do we really want more people driving around without car insurance?)

The one principle that neither the NoVa business lobbyists nor Gov. Kaine seems willing to articulate is this: users should pay. Instead of taxing people for owning property, purchasing cars, registering their cars or buying auto insurance, we should require them to pay on the basis of how much they drive and when they drive.

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21 responses to “The One Consistent Principle in the Transportation Debate: Make the Other Guy Pay”

  1. Freedom Works Avatar
    Freedom Works

    Jim, I agree user should pay.

    One of the things that gets lost in the sock it to commercial property owners debate is that a lot of commercial property is already paying a real estate tax premium for transportation.

    The Route 28 Tax District and the Phase I Dulles Rail Transportation Improvement District are two that come to mind.

    How many overlapping tax districts are we going to impose on commercial property before it becomes a competitiveness issue?

  2. Roll Tide Avatar
    Roll Tide

    Mr. Bacon, Where does the money come from that the federal government and its contractors use to pay the rent?

    Also, while Virginia does not have a ‘when they drive’ tax, the gasoline tax comes pretty close to meeting your criteria for a ‘how much they drive’ tax.

  3. Jim Bacon Avatar
    Jim Bacon

    Roll Tide, that’s a fair point about passing on costs to the federal government. Someone pays eventually — it’s just a matter of who pays. I’m not going to defend the commercial real estate surcharge; I was only arguing with Gov. Kaine’s frame of reference: When the federal government pays, it’s someone other than Virginians who pay. From Kaine’s point of view, that’s good.

    Of course, what we need is a user pays system. Yes, the gas tax is closer to a user pays tax than the taxes on the table, but it has its defects. To see my thinking, read “The Oregon Solution.”

  4. Groveton Avatar


    Welcome back.

    I guess (and it is a guess) that renters generally have lower incomes than homeowners so a tax that affects renters could (repeat could) be considered regressive.

    However, this is beside the point. The point is:

    No jurisdiction in Virginia should subsidize any other jurisdiction in Virginia for anything.

    Show me an analysis of ALL taxes raised and ALL taxes spent by jurisdiction and I can say whether some new tax is “fair” or not. Until then – who knows? Not me and (I think analytically speaking) not you.

  5. Anonymous Avatar

    Freedom Works- The bill excludes the current tax districts as well as section 8 housing.

  6. Ray Hyde Avatar

    We should require them to pay on the basis of how much they drive and when they drive, and WHERE they drive.

  7. Ray Hyde Avatar

    “Someone pays eventually, it is just a matter of who pays.”

    The beauty of our system is that in the end the consumer always pays. It may be that the distribution of payments is not exactly as fair as if we had a strict “user-pays” system. It may also be that when you divide all the payments by all the people, and average all those payments according to benefit received, and allow for everyone who is trying to tax the other guy behind the tree, that the difference is miniscule.

    The difference might not even pay for the elaborate systems and accounting required to see that everyone pays exactly fairly.

    Assuming we can agree on what that is.

    I argued in the adjacent post on parking, that someone pays eventually. I’ve argued with regard to housing that someone pays eventually. I’ve argued with respect to roads, that road users pay eventually.

    I’m not even sure that trying to sock it to non-Virginians is good, because they are less likely to trade here as a result, and more likely to retaliate with trade tarrifs of their own. In the end the money goes round and round, and the disadvantages go round and round. And in the end, somebody pays; plus they pay for all the unnecessary bureaucracy involved in playing tit for tat.

    It seems to me that the problem is in balancing the general concept of user pays with the particular idiocy that follows from pursuing this idea to extremes.

    Otherwise, Bacon is right: we should tax people for using property, not for owning property.

  8. Larry Gross Avatar
    Larry Gross

    How about this concept: People should pay for what they consume.

    Why not tax each of us comensurate with how much resource we consume?

    I know this is such a radical concept… but hear me out…

    We do this for airline tickets, electricity, water/sewer, 42″ Plasma TVs… even cups of coffee at 7-11, etc, etc, et al.

    or let me make a counter offer –

    let’s equalize this concept to extend to airline tickets and 7-11 coffee.. elecricity, etc.

    You go right ahead and use whatever you think is the “right amount” for you – and at the end of the day – we’ll tally up the bill for everyone and split it equally right down to the penny.

    Fair enough?

    It would be such a relief to me. Right now, I fret everytime I hear that blamed furnace come on.. live in fear of the next electric bill.

    This way.. I just set that thermostate where I really want it and know that the rest of you guys will help me out when the bill comes.


  9. Ray Hyde Avatar

    “Why not tax each of us comensurate with how much resource we consume?”

    Isn’t that what a gas tax does?

  10. Larry Gross Avatar
    Larry Gross

    No – the gas tax does not. The gas tax was predicated on the theory that everyone would pay because everyone would need the same amount of road resource.

    The gas tax was never designed to charge proportionally …
    The guy who drives to work on a 2 lane road at 11pm in Farmville and the guy who drives every day at 8am in NoVa Rush Hour.

    Both guys are paying 37 cents a gallon for their respective road infrastructure but the guy in NoVa needs 12-lane interstates, Springfield Interchanges,etc.

    The more folks who want to drive at the same time – defined as “rush hour” – the more road capacity that is needed and this is what costs much, much more.

    Yet the gas tax – does not differentiate – it just assumes that every takes the same trip and that everyone should pay the same for that trip.

    If the gas tax were indexed then we’d be able to keep up with maintenance costs – and I agree that that should be done.

    But a 10 cent increase in the gas tax will only generate 500 million statewide. Even if NoVa got 1/4 of it – it would not buy squat in terms of new commuter-grade roads in NoVa. In fact, if you look at the 100 million per mile costs for the ICC – a 10 cent gas tax increase will likely buy NoVa about two miles of ICC-like roads.

  11. nova_middle_man Avatar

    Which is why once again NoVa wants to raise and keep its own money instead of going through the state unless of course you are talking about maintaining secondary roads the state should do that


    Tysons tunnel is a mess dont know who or what to believe anymore

  12. Ray Hyde Avatar

    “The gas tax was predicated on the theory that everyone would pay because everyone would need the same amount of road resource.”

    What? How is that?

    You drive more,you burn more gas. You drive more HP, you burn more gas. You drive heavier vehicles, you burn more gas.

    You logic on this post escapes me.

  13. Ray Hyde Avatar

    I agree about what you say about WHEN you drive, but that is only an issue in a few places. In those places congestion pricing should apply.

    The fact that the guy in NOVA needs 12 lanes has nothing to do with how much he drives, it has to do with how many people are driving, as you say, aththe same time.

    If you believe EMR’s 10X argument the road the guy in farmville is using actually costs more per user, because it is underutilized. The real purpose of congestion pricing is to help alleviate both too many people using some roads and too few people using others by shifting the competitive advantage of one over the other.

    It would be nice to think that congestion pricing results in less driving, but that isn’t clear yet. Even if it results in less driving, it isn’t clear that it results in less waste, overall.

  14. Larry Gross Avatar
    Larry Gross

    well…. the “few places” observation is an interesting take…

    IF .. the “few places” involves hundreds of thousands of simultaneous daily commuters and results in a need for 2 billion dollar bridges over the Potomac and 700 million dollar interchanges for Springfield…

    it kind of renders the “underutilized” roads issue for Farmville’s 7000 folks… what’s the word… MOOT?

    See.. part of the problem is is one lane of road can move anywhere from one to several hundred cars per hour – but you can’t save money by building 1/2 of a lane…

    so if that is the definition of “too much road” then perhaps we do need to go back and re-explore the 10x rule… ๐Ÿ™‚

  15. Ray Hyde Avatar

    The Potomac Bridge and Springfield interchange are part of Main Street USA – Rte 95. You cannot allocate all of that problem to commuters.

    If your argument is to compare those major projects with Farmville, then the issue is moot. But if you compare it with all of ROVA it isn’t.

    Put it this way. ROVA is grossly overinvested in roads. If NOVA was overinvested in roads to the same extent, then NOVA roads would be as uncongested as Farmville. Probably, if NOVA was as overinvested in roads to the extent that ROVA is, then the space required for all those roads would mean that NOVA extended nearly to Farmville.

    But why would we do that? Farmvillle already has excessive (read uncongested) roads. Why not just plan to make better use of the uncongested roads we have?

    Because we are afraid of sprawl and want to save open space. If that is the case then we need to spend a LOT more money fixing the problems in Urban Virginia. If we actually do that, then EMR’s 10X rule goes out the window, because we will need a lot more projects on the scale of Wilson Bridge and Springfield Interchange. Complexity adds cost.

    I wasn’t able to locate the statistics, (I think we have had that coversation here already) so tell me, what is the ratio of road miles to population in a place like Farmvill compared to a place like Centreville? How much of those road miles was paid for by people actually in Farmville?

    Parenthetically, I was able to find stats by county for road miles, road expenditures, and road usage – by county- for other states.

  16. Larry Gross Avatar
    Larry Gross

    Tis true that others besides NoVa use Wilson Bridge and the Springfield Interchange but how much as a percentage – on a daily basis “belongs” to true interstate flow?

    How many of those cars New York to Florida – bound?

    What percentage of those facilities are used by NoVa and Wash Metro commuters AND.. more important – would those very expensive projects have had to be built sooner rather than later because of the tremendous growth of rush hour commuting in the region?

    And you DO need MORE lanes if you want to move MORE traffic in a shorter amount of time. Each lane carries a finite amount of traffic.

    Unless you want rush hour to last for 7-8 hours.. you need many more lanes than you would need in Farmville.

    I would liken NoVa to be like a large manufacturing plant somewhere and at every shift change there is a massive but short-lived traffic jam.

    Only in NoVa – the jobs are EVERYWHERE – but everyone still gets out at about the same time.

    At 2am – there are miles and miles of empty lanes of very, very expensive roadway – not being utilized which makes Farmville’s “under-utilized” roads pale in comparison.

    Would you not agree?

  17. Ray Hyde Avatar

    I think the Woodrow wilson bridge basically got pounded to pieces by heavy interstate truck traffic. Commuter travel was the least of its problems, but it would have needed replacement anyway.

    “Unless you want rush hour to last for 7-8 hours.. you need many more lanes than you would need in Farmville.”

    Right. And if Farmville/ROVA had the same amount of lane miles compared to traffic as NOVA has, then they would be stuck in rush hour, too, except they would probably be stuck in their pasture.

    Unfortunately, the jobs in NOVA are not everywhere: they are highly concentrated in a few spots. If they were located everywhere, there would be a lot less congestion, and people would travel less. But, even if you magically managed to sprinkle the jobs evenly over the region, tomorrow, it might take a long time to see the results.

    “At 2am – there are miles and miles of empty lanes of very, very expensive roadway – not being utilized which makes Farmville’s “under-utilized” roads pale in comparison. Would you not agree?”

    Ever try riding Metro at 2am? Talk about expensive and underutilized. Every transportation system has a peak-capacity / rush-hour problem. Even the airlines.

    No, I’m not sure I agree. Look at it any way you like. Farmville/ROVA roads are underutilized, or else they have built and provided far more lane miles per person. Where do you suppose the money came from? Poor farmers?

    People who live in Farmville/ROVA have sense enough to be in bed at 2am.

    In TBC there are always a few people who need to drive at 2am. It is the same phenomenon as your example of the grocery refrigeration specialists. Even so, the lane miles are under utilized, and there are a lot of them. Even though there are a lot of them, they are not as many as Farmville/ROVA, compared to population. That is why they are so heavily used during “rush hour”. If they are heavily used during rush hour, compared to Farmville / ROVA, then there is no reason to think that they are not also used more than Farmville/ROVA at 2am.

    The real difference is that in Farmville/ROVA new roads cost a lot less. They are fewer lanes, less complex,and the land is cheaper. In Farmville/ROVA there is some possibility that you will be able to buy land/house at a reasonable price and still be close to your job “downtown”.

    Even if EMR is right, and you do waste your 10X dollars, the result is that you get more bang for your buck. Fewer people sort themselves out quicker. They have more places to disperse to. Even if everybody is going “downtown” there isn’t miles and miles of downtown to get criss-crossed up in.

    Basically, you’d have to be stark raving mad to put either more jobs, or more roads in some areas of NOVA. It is far more cost effective to go to Farmville/ROVA and use those underutilized roads.

    Especially since NOVA already paid for them.

  18. Larry Gross Avatar
    Larry Gross

    “Ever try riding Metro at 2am? Talk about expensive and underutilized. Every transportation system has a peak-capacity / rush-hour problem. Even the airlines.”

    hmmm.. I thought they just shut down … and did not run empty trains or planes…


    re: RoVa/Farmville roads.

    Since they were probably built 50 or more years ago .. back when NoVa was fact essentially RoVa itself also…

    I suspect that way back when.. there was likely more equity and parity statewide in terms of local economies and their respective tax contributions for roads.

    I’m not sure when Virginia decided that some places where richer than others and therefore NoVa should pay more but I strongly suspect it was way past the time when most rural roads and State connecting roads were built.

    All of this focus … and discussion on .. essentially why it is RoVa’s “fault” for NoVa’s traffic congestion.. leaves me with the impression that some folks believe that NoVa’s traffic congestion is the fault of RoVa.

    Essentially.. it appears that NoVa would prefer to blame others rather than deal with it’s own issues.

    Even now – when the existing funding streams are dedicated to maintenance – some NoVa folks continue to argue about “their share” of the funding that is non-existant

    .. and insist that new funding should come from RoVa to make amends for past allocation wrongs.

    The solution to that all along has been to self-fund .. and to actually oppose NEW statewide increases because they continue the unfair allocation practices of the past.

    But it sometimes seems to me that rather than NoVa looking forward and taking more responsibility for their own destiny.. they still want to natter about the past….

    It’s like .. “yes we want all of those new jobs… and all the nice economy that goes with them but it’s RoVa’s fault that we have congestion.


  19. nova_middle_man Avatar

    One other pro for metro they use congestion pricing

    You pay more during rush hour than during off peak

    I do agree that metro only makes sense in very few cases

    The silver line is a giant pork barrel project

  20. nova_middle_man Avatar

    No one wants to take responsibilty in NoVa

    Gerry Connolly is exhibit A

    whine Dillon Rule
    whine State not providing
    whine whine whine

    Well do something about it.

    Prince William did by buidling its own roads and as Larry said they also adopted the best option of keeping more money at home and less to the state. They want to assume responsibilty for taking care of themselves.

  21. Ray Hyde Avatar

    My point was that it is shut down and you CAN’T ride the Metro at 2 AM. The cost clock is still ticking though, therefore it is expensive nad underutilized.

    As for planes, if you have a scheduled flight, you are required to fly it, if possible. I once flew to Jackson Hole on a 727 with four passengers.

    NOVA is kidding themselve if they think they can get more money from ROVA. ROVA is kidding themselves if they think they are getting part of funds raised by NOVA and dedicated to NOVA.

    “The solution to that all along has been to self-fund .. and to actually oppose NEW statewide increases because they continue the unfair allocation practices of the past.” Agreed. Except that self funding for ROVA is going to mean they pay more than in the past, and they will see that as a tax increase they bear to benefit NOVA, whether it is true or not.

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