From: "Michael Smith" <p00004@psilink.com>
Subject: Re: Gas Tax?
Organization: Performance Systems Int'l
Date: Fri, 22 Jan 1993 22:16:41 GMT
X-Mailer: PSILink-DOS (3.3)

Much of the discussion of this issue has centered on the regressiveness 
of a gas tax, which is certainly a problem. But there is an additional 
issue, perhaps even more problematic, that hasn't been addressed: the 
fact that even in urbanized areas, housing and work are so dispersed 
that nearly everyone has to *have* a car. Once you *have* the car, then 
the marginal cost of a car trip can never be as great as the marginal 
cost of a transit trip, because the car is either paid for or being paid 
for whether or not you drive it, whereas your share of the capital cost 
of transit is paid for on a per-trip basis. 

Moreover, with a high coefficient of dispersal for workplaces, it 
becomes impossible to design efficient transit nets to serve even 
commuting trips (much less utility trips). 

The only market-based means I can think of to overcome the capital-cost 
problem are: 

1) gas taxes so ferocious that their regressiveness becomes a very 
serious problem, or 

2) paying the fixed costs of the transit net out of 
taxes, and charging people for a ticket only some sum related to the 
marginal cost their trip imposes on the net -- which would
be quite close to zero for trips outside rush hour, and still pretty low 
for trips in it. 

Method 2) is certainly better than 1), and makes sense in any case. But 
neither of these mechanisms addresses the technical diffculty of 
designing a transit net suitable for highly dispersed "urbanized" 
(really, of course, "suburbanized") areas.

So the only real solution seems to me a policy mix that re-concentrates 
workplaces and at least a good chunk of residences in ways that can be 
well served by transit. This may sound ambitious, but I think it's 
actually less ambitious than to try to lever people individually out of 
transportation arrangements that do in fact make sense for them given 
the actual constraints under which they operate.

What would this policy mix incorporate? Zoning that prevents suburban 
office development and channels new construction into central areas. An 
absolute freeze on new road capacity, and indeed some removal of 
right-of-way from cars and its reallocation to transit. Phaseout of the 
mortgage interest deduction, or (alternatively) a similar break for 
renters that makes the tax code neutral vis-a-vis the choice of 
apartment vs. house. Don't license people to drive until they're 21. Of 
course, beef up the transit net and the level of service, and lower 
fares through a mechanism like the one mentioned above, such that the 
cost structures of car-use and transit use are similar. (This has the 
advantage of being *progressive* in the sense that it actually *benefits* 
poor people, instead of punishing them disproportionately as a gas tax 
does.) A freeze on infrastructure provisioning for new suburban 
residential development. 

In areas where cars actually do make sense, like really rural areas, 
none of these measures would cause the kind of suffering that a gas tax 
sizeable enough to make a difference would do.

None of this, by the way, should be taken to imply that I'm *opposed* to 
a gas tax at, say, European levels. On the contrary. The regressiveness 
of a tax at such levels could easily be mitigated by some tax relief at 
the low end in the income-tax mechanisms. My point is that a gas tax 
high enough to produce really significant changes in transportation 
patterns would be, really, impossibly high, and that other mechanisms 
will have to be found for this purpose.

--Michael Smith


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