Tolls More Fair Than Sales Taxes to Pay for Roads

One of the more important policy arguments around highway tolling revolves around whether tolling and toll lanes are fair. Many people presume that tax-funded transportation is more fair because can be higher compared to income and general purpose highways allow for equal access (even if the performance is very low because of congestion). A new study by Lisa Schweitzer at the University of Southern California and Brian D. Taylor at UCLA cast doubt on these assumptions.

Schweitzer and Taylor analyzed household data in Orange County and users of the 91 Express Lanes (the nation’s first HOT lanes) to examine the equity implications of tolling. Their results are reported in a very accessible summary article in the Spring 2010 issue of Access magazine publisehd by the University of California Transportation Center.

In short,

We found that switching from tolls to sales taxes would shift the burden of paying for the road from users to non-users, and away from middle-income people and onto both the rich and the poor. People in the poorest households in Orange County almost never use the 91 Express Lanes. So while few of the poor enjoy the time savings of travel in the tolled lanes, they also don’t pay for the road space that benefits others. But these same poor households pay up to 4 percent of their income each year in sales taxes. Had the lanes been financed by a sales tax, Orange County’s poorest households would have paid over $3 million of the $34 million needed to fund the facility in 2003. The richest households, for their part, would lose the most in absolute terms, because they buy lots of goods and services subject to sales taxes.

But, since nonusers pay most of the sales tax, the burden shifts to the lower income groups without toll financing.

In conclusion, Schweitzer and Taylor write:

Our examination of the 91 Express Lanes in Orange County, California finds that transportation sales taxes are doubly unfair. They disproportionately burden the poor and those who drive little or not at all. We find that the heaviest users of the 91 Express Lanes—and the largest beneficiaries of them—are primarily from middle- and upper-middle income households both inside and outside of Orange County. From a regional planning perspective, funding freeway capacity with sales taxes is a pro-auto/pro-driving policy that taxes all residents, rich and poor alike, to provide benefits to a much smaller group of drivers and their passengers.