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.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.

Staley is the author of several books, most recently co-authoring Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008). Texas Gov. Rick Perry aid Staley and Moore "get it right" and world bank urban planner Alain Bartaud called it "a must read for urban managers of large cities in the United States and around the world."

He is also co-author, with Ted Balaker, of The Road More Traveled: Why The Congestion Crisis Matters More Than You Think, and What We Can Do About It (Rowman and Littlefield, September, 2006). Author Joel Kotkin said, "The Road More Traveled should be required reading not only for planners and their students, but anyone who loves cities and wants them to thrive as real places, not merely as museums, in the 21st Century." Former U.S. Secretary of Transportation Mary Peters said, "Balaker and Staley clearly debunk the myth that there is nothing we can do about congestion."

Staley's previous book, Smarter Growth: Market-based Strategies for Land-use Planning in the 21st Century (Greenwood Press, 2001), was called the "most thorough challenge yet to regional land-use plans" by Planning magazine.

In addition to these books, he is the author of Drug Policy and the Decline of American Cities (Transaction Publishers, 1992) and Planning Rules and Urban Economic Performance: The Case of Hong Kong (Chinese University Press, 1994).

His more than 100 professional articles, studies, and reports have appeared in publications such as The Wall Street Journal, The New York Times, Washington Post, Los Angeles Times, Investor's Business Daily, Journal of the American Planning Association, Planning magazine, Reason magazine, National Review and many others.

Staley's approach to urban development, transportation and public policy blends more than 20 years of experience as an economic development consultant, academic researcher, urban policy analyst, and community leader.

Staley is a former chair for his local planning board in his hometown of Bellbrook, Ohio. He is also a former member of its Board of Zoning Appeals and Property Review Commission, vice chair of his local park district's open space master plan committee, and chair of its Charter Review Commission.

Staley received his B.A. in Economics and Public Policy from Colby College, M.S. in Social and Applied Economics from Wright State University, and Ph.D. in Public Administration, with concentrations in urban planning and public finance from Ohio State University.