Would Eliminating Road Subsidies Encourage Transit Use?

Not only are transit systems subsidized, but so are America's roads. While some advocate for the reduction of road subsidies to better incentivize transit use, Josh Barro argues for more effective ways to make mass transit work better.
July 15, 2012, 9am PDT | Andrew Gorden
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Barro, writing in City Journal, points out the sometimes conflicting arguments regarding transit subsidies versus those of road subsidies, finding that roads require a much lower subsidy than transit, at ~8% and ~41-55%, respectively. "More important is that the 41-to-55-percent figure is misleading: it refers only to the cost of roads, not to the total cost of driving," says Barro, "[t]hat total cost includes not only public spending on roads but also a host of private purchases-of cars themselves, maintenance, gas, and insurance."

"All told, then, $1.08 trillion was spent on road travel, with government subsidies providing only $83 billion of the total. That's a subsidy of less than 8 percent," writes Barro, who argues against the commonly-held concept that eliminating these subsidies will encourage greater transit use. "An end to road subsidies would raise gasoline prices by about 50 to 60 cents a gallon. Over the last decade, fuel prices rose much more sharply than that, which led to a modest reduction in vehicle-miles traveled, but there hasn't been any sea change in our transportation practices."

Instead, he argues for a drastic change in the way Americans approach planning and zoning. Leveraging the fact that properties near transit increase property values and, therefore, property taxes, Barro believes "[c]ities should allow dense development, collect the property taxes that are generated, and use them to finance transit."

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Published on Thursday, July 12, 2012 in City Journal
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