Urban Fold

Study Finds U.S. Motorists Do Not Pay Their Way

A new study by Mark Delucchi, research scientist at the U.C. Davis Institute for Transportation Studies, has found that "motor-vehicle users in the U.S. -- unlike users in most European countries -- do not 'pay their way.'"

In a new study entitled, "Do Motor Vehicle Users in the U.S. Pay Their Way?" Mark Delucchi, the nation's leading taxonomist of motor vehicle-related revenues and costs, finds that current tax and fee payments to the government by motor-vehicle users fall far short of government expenditures related to motor-vehicle use in the U.S..

Published in the journal, Transportation Research A, Delucchi's analysis indicates that US motorists are subsidized at a rate equal to somewhere between 20 to 70 cents per gallon of all motor fuel.

That implied subsidy, which excludes social and environmental costs such as climate damage and uncompensated crash costs, equates to 7 to 25 percent of the current price of gasoline. On a dollar basis, writes Streetsblog contributor and economist Charles Komanoff, U.S. drivers are underpaying local, state and national governments by $40 to $105 billion a year.

Full Story: Delucchi Study Finds That U.S. Motorists Do Not Pay Their Way



Forgetting where ALL the money comes from

As usual. Every cent that goes to road maintenance, etc. comes from taxpayers. Given that 99% of taxpayers use roads, I fail to see the point of the research, other than to lobby for higher fuel taxes. And before anyone starts, public transit is "subsidized" to a far greater extent than us "motorists."

Money where mouth is.

I fail to see the point of the research,

Perhaps because you failed to read the paper or the blog entry.

When small-minority ideologues decry TOD, transit, whatever, they do so because of the subsidies. Automobile transport is subsidized.

Therefore, you should be decrying auto transport.



The Elementary Economics Of Subsidies

In Economics 101A, they teach you why this sort of subsidy reduces overall well being. Here is a simplified example that explains the economic reasoning:

Imagine that the United States decides to provide free roast beef and steak for everyone, paid for by taxpayers. Even if chicken cost half as much as beef, and even if the average person preferred the variety of eating chicken half the time and beef half the time, people would virtually always eat beef rather than chicken, because they have to pay for the beef through taxes whether they eat it or not. In fact, people would say: "I wish I could eat more chicken, but I can't afford it" (even though chicken actually costs less than beef).

The result of this subsidy would be 1) people would pay more for meat than they would if there were no subsidy (because they pay indirectly through taxes rather than directly), and 2) people would not enjoy the meat they eat as much as they would if there were no subsidy and they could eat chicken as well as beef. Thus, even though 100% of all people pay the tax and eat the subsidized beef, those people are worse off than they would be if there were no tax and subsidy.

Now, apply the same reasoning to transportation. In many cases, it might be cheaper overall to drive to a local store than to drive a much longer distance to Wal-Mart, if you included the full cost of driving; the full cost of driving might be greater than the price saving at Wal-Mart. People might also prefer to shop locally rather than drive a long distance to Wal-Mart. But because driving is subsidized, it seems cheaper for them to drive to Wal-Mart, and they say: "I can't afford to shop locally."

Like the subsidy for meat, the subsidy for driving means 1) people pay more for transportation than they would if there were no subsidy (because they pay indirectly through taxes rather than directly), and 2) people's lives are less convenient than they would be if there were no subsidy and they could shop locally rather than driving long distances to Wal-Mart. Thus, even if 100% of all people drive and 100% pay the tax that subsidizes driving, people are worse off than they would be if there were no tax and subsidy.

This is the basic principle that free-market economists use to argue that a free-market is better than government control of consumption: the market leads to lower costs and gives people what they want. I don't see how anyone who claims to be a free-market conservative can ignore this elementary point.

Charles Siegel

Money isn't everything

Even in ECON 101 your teacher should have explained that price isn't the sole consideration influencing consumers' spending patterns. Just because something is subsidized, it doesn't always mean people will use it. If transit subsidies worked the buses and trains would be full. Even if beef were free many wouldn't eat everyday due to different tastes, health concerns, religious prohibitions or just for the sake of variety.

The reality is that there is a tipping point where we are willing to pay a higher price if we think a good or service has value. Most people drive because they already have car, it's easily operated and highly mobile except where traffic congestion is so bad people have opted for transit or moved away. Price arguments won't sway most people in a country where owning a car is almost considered a God-given right but in most countries only the wealthy have a car. Again, even without subsidies, some people choose to buy more expensive vehicles for their own reasons of perception of value even if they could have bought a far cheaper car to get from A to B.

ECON 101

There is a demand curve: as price increases more and more, consumers move further and further along the curve and consume less and less. There are different demand curves for different products: some of them are fairly smooth, others are very kinked so they have a tipping point where higher prices begin decrease demand more rapidly.

That is one of the key lessons they teach in Econ 101. It is consistent with your statement that people will pay more for products they consider higher quality, as any elementary textbook explains.

Yes, even if beef were free, people would sometimes eat chicken for variety (as a luxury). But are you seriously claiming that free beef would not distort this choice and leave them less well off?

Price arguments won't sway mosot people? Have you heard that, because of higher gas prices, VMT per capita declined in the last couple of years, for the first time since the 1970s, when VMT also declined because gas prices went up.

Charles Siegel

Everything money.

The reality is...[m]ost people drive because they already have car, it's easily operated and highly mobile except where traffic congestion is so bad people have opted for transit or moved away

This is an incorrect premise.

Most people drive in the US of A because it is relatively cheap, in addition to the easy mobility for non-discretionary trips [made possible by the inexpensiveness of auto operation and transport]. These are the actions of generally rational utility-maximizing agents.

Of course agents are not always rational, but as Charles points out, VMT dropped and transit increased last year because of the utility-maximizing impression that gas was expensive (Planetizen had a few stories on this phenomenon).

What do you think you would do if gas prices were similar to Europe's? Make fewer non-discretionary trips? Take transit to work, say, twice a week and optimize your utility and read while on the train (hopefully a book from the library, further maximizing utility)? Or would you not take transit because you would rather stare at bumpers while not moving as your engine purrs along, burning gas at a rate that takes you until your first coffee break to pay for it?



User Fees vs. Taxation

Greg, I would tend to agree with the posts below. I understand what you are saying, however, you might think of transportation as a utility of sorts. If you drive more and have a heavier vehicle, don't you think you should pay for your driving. After all, you wouldn't want to pay for my electric bill if I use the heat or AC all the time and run up huge electric bills.

However, it is also true that transit is heavily subsidized as well, even more as you suggest.

On top of that, we could discuss "external" costs of each method, but that would be a new topic.

Subsidies For Transit

I would say the ideal is full-cost pricing for all transportation, including external costs - no subsidies for either automobiles or transit.

The big issue that no one talks about is reducing the distances that people travel (as I say in my example below about driving to Wal-Mart vs driving to local shopping) and we can do that by eliminating subsidies to transportation.

Unfortunately, because we are not willing to make cars pay their full cost, it is necessary to subsidize transit to take some of the edge off of congestion.

Yet that means that the most benign forms of transportation get the smallest subsidies: virtually nothing to walking or bicycling, large subsidies to transit, and immense subsidies to the automobile (far, far greater than the subsidies to transit if you count external costs). Is it surprizing that so few Americans live within walking distance of shopping?

Charles Siegel

You fail to see

What I'm saying. And, yes, I did read the paper. I didn't "decry" TOD's, etc. I omly pointed out that, ultimately, every penny for roads comes from the people who use them, which is all of us, even if you don't drive. So, the idea that I don't pay my share is ludicrous.

As for the idea that larger vehicles should pay more-they do. By using more fuel per mile driven, they DO pay more in fuel taxes. In fact, the only one's who really don't pay their fair share, are those who only walk or ride a bike. They pay no fuel taxes for the roads/sidewalks they use. All of their other needs also use the roadsd, but I suppose whatever form of transport was used paid some fuel taxes anyway.

Who Pays For Roads And Sidewalks

"the only one's who really don't pay their fair share, are those who only walk or ride a bike. They pay no fuel taxes for the roads/sidewalks they use."

City streets and sidewalks are paid for out of cities' general funds, supported mainly by sales taxes and property taxes. I pay about as much in taxes as the average person in my city, but I use about one-tenth as much of the road space that those taxes pay for.

I also pay extra for the products I buy to help pay for the free parking that merchants provide, which I don't use.

Charles Siegel

Paying Through The Nose

"the idea that I don't pay my share is ludicrous."

Very true: like virtually all Americans you are paying through the nose for transportation in quantities that make your life less pleasant and less convenient.

I am glad to see that you are only objecting to the idea that you don't pay your share - not to the free-market policy of eliminating subsidies to the automobile, which would reduce the amount that you and other Americans drive (and so reduce the amount you have to pay for driving).

Charles Siegel

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