Tag Archives: subsidized

Drivers pay less than what the roads cost

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One report suggests the gap between what drivers pay and what roads cost continues to grow:

A report published earlier this year confirms, in tremendous detail, a very basic fact of transportation that’s widely disbelieved: Drivers don’t come close to paying for the costs of the roads they use. Published jointly by the Frontier Group and the U.S. PIRG Education Fund, “Who Pays for Roads?” exposes the myth that drivers are covering what they’re using.

The report documents that the amount that road users pay through gas taxes now accounts for less than half of what’s spent to maintain and expand the road system. The resulting shortfall is made up from other sources of tax revenue at the state and local levels, generated by drivers and non-drivers alike. This subsidizing of car ownership costs the typical household about $1,100 per year—over and above the costs of gas taxes, tolls, and other user fees…

There are good reasons to believe that the methodology of “Who Pays for Roads?” if anything considerably understates the subsidies to private vehicle operation. It doesn’t examine the hidden subsidies associated with the free public provision of on-street parking, or the costs imposed by nearly universal off-street parking requirements, which drive up the price of commercial and residential development. It also ignores the indirect costs that come to auto and non-auto users alike from the increased travel times and travel distances that result from subsidized auto-oriented sprawl. And it also doesn’t look at how the subsidies for new capacity in some places undermine the viability of older communities…

The problem with the subsidies currently propping up driving is that they’re often hidden: If they were made more explicit, policymakers would likely rearrange their priorities. The problem of pricing roads correctly is one that will grow in importance in the years ahead. It’s now widely understood that improvements in vehicle fuel efficiency and the advent of electric vehicles is eroding the already inadequate contribution of the gas tax to covering road costs. The business model of companies such as Uber and Lyft likewise hinges on paying much less for the use of the road system than it costs to operate. The problem is likely to be even larger if autonomous self-driving vehicles ever become widespread—in larger cities it may be much more economical for them to simply cruise “free” public streets than to stop and have to pay for parking. The root of many existing transportation problems—and the problems to come—is that the prices are all wrong.

Americans like their cars and policies have reflected that for decades. But, owning the “average” car is not cheap – there are a number of expenses that many drivers would say consume a decent amount of their budget. The real issue may not be increasing the gas tax – and with gas as cheap as it is right now, this would be as good a time as any to fix that – or limiting subsidies. The real goal may need to involve having less need for cars and roads. Having electric cars might help society in some ways but it doesn’t solve the problem of paying for roads (see the pilot programs for a per-mile driven tax). Electric cars may enable sprawl to go on for decades.

In the end, perhaps we need to figure out to build and maintain roads more cheaply…or we are left with two options I imagine a lot of people (not necessarily the same ones) will dislike: getting cars off the road or upping the cost of driving by quite a bit.

Is not taking a health care subsidy from the government an effective form of protesting?

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At least a few Americans are refusing to take government subsidies for healthcare when they are eligible:

Her sentiment is unusual, but brokers say they do hear from clients who are eligible for subsidies – which are based on household income and not assets – but want no part of them. Health officials have been boasting that 6.6 million people have enrolled in health coverage through state or federal marketplaces created under the Affordable Care Act, but in sharp contrast stands a small group of Americans who say they want nothing to do with the plans, even if they would save money. Their reasons vary: Some are protesting Obamacare, while others simply feel it’s unethical to accept taxpayer dollars to pay for health insurance.

“It’s almost a philosophical or political statement,” says Gerry Wedig, a professor at the University of Rochester’s Simon Business School.

For Brewer, buying a plan on her own would mean she would not have enough to pay for housing, she says, so she chose not to be insured this year and will have to pay a penalty in her 2016 tax filing that is likely to be 2 percent of her income. She has no dependents, is healthy, does not use prescriptions and says she has been careful about her health choices, not overusing medical care…

Complicating the ethical question is that some people who qualify for subsidies based on their income could afford to pay their own way. “There is no question that we are enrolling people through these programs who would otherwise be considered middle-class or even affluent,” says Ed Haislmaier, a senior research fellow for health policy studies at the right-leaning Heritage Foundation think tank. “We are seeing people with enrollment in these programs that have significant assets, but for whatever reason – usually a temporary reason – fall below the income line.”

This sounds like an interesting form of protest. How many people turn down free money? Would the same people not take other tax breaks? While I understand the interest in standing on principle, I would want to ask two further questions: (1) how would anyone know that you are taking this stand (would these people go around boasting about their principled stands or encourage media attention?) and (2) is this an effective method for bringing about desired social change. It seems like this sort of stand might not go very far…

A few graphs suggest people in wealthier countries spend more on housing, less on food

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Look at some graphs of how families in different countries around the world spend their money and a few things stand out:

Two big ideas for the road: Houses and food. Everybody needs somewhere to live and something to eat. But you can learn a lot about a country by looking at housing and food spending. Here’s how the U.S., where middle-class families spend about a third of their income on housing, compare to the developing economies in this survey…
I don’t want to push this point too far, because these sort of surveys have obvious limitations. Tremendous income inequality in developing countries with hundreds of millions of people makes it impossible to tell the story of the frothy middle class *in one graph.* But the bigger picture is clear and uncontroversial. When families earn more income, they can afford to eat more and buy more clothes, but the real shift is from those essentials to bigger better houses, education, and health care.

Interesting. However, I wonder much of this differs by country based on political, economic, and cultural values. Clearly, items like food are necessary for survival. But once citizens reach a certain income threshold, I assume there are differences across countries in how they spend this more discretionary income. For example, in the United States, transportation is a relatively high cost because of a reliance on automobiles. Similarly, people in the US might spend relatively less on food but how much of this is due to policies that help keep food prices low? More broadly, don’t government policies affect whether people have to spend more in certain categories; for example, they might spend less out of their income for health care but if that is due to paying higher taxes which cover more health care costs, then such figures of discretionary spending might be misleading.

Perhaps this situation is ripe for a cross-cultural experiment. Go to different countries and give people a scenario: suppose you are given a decent sum of money (might differ by country) and then ask how people would spend that money. What emerges as a common need or want?

Time magazine cover: “One Nation on Welfare. Living Your Life on the Dole”

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This is an interesting cover story amidst the current election cycle and arguments about how much the government should be involved in day to day life: much of our current lives are already subsidized by the government.

Three things to note:

1. This story plays with what we mean by “welfare.” While there is a particular set of policies this typically refers to, the definition is expanded here.

2. While the two parties try to cast the other side as being on extreme, both parties want some government involvement. Democrats don’t want all of life run by the government just as Republicans don’t want no government involvement whatsoever. We’re talking about differences in degrees though this often gets cast as two different ideological poles.

3. I’m not sure Grunwald plays enough with the idea that while Americans may be okay with government funding certain things, they also tend to like local control over certain matters. In this sense, it is not just government vs. no government; it is “big government” in Washington versus “local government” represented by a local school board, park district, or municipality. The levels of government are important in this discussion as residents who pay taxes often want to feel like they still have some control over their tax dollars.