Reason TV on Cap Bikeshare

[jabberwocky]

Against the “gas tax as user fee” argument, this is a good study: http://uspirg.org/reports/usp/do-roads-pay-themselves

[lordofthemark]

@DismalScientist 23228 wrote:

I haven’t claimed that the gas tax is set at the right level, just that it may be the best, if imperfect way, to impose a user fee.

My jargonized answer for lordofthemark is that I see no empirical evidence suggesting the long run elasticity of gas tax has a different sign that the short run elasticity. In English, I doubt that raising the gas tax would induce sufficiently higher mileage cars that the increase in tax would result in a net reduction of revenues. Remember that much of the potential revenue comes from trucks moving stuff around the country. I doubt that there is much room for greater efficiencies in these vehicles.

The collection of gas taxes is relatively anonymous from the perspective of the driver. I don’t want to tell the government how much I have driven every year.

1. IIUC there is currently further research going on on the elasticity of VMT wrt to gas prices. The a priori reason to think its higher in the long run are due to the slow turnover of the vehicle fleet. Also, IIUC, there are differences in gas mileage among differerent trucks. There is also room for economies in truck operation, including changing the number of empty miles by changes in head haul vs back haul rates.

2. The govt can treat the odometer readings as confidential for revenue purposes only, with firewalls, etc. I fully understand many people will not trust that. But if thats the case, then there are larger problems with income taxes, census records, etc. It seems to me the cost benefit on this is pretty strong.

[lordofthemark]

http://economics.about.com/od/priceelasticityofdemand/a/gasoline_elast.htm

“One such study is Explaining the variation in elasticity estimates of gasoline demand in the United States: A meta-analysis by Molly Espey, published in Energy Journal. Espey examined 101 different studies and found that in the short-run (defined as 1 year or less), the average price-elasticity of demand for gasoline is -0.26. That is, a 10% hike in the price of gasoline lowers quantity demanded by 2.6%. In the long-run (defined as longer than 1 year), the price elasticity of demand is -0.58; a 10% hike in gasoline causes quantity demanded to decline by 5.8% in the long run.”

[DismalScientist]

@jabberwocky 23229 wrote:

Against the “gas tax as user fee” argument, this is a good study: http://uspirg.org/reports/usp/do-roads-pay-themselves

This study largely finds that, in practice, gas taxes have not been treated as user fees by politicians. It’s certainly difficult to argue with that. However, I don’t think that I am arguing that gas taxes have been treated as user fees. Certainly, a tax as a user fee would not be collected at the federal level and doled back to the states under a variety of conditions, many related more to politics than transportation needs. Transportation is generally a local issue and should be decided and funded (including those folks just passing through) locally.

At a quick glance, the study presents a strange contradiction, sometimes advocating pricing of transportation assets for users (e.g. toll roads), but at other times advocating divorcing transportation investments from specific dedicated funding sources (e.g. investing in efficient systems regardless any particular funding source). The problem with delinking investment in specific facilities with a demonstrated willingness-to-pay for these facilities by users (i.e. user fees) is that means these issues will be decided by politics and all the distortions that can introduce. Certainly, if transportation issues are decided by politics, I would advocate that this be done on as local level as possible.

[DismalScientist]

@lordofthemark 23234 wrote:

http://economics.about.com/od/priceelasticityofdemand/a/gasoline_elast.htm

“One such study is Explaining the variation in elasticity estimates of gasoline demand in the United States: A meta-analysis by Molly Espey, published in Energy Journal. Espey examined 101 different studies and found that in the short-run (defined as 1 year or less), the average price-elasticity of demand for gasoline is -0.26. That is, a 10% hike in the price of gasoline lowers quantity demanded by 2.6%. In the long-run (defined as longer than 1 year), the price elasticity of demand is -0.58; a 10% hike in gasoline causes quantity demanded to decline by 5.8% in the long run.”

Right. Assume taxes constitute 25% of the price (this may be an overestimate, but I use it for illustrative purposes only) A 40% increase in the tax would increase after-tax price of gas by 10%, which reduces long run consumption by 5.8%. On net tax revenues increase by almost 32%.

Note: when I used the term elasticity in the first post and how it would not change sign, I meant the elasticity of tax revenues with respect to tax rates, not the elasticity of consumption with respect to price (or tax rates, for that matter).

[JeffC]

Just watched that video. What an annoying commentator. It’s all gotcha fist pumping journalism. I used to subscribe to Reason magazine a few years ago but got tired of it for the type of product this video represents. In fairness to them, their magazine is better but that video was a joke.

I generally agree with the tenor of others’ comments that the price of electricity does not represent the true costs. We don’t pay up front in dollar amounts for the environmental harm, the wasted productivity from gridlock, the obesity from lack of exercise, and ignore that we have sent the US military around the world to secure world energy supplies. Factor that in and ask how much energy should cost.

[Mikey]

Roads cost money to repair, heavy trucks do the most damage to roads, they should pay.

Bike trails need repair too, mostly from those darn tree roots. I say we tax those maples, elms, and poplars that are rutting our dear trail network. Oh and don’t get me started on the gophers!:rolleyes:

[dasgeh]

Don’t forget that, at least in the short run, gas taxes are regressive — people with more capital at hand can “trade up” to more fuel efficient cars faster, allowing them to pay less for the same number of miles traveled.

I don’t agree with the premise that user fees are the best way to fund infrastructure. Yes, infrastructure (like roads) benefits the individuals using it at any given time, but it also has benefits for the greater community. Even if I never drove a car, then fact that firetrucks and police cars can drive on roads and arrive at my house quickly, in case of emergency, and the fact that trucks can move goods from factories and to stores, benefit me.

I believe that there are certain things that the government (or the people collectively) should pay for without user fees. Transportation infrastructure (roads, bike paths, etc) is near the top of that list for me. Yes, politics and collective payment introduce some inefficiencies, but I think that process is better than the alternatives at reaching an end result that is fair and does the greatest good for the greatest number. I do think user fees (like a gas tax) can be useful for incenting behavior, but the goal shouldn’t be to pay the entire cost of the expenditure.

In other words, I think the whole “cyclists don’t pay for bike paths” is a red herring argument that we shouldn’t be baited into. But then again, some may call me a “liberal”. I say thanks.

[Author]

Posts