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A better tax plan

Governor Patrick is displeased with our legislators. Instead of his 10 year, $13 billion transportation plan, supported by an increased income tax, the Legislature has put forward a more modest approach, making fewer promises for big projects and asking travelers to pay more of the costs of their transportation. However disappointing to Patrick, this more limited approach comes closer to how we ought to be raising money for transportation. Legislative leaders are dead right to expect commuters — not general taxpayers who would pay the income tax hike that Patrick proposed — to cover the costs of transportation infrastructure.

A key feature of the Legislature’s plan is a modest hike in the state gasoline tax. This approach, Patrick maintains, “taxes the middle class every time they pump a gallon of gas.” But drivers should pay for the costs of their roads. Taxpayers who rarely drive shouldn’t have to subsidize sprawl and long commutes. People will drive too much if they don’t pay for the social costs of driving, including the congestion, pollution, and highway deterioration.

Instead, America has long subsidized the automobile. Gas taxes were supposed to fill a federal trust fund used for highway construction. When gas tax collections fell short, President Obama signed a measure that added more than $16.6 billion in other revenue to the fund. Yet the effect of building more highways isn’t to reduce congestion, but to encourage more driving. The only way we can make our roads less congested is to charge people to drive, ideally with electronic tolls but also with gas taxes.

The House proposal to raise the gas tax and bring tolls back to the westernmost part of the Massachusetts Turnpike is a step forward, not backward. These roads may not be crowded, but they cost money to maintain. My rough estimate based on state data suggests that $1.50 per trip is needed to cover those expenses.


For years, transportation planners have taken a rise in the number of long-range commuters as an inevitable fact of life. Indeed, a 2009 study used such an anticipated increase as an argument for the long-proposed South Coast commuter rail line to Fall River and New Bedford. Yet that assumption need not be true. More people would live close to work if they paid the full costs of driving — especially if some farsighted Legislature also limited the local regulations that make it hard to build nearer Boston.


There are two obvious exceptions to the idea of making transportation users, rather than general taxpayers, pay for infrastructure. One is when a system has large fixed costs of construction and low costs of usage. The other is when a system serves a particularly disadvantaged population, such as the disabled, whom we want to make more mobile. The MBTA’s paratransit program exemplifies this second case for subsidy; the Legislature should ease the MBTA’s budget woes by separately funding that program. The MBTA as a whole meets both criteria for subsidy. It serves the poor and carless, and it has high fixed costs — which helps explain why only 32 percent of the MBTA’s budget comes from its users.

But the non-Bostonians who complain that outsiders pay too much of the system’s costs also have a point. The fairest way to embrace the “user pays” principle, while keeping fares low enough to reduce traffic, is to increase the portion of the MBTA’s budget that comes from local property assessments — and reduce the share that comes from statewide sales taxes. To the extent that statewide taxes are involved, they should be targeted towards the costs of poorer passengers, both in Boston and elsewhere. Addressing non-Bostonians’ concerns about subsidizing a system they don’t use will help get a fair transportation bill passed.

More local funding of the MBTA would also move us to a better dialogue about further rail extensions. If New Bedford and Fall River had to pay the full $1.8 billion cost of proposed South Coast line, they would be far less enthusiastic about it.


In any case, the Legislature is right to reject a vast transportation program funded by income taxes. Patrick proposed a significant gas tax hike in the past. And if the governor wants to spend billions on transportation infrastructure now, he should once again be open to a plan where drivers pay for the roads they use.

Edward L. Glaeser, a Harvard economist, is director of the Rappaport Institute for Greater Boston.