Transit Riders as Taxpayers
The Amalgamated Transit Union represents about 190,000 transit operators, most of them bus drivers. The union's members depend on a robust bus and transit system to keep their organization alive. But, as international president Larry Hanley will tell you, those transit systems also are essential to plenty of city dwellers, particularly those with lower incomes. Anyone who lives in a cheap suburb without a car probably depends on a government-funded bus service to get to work.
It drives Hanley crazy to hear lawmakers in Congress whine that it is impossible to raise taxes when local officials seem to have no problem raising transit fares. Hanley argues that increased transit fares make bus drivers de facto "curbside tax collectors." Commuters don't see fare increases as taxes, and they don't fight them as they might fight other local initiatives. ATU is trying to change that by launching a rider organizing campaign in each of its locals, asking commuters to petition city officials for transit systems (often buses) to get them from home to work and back easily without a car.
The campaigns are local, but they are driven by broad ideas about wealth distribution and workers and the role of transit in the economy. The union knows that without the riders, its own lobbying efforts aren't likely to go very far. After all, there are only so many bus and train drivers in the world.
Does it make sense to view transit fares as taxes? Are transit fares different from other "user fees" like gas taxes? If so, how? What should transit riders expect in return for their fares? Do transit riders shoulder a disproportionate burden of the cost of maintaining buses and railways? What is a fair price for an easy mass transit commute?
November 17, 2011 4:38 PM
End all federal transport subsidies?
By Gabriel Roth
Research Fellow, The Independent Institute
I find it difficult to agree with Bill Lind that road transport in the US is heavily subsidized,
However, be that as it may, would the American Conservative Center for Public Transportation agree with me that the federal government, which has run out of money, should phase out all subsidies for US transport?
November 16, 2011 4:29 PM
Fair Transit Fares and the Subsidy Issue
By Bill Lind
Director, American Conservative Center for Public Transportation
If transit is to be able to defend itself politically during a period of potential Republican dominance, it needs to be able to reply to the libertarian argument that it is subsidized. Of course transit is subsidized. But so are highways, a point libertarians either pass over or deny outright, despite the evidence.
According to Federal Highway Administration data, all highway user fees, including the gas tax, now cover only about 50% of the cost of highways. That number will continue to drop as gas tax receipts decline. To compete politically, transit needs to equal that figure. That is to say, fares need to cover about 50% of operating costs.
Here we see another advantage of rail over bus. On average, rail transit systems nationwide do cover almost 54% of their costs from the farebox. Bus systems do not. Their national average cost recovery rate is on...
If transit is to be able to defend itself politically during a period of potential Republican dominance, it needs to be able to reply to the libertarian argument that it is subsidized. Of course transit is subsidized. But so are highways, a point libertarians either pass over or deny outright, despite the evidence.
According to Federal Highway Administration data, all highway user fees, including the gas tax, now cover only about 50% of the cost of highways. That number will continue to drop as gas tax receipts decline. To compete politically, transit needs to equal that figure. That is to say, fares need to cover about 50% of operating costs.
Here we see another advantage of rail over bus. On average, rail transit systems nationwide do cover almost 54% of their costs from the farebox. Bus systems do not. Their national average cost recovery rate is only in the 28th percentile.
What this means is that rail fares are about right, but bus fares need to rise substantially, or the cost of running bus systems need to drop. Most of that cost is labor, which many transit systems pay too much for because of the power of unions. As is often the case, liberals face a choice here between the poor and the unions. Guess which one usually wins.
If a city or state decides to keep bus fares down in order to help the poor, it should do so with some sort of targeted welfare program, not by making the transit agency bear the cost. The same applies to paratransit for the disabled. Handling the bill to the transit agency creates ammunition for the libertarian transit critics, who point to the size of the subsidy transit then requires. When that greatly exceeds the subsidy to highways, transit is setting itself up for de-funding under a Republican President and Congress.
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November 14, 2011 8:54 PM
Transit fares should not be taxes
By Gabriel Roth
Research Fellow, The Independent Institute
I’ve known a number of bus drivers, including Dave Wetzel (an expert on land taxes) who became Deputy Director of Transport for London. I have much respect for them, but don’t agree that transit fares should be treated as taxes.
Fares are paid for a purpose, and payers expect something specific in return. Taxes are paid to help meet government’s general expenses, e.g., to subsidize rail service that displaces bus service, as happened in Washington DC. And it is indeed harder to raise taxes than fares, because most would rather pay for a specific service than pay a tax.
Transit riders in most US cities often pay too much, because regulations designed to protect unionized services deny travelers the alternatives of high-frequency, low-cost, seated, transport services provided by shared taxis or minibuses.
Such services are provided, without subsidy, in Atlantic City (legally); in parts of New York City (illegally); and in numerous urban areas worldwide. They also generate employment: Directly to those providing the service, and indirectly by improving urban transport.
Should not governments be stimulating public transport and employment?