Tuesday, June 26, 2007

Congestion Tax No, Fee Yes

I met Saul Weprin, who was David Weprin's father, in 1991 when I briefly worked on the staff of the New York State Assembly. Saul, who later became speaker, was chair of the ways and means committee.

David Weprin is a member of the New York City Council. He has an op ed in the June 25 NY Sun about Mayor Bloomberg's plan to tax vehicles that enter mid-town Manhattan. He argues that the tax will cost commuters as much as $2,000 per year and firms as much as $5,000 per year, devastating them financially and forcing them to take the subway, which Weprin does not mention is in terrible shape after 70 years of city and state management.

Weprin is right that Mayor Bloomberg ought not to raise taxes when the bulk of industry has already fled New York and the rest is likely to do so. Weprin is wrong if the tax is really a use fee aimed to capture the costs that motor vehicles impose on the public in the form of congestion and pollution. A nation-wide use fee would be preferable to a tax aimed to shield the Mayor's wealthy friends from traffic.

Mayor Bloomberg's congestion tax proposal needs to be viewed in light of the paradoxes and unintended effects that government subsidies create. In the 1930s the city took possession of the previously private subways and allowed them to deteriorate. In the 1950s and 1960s, the federal and state governments, coordinated by Robert Moses, subsidized interstate highway construction and guaranteed loans for suburban single family home construction. New York City responded to the deterioration of its tax base because of "white flight" (that resulted from the federal subsidies to interstate highways and single family homes) by raising taxes. By the 1970s, the city was in a major state of deterioration. This is evident in movies made from 1965 to 1990 or so, such as Martin Scorsese's Taxi Driver.

Subsequently, the city had a rebirth that Mayor Koch conceived and that was delivered under the Giuliani administration whereby increased emphasis on law enforcement, subsidies to real estate developers, high taxes and low-quality services maintained an equilibrium of special interest pressure groups (unions, service industries, the welfare industry). The Koch-Giuliani model permitted the very affluent to develop the city into a consumer center but also permitted those on welfare to to remain. Those with jobs that led to average or above-average incomes (ninety percent of the American population) left, with some continuing to work in the city as commuters. High-margin service firms could continue to function, but many of their employees could not afford rent, which, even in nearby places like Brooklyn and Hoboken that were once butts of jokes, is now often five times the national average.

Now, Mayor Bloomberg suggests a commuter tax that would dissuade vehicles from entering the city without addressing the stratospheric taxes and other city policies that have forced firms to leave and that encourage commuters to avoid the subways.

If commuters choose to take the subways instead of driving, they will incur significant psychic costs. If commuters choose to drive, they will have to pay the congestion tax on top of the already very high taxes. This is likely to stimulate further exodus of business from the city as commuters demand higher pay to compensate for the increased costs (psychic or financial) of commuting.

While avoiding taxes, the nation should consider road-use fees to fund all highway and local street use. There is no reason why the public should subsidize drivers and consumers of trucked merchandise. However, such a fee should be applied based on computer monitor-based charges and should not favor one economic class over others, as Mayor Bloomberg's proposal would. Heavier drivers and trucks should pay larger fees. Those who do not have cars and who consume less, i.e., the poor, should not subsidize the wealthy.

1 comment:

USpace said...

I think Mayor Nanny Bloomie is a very arrogant man. I also highly doubt he rides the subway that much. He's the mayor, I want someone driving him around so he can work and make calls and stuff. New Yorkers shouldn't want him wasting all that time on the subway.

We all have to wonder what Bloomberg is really thinking of with this congestion pricing tax scheme. Maybe he mostly just wants a new tax. Just wrap it up in ‘concern for the environment’, and then people can just demonize those who oppose it.

If he cares so much about traffic jams, congestion and air pollution, why does he let Park Avenue be blocked off? Why doesn’t he do anything about that?

It's true, Pershing Square Restaurant blocks Park Avenue going South at 42nd St. for about 12 hours a day/5 months of the year! This Causes Massive Congestion and Air Pollution!

But apparently it does not bother NYC’s Nanny-in-Chief Mike “Congestion Pricing Tax” Bloomberg?

It certainly supports his claim that the city is hugely congested.

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Little Blue PD