. . . any politically tolerable carbon price, enacted by cap-and-trade or tax, would add mere cents to the price of a gallon of gas. I don't remember the exact data point, but I recall George Bush railing against Lieberman-Warner by saying that it would add 40 cents to the price of gasoline by the year 2020 (or something like that). At a time when prices were rising by well over a dollar in a matter of months, this was not a particularly frightening statement.But people hate the idea of expensive gas, and it could be the case that even a small potential increase in prices would make it more difficult to pass a carbon price. For this reason, some greens (Dave Roberts, for instance) argue that a carbon pricing system should exempt transportation. I disagree -- the idea of pricing is that emission reductions will occur in difficult to predict places, which makes me extremely reluctant to exempt such a large sector of the economy -- but I understand where he's coming from.
But the most important thing to understand about the above is that consumers are far more vulnerable to market-driven swings in the price of gasoline than they are to regulation-driven changes. Any potential government-engineered gas price increase pales in comparison to the spike markets delivered in 2007 and 2008.
There are two things about this that trouble me. The first is that Ryan and I may conceive of a 40 cent increase in 2020 as trivial. On the other hand, I don't drive to work every day, and when I do, my commute is three miles each way. Traffic is a vastly bigger problem for me than the cost of gas; I fill up my tank about once a month. For households out in the Great Beyond, a permanent 40 cent a gallon increase is quite a lot--particularly if the 2008 prices were a bubble, and the permanent cost of a gallon of gas is more like $2.00.
Second, if Ryan is right, why are we doing this? It did take a lot of increase to change driving behavior, which is why in Europe, taxes can account for as much as 90% of the price of a liter of gas. There's a plausible argument that a 40 cent tax won't do much to change driving habits. But then, why have the 40 cent tax at all? If you have a Pigovian tax that doesn't alter the production of the externality, cap and trave starts to look a lot less like controlling our carbon emissions, and a lot more like taxing people who aren't Ryan Avent and Megan McArdle to top up government revenue.
Is there a non-controversial bottom line in how much cap and trade will cost the average American?
I got confused by all the GOP/MIT kerfuffle over what percentage of the cost was really a disguised tax, what percentage of that disguised tax would be returned to taxpayers as a rebate, and what percentage would be spent on other governement projects.
Why not just set the gas tax to automatically adjust for inflation, and apply the adjustment since the last rise? That covers the "tax for revenue".
Then see if that affects driving. Then raise as necessary, slowly (say a quarter a year), to the point it does. That way people have time to make any necessary adjustments.
Interesting to note that driving seems to still be far below where it was before prices spiked. Permanent effect?
The problem with that is that it is politically impossible. Can you imagine trying to sell a tax that automatically increases every year? I mean, its difficult enough to push through a one-time tax increase in the face of Republican and moderate Democratic opposition. Pushing through a recurring tax increase would be well-nigh impossible.
Thats the problem with pricing in externalities. To convince the people who actually have to foot the bill, you better show that you use that money to do something for said externality. Saying that putting another tax on something will magically make the problem go away is not going to convince many people.
It occurs to me that from an environmental stand point, one should always buy the cheapest available choice. It is cheapest because it uses the least resources. A cheap product might be made at some factory in India that does not have the best emission controls, but I'm certain that the workers did not take a car to work.
... to the company that manufactures them. If the good in question has costs to others, like a pollutant does, it won't be reflected in the price unless it's taxed.
Out here in the "Great Beyond," none of these ideas makes any sense. Gas tax? Isn't it already too high? High speed rail? Who uses rail? There is a massive disconnect between the social structure (and city planning fundamentals) between the high-density coastal areas and the sparsely populated, huge swath of land between the mountain ranges. In something like 80% of the country, the structure of cities, towns, and life in general is utterly dependent on the car. This is why in the Midwest, Yglesias' obsession with HSR and mass transit seems completely nonsensical and unrealistic.
As Charles Krauthammer has pointed out, a high gas tax (perhaps one that also adjusts for other rises in gas price) reduces driving, thus reducing our dependence on foreign oil (fungibility aside, using less oil means using less foreign oil), thus enhancing security. This is in addition to any extra funding it may raise to keep roads paved and such.
Somehow I doubt that making people poorer and less mobile is going to enhance our security.
If you were to succeed in reducing driving and, therefore, reducing demand for gasoline, you would reduce demand for oil and, therefore, producers would earn less from selling a barrel of oil. As the market price of a commodity decreases, the higher cost producers are forced out of the market first. That means, US domestic production would decrease and the consumption of foreign, lower cost oil would increase. Consumers may pay more if the government decides to levy higher taxes on a gallon of gasoline, but the low cost producers of oil(i.e. Saudi Arabia, etc.) would gain market share at lower price levels. I'm all for reducing our dependence on foreign oil, but it isn't as simple as tax proponents and other liberals want to make it.
While it may be 80% of the *area* of the country, it certainly isn't anywhere near 80% of the population.
And I think what Yglesias is trying to point out is that having "the structure of cities, towns, and life in general utterly dependent on the car" is a really, really bad idea in some places. I mean, in the plains states, sure. But if you've ever lived somewhere like Atlanta or LA you very quickly realize that endless suburban sprawl and no transportation options other than driving is a nightmarish design that we should really be trying to get away from, especially since it's pretty likely gas isn't going to stay at $2 indefinitely.
Is there a giant "undo" button that makes Los Angeles vanish in a puff of smoke, or at least reconfigure into a dense, mass-transit friendly urban zone?
If not, then what are you going to do? Impose a transitionary tax structure that destroys existing suburban-structured cities in the hope that the next city that forms will meet the ideal layout?
The other thing you've got to consider is that sprawling suburban cities like LA don't form because of some evil conspiracy to suck gas away into automobile transportation, they form because people like having houses and yards with a tree or two, without giving up the convenience of having a supermarket and a big-box store less than 20 minutes away. When lots of land is available to enable it, that's what forms. Dense cities are not a default configuration; they are an artifact of a commercially viable region coinciding with land scarcity. The average person accustomed to the comforts and convenience of suburban living, and willing to make the commuting trade-off to have it, is not going to willing adopt a Manhattan lifestyle tomorrow morning just because some well-meaning central planners think it would be a great idea for reducing carbon emissions.
"If not, then what are you going to do?"
There's certainly not a magic button. Nor do I have a convenient proposal for fixing LA traffic. But I do think it's worth discussing what the ideal city layout is, and I think it's a lot closer to Portland or Denver than LA.
"When lots of land is available to enable it, that's what forms."
You're certainly correct here. Atlanta keeps expanding and expanding because there's room for it to. But at the same time the policies have been terrible and completely failed to cope with this expansion. MARTA barely goes outside 285, 400 and the top end are among the most crowded roads in the country, etc. So perhaps some regulations are in store to make sure messes like that don't form since they appear to form naturally in the absense of any regulation.
"The average person accustomed to the comforts and convenience of suburban living, and willing to make the commuting trade-off to have it"
I assure you there's nothing comforting or convenient about a 90 minute commute. And to be honest there's not much convenient about the suburbs they commute from either. That big box store 10 miles away can take 45 minutes to get to in many Atlanta suburbs, and having to drive your kids everywhere isn't that great either.
In a lot of cases the reason they're there is because the schools are better and there's low crime, and the more people with well-paying jobs that move there the greater the disparity is. It's a spiral that leads to places like Atlanta and Detroit where you can pretty easily draw a line on a map between the white and black parts of town.
"is not going to willing adopt a Manhattan lifestyle tomorrow morning just because some well-meaning central planners think it would be a great idea for reducing carbon emissions."
The choices aren't between Atlanta hell and Manhattan not-needing-a-car-ever. You could still live in your convenient suburb and actually have a train you could take to work. Or you could build more office areas in suburbs to cut down on commutes. There's a lot of things you could do besides just ignoring a big problem.
What I was trying to get at was not just intracity travel, but intercity travel being a problem. Increasing the gas tax might (or might not) push people in the Midwest back into the cities out of the suburbs, fine. But the Midwest (and Rockies and Southwest) have no tangible intercity transport other than highways, so a gas tax hurts those areas more than it does on the coasts, where intercity mass transit systems are much more well-established. It's simply not feasible right now to develop HSR or even LSR between every city and town in the country.
I agree with aMouseforallSeasons. Again (see below), I would rather have an increase in gas tax (20-30 cents would be hardly noticeable compared to the dramatic upswing seen previously) that does not revolve around a cap and trade, but specifically addresses the transport problem by increasing the DOT budget to address the infrastructural problems of the transit systems in this country. The tax revenue could be used both the repair the aging interstate/road systems (desperately needed in multiple states) as well as research/develop/implement new transit methods. In Atlanta, which is huge with an even bigger tax problem, MARTA goes a long way to solving the problem. Further development of that type of system, as well as rail, etc, would not only help reduce Carbon emissions but increase industrial/commercial productivity
"In Atlanta, which is huge with an even bigger tax problem, MARTA goes a long way to solving the problem. Further development of that type of system, as well as rail, etc, would not only help reduce Carbon emissions but increase industrial/commercial productivity"
Yeah, I think this is well-said. You don't need to drastically overhaul Atlanta to improve the situation, just do stuff like this. The NIMBYism that keeps MARTA out of Cobb and Gwinnett is just ridiculous though.
Might as well punish those flyover zone redstater bible/gun clingers.
"I won."
I have good horsemanship skills and the room to keep one.
Ah, but you don't realize, Megan, that it is imperative to enact taxes wherever possible to try to force people to live more like Megan McArdle and Ryan Avent. Because our idiotic system allows the simple rubes a vote, you sometimes have to do it piecemeal and carefully -- like the old saw about boiling a frog -- but anywhere you can make it more expensive to live in a way that Megan McArdle and Ryan Avent find unappealing, you must do it.
You see, people who want big families, big houses, big cars are evil, greedy people whose choices are invalid on their face. They must be punished as much as possible if we are ever to enter the sustainable, utopian future that all right-thinking people know is easily attainable once the troglodytes blocking progress with their archaic "choices" are convinced to get with the program or are otherwise removed.
"boiling a frog"
Oooh! I'm gonna tell Fallows on you!
I know, I know.
That's why I called it "an old saw", I meant to imply that it wasn't necessarily true and that it's def. cliched.
But whether the frog-story is true or not, there is some truth in trying to get people to do things your way by slowly changing things on them, hopefully without them noticing.
Like how my Dad taught me to swim across the pool underwater. He stood about 3/4 of the way across and said, "Do you think you can swim this far underwater?" I thought so, so he said "Go for it."
Of course when I was swimming to him he was backing up so I ended up swimming the whole way.
I suppose I could avoid Fallows's wrath by refering to this method as "swimming with Dad" or some such but then nobody would know what I'm talking about. The nice thing about cliches is that everybody knows what they mean.
Here's a more apt metaphor.
If I'm going to get screwed, I'd appreciate drinks and dinner first.
No boiling frogs here. More like rape and no lube. Ow.
Considering we've been forcing an urban tax base to subsidize the automobile-dependent suburban lifestyle for the past 50 years, it seems only fair that the balance should shift the other way at some point.
Or we could stop letting the govt inefficiently spend massive amounts of our money on lots of things that govt probably shouldn't be spending our money on and let the suburbanites pay for their lifestyle and the urbanites pay for their lifestyle.
Urban localities can easily support their own traffic infrastructure. In New York city, residents pay $22b more in taxes than they receive in services. The current gap in the MTA budget is $1.4b.
I'm not disputing that urban localities can be self-sufficient. Rather, I'm arguing that taxes are spent on so much complete and utter nonsense that eliminating a lot of that spending would end the subsidization.
At least here in California the gas tax pays for all road construction and maintenance, plus some portion of it goes into the general fund. So this statement is not true here. Quite the opposite, actually - car drivers subsidize everyone else.
But then, why have the 40 cent tax at all?
Because it is a small cost to enact a carbon pricing policy.
It occurs to me that from an environmental stand point, one should always buy the cheapest available choice. It is cheapest because it uses the least resources.
This is just false. It is cheapest because it either uses the cheapest resources and labor or its production is more efficient than its competitors. There is no connection between the retail price of an item and how much carbon was emitted in producing it. That's why environmentalists advocate a carbon tax.
No, it is not "just false", it is quite correct in the general case since the majority of energy used in all resource extraction, raw materials shipping, goods manufacturing, and finished goods shipping generally comes from fossil fuels. Every stage of the manufacturing and shipping cost, especially where mass-market commodity goods are concerned, is controlled by the primary or derivative energy costs associated with the process.
You can doubtless identify exceptional cases and distortions, but in general, the cheaper of two equivalent goods required fewer energy inputs and therefore released less carbon.
You can doubtless identify exceptional cases and distortions...
Like globalization of the economy generally. All other things being equal, Chinese made imports are cheaper than US manufactured counterparts (because of lower labor rates) yet emit more carbon to distribute (due to increased shipping). The same holds true in other instances where US manufacturers relocate outside the US (Maquiladora in Mexico, Costa Rica, Mariana Islands, etc.) to take advantage of cheaper labor, and repatriate the goods thru increased shipping. The savings from labor is greater than the increase in distribution costs, so the product is 'cheaper' at market. If your point is only that energy costs are a contributor to price, we agree. If it is the 'primary' determiner of price, we don't.
Exactly, and although the labor costs will temporarily produce a price advantage, if the difference is large enough to matter the disadvantaged location will stop manufacturing that particular product (or manufacture only specialty and luxury variants). So energy input will again become the main factor in price differentiation.
There was a time when any electrical appliance or electronic product you could buy on any western market was made in the US or Europe. Then Japan took over, then Taiwan crowded out Japan, and now almost everything of that nature is made in China. Want to buy a toaster? Buy the cheapest one at any given feature set and you're probably buying the least carbon-intensive one, because the three equivalent choices stocked by Wal-Mart all have the same stamp on the bottom.
First, I would not mind a gas tax increase, and I do a pretty fair amount of driving (fill up my 25 gallon tank at least twice a month). However, I support that tax increase as a means to infuse money into the Department of Transportation budget, which is hugely suffering from the direction of the gas market (higher fuel efficiency, etc.) I would love to see the country investing in alternative transportation methods/general infrastructure, something that has been lagging in this country for a long time.
However, and I didn't read all of Mr. Avent's post so he may have addressed this elsewhere, but my 2 concerns about a cap and trade are first, the increase in expenses in utilities (supposedly this will be compensated for via rebates, but if that's the case, what's the point in the tax in the first place?). Second, and in relation to the first, I worry that if energy is more expensive, than all goods become more expensive (they all require energy in some form, and green energy at this point costs more than coal/oil etc). This not only hurts domestic consumers, but also international industrial competitiveness, because I sincerely doubt China is going to be enacting any similar legislation anytime soon.
"my 2 concerns about a cap and trade are first, the increase in expenses in utilities (supposedly this will be compensated for via rebates, but if that's the case, what's the point in the tax in the first place?)"
The point is that the rebates are distributed through flat tax breaks. So people who use less energy save money, while people who don't mind paying to use more energy do so. Basically redistributing (!) money from high energy users to low energy users, with the idea being that if given a direct financial incentive, people will use less energy than they currently do.
This is susceptible to very bad framing about massive tax increases though, which makes it pretty unlikely it'll be implemented soon.
"This not only hurts domestic consumers, but also international industrial competitiveness, because I sincerely doubt China is going to be enacting any similar legislation anytime soon."
This is certainly a very valid concern. The problem is that, since as you say China isn't going to go along with us, the choices are basically hurt ourselves economically in the interests of environmental protection, or keep up economically and hope all that increased energy use doesn't really do anything bad. This is not a particularly pleasant choice.
Interesting point on the redistribution, even though that's a huge negative buzzword.
As for the the unpleasant choice, agreed, very unpleasant. However, as an obvious free-marketer, I think it would be better, especially given the tangible state of the economy vs the possible, unproven long term effects of carbon in the atmosphere, to allow industry to slowly develop greener/renewable resource technology rather than force the implementation immediately. I think in the long run, even disavowing environmental concerns, companies realize the benefits of finding renewable resources, especially in light of the turmoil of the oil markets. Adding in the PR aspect of "going green," I think most companies are pursuing renewable and cleaner resources of their own volition. I worry government intervention at this delicate economical time will do much more harm than it could possibly do good.
"I think in the long run, even disavowing environmental concerns, companies realize the benefits of finding renewable resources, especially in light of the turmoil of the oil markets. Adding in the PR aspect of "going green," I think most companies are pursuing renewable and cleaner resources of their own volition."
You would think that. And I'd like to, as it would really reduce the need for government intervention. Is it really true though? Given the auto industry making so many more SUVs than hybrids and bitterly resisting any efforts to raise mileage standards I don't know that they were (or are) taking the long view that as gas inevitably increases customers will want cars with really good gas mileage. Or maybe it's the customers that are stupid and the companies are trying to make a buck, I don't know.
But the important question is: what if the companies aren't really "pursuing renewable and cleaner resources of their own volition"? It'd be nice if they did but I'm a little wary of just assuming they will because it would make sense. So what happens if they don't? I love the free market but I'm skeptical of its ability to timely punish companies that don't do this barring a massive consumer shift that highly antagonizes any non-green company. It seems more likely to me you'll just have a lot of companies that realize the value in branding themselves green and giving a lot of lip service to the environment, but doing the minimum they have to to make it look like they're trying.
Isn't the fact that people are more sensitive to market driven changes kind of the whole point of adding a tax to carbon and/or gas?
As an engineer I tend to think of challenges systemically. So if the challenge is global warming (debatable) and the cause is carbon (also debatable) then the solution is to reduce carbon consumption. Individuals are very market driven - when price goes up they use less or find alternatives. Gasoline has a long term pricing trend that is naturally increasing (supply - it is getting harder to find and extract oil and demand - a few billion upwardly mobile Chinese and Indians) so that will alter personal consumption eventually. Short term if we want to have a more immediate impact then we have to artificially raise prices via a tax. Expecting individuals to radically decrease carbon usage without raising prices is just not rational.
endless suburban sprawl and no transportation options other than driving is a nightmarish design that we should really be trying to get away from
To do that, you need to get people to give up living in single-family homes. The major obstacle is that people like having their own house and their own yard, and they're willing to pay for it in the form of commute times.
Speaking for myself, you can put me in an apartment building surrounded by irritating hipsters with nothing but sidewalks and bum-filled parks nearby when you drag my cold, dead body into it.
To do that, you need to get people to give up living in single-family homes.
Not at all, the problem with some neighborhood designs is that it's near impossible to walk anywhere. Since they don't build them on some sort of grid system, you have to travel 3 miles on high speed roadways, to get somewhere 1/2 mile away as the crow flies. There are major areas in my city, that are single-family homes with yards, but you can still walk places. There are apartment buildings in the area as well. I've lived in small towns, that are far more walkable than LA. Our only options aren't live like Manhattan or LA.
People should be able to live wherever they want, as long as they're willing to paying the full cost of living there.
But should they have to pay the 'full cost of living there' plus an artificial tax tacked on by politicians who disapprove of where said people live?
Well, considering that suburbanites currently pay less than it actually costs to maintain their infrastructure, this tax would be a step towards normalizing the cost. Of course, the better solution would be to somehow shift the tax burden of that infrastructure onto the people that use it.
Considering we've been forcing an urban tax base to subsidize the automobile-dependent suburban lifestyle...
Do you claim that urban homeowners and apartment dwellers subsidize the suburban lifestyle? Or that urban workers, many of whom are suburban residents do the subsidization?
Considering that tax receipts increase relative to population density, and most people are paying the bulk of their taxes within their locality, I would say that people who live, work and own business in urban areas subsidize those who do not. Otherwise lower tax rates would not be an incentive to live in a suburban, rather than an urban area.
Not necessarily. Density also increases the requirements for public services. Much of the increase in tax receipts disappears into the circular consumption paths that density necessitates, for example by having a disproprotioate increase in demand for policing.
Actually density usually reduces the per-capita cost of public services. There's a lot less redundancy.
Oh? Why is it the most expensively (and poorly) educated children live in dense cities?
Alexi, I'm starting to think you get your information from big city newspapers.
"a permanent 40 cent a gallon increase is quite a lot--particularly if the 2008 prices were a bubble, and the permanent cost of a gallon of gas is more like $2.00." I'm not clear how the second part of this sentence makes sense. 40 cents is 40 cents, whether you're adding it to $2 or to $4. It seems like the only plausible way to say they're different is a wealth effect, but that goes the other way: you're poorer in a world of $4 gas than in a world of $2 gas, so then you'd be saying 40 cents is less of a burden now than before.
"If you have a Pigovian tax that doesn't alter the production of the externality ..." If this is true, that tax produces zero deadweight loss -- isn't that a good thing?
More generally, I don't understand the complaint that gas taxes wouldn't reduce emissions/driving/congestion/pollution/whatever enough. Let's remember the first principles here. The problem isn't "driving". It's that if some costs of driving aren't internalized by drivers. Insofar as using a Pigovian tax wouldn't change anyone's behavior, then their behavior is already efficient -- so if you think their behavior is efficient, then why would you want to change it?
+1.
From this libertarian's perspective, the transportation system is a perfect candidate for using a pay-as-you-go approach to funding a government provided good. Even if it weren't for the externalities, a gas tax seems like a great way to price this good.
The ability to also use the tax to capture the pollution and national security externalities associated with driving just makes the case that much more compelling.
Now if we could just get the expenditures tied to the revenue somehow.
Re: the nightmarish design. I've been to Atlanta and I've been to LA. They look very much like Dallas. I've been to Washington, DC. It looks more like Moscow than any other city in the US I've seen (I am yet to visit NYC). Apparently, one man's dream is another man's nightmare.
Well, I wasn't talking about the building design or aesthetics. And yes, DC is a very ugly city, and I really don't think the building height restriction is a great idea.
The problem with Atlanta in particular, since I'm familiar with it, is that public transportation is essentially useless, and it takes a really long time to go anywhere outside of your particular suburb. Want to go to a sporting event or concert or a specialty store in another part of town, it's often a minimum of an hour drive each way. Many people's commutes are similar or longer because your only option is one of three arteries that every other commuter shares.
public transportation is essentially useless
That is an unqualified truth, not a problem with Atlanta. At least it is a good functional definition of the subset of all cities where I agree to live in.
I think the problem with Atlanta is different, namely:
your only option is one of three arteries that every other commuter shares
That must be the real differentiator between Atlanta and Dallas metro -- we are not hurting for freeways. In fact, the 3 toll roads we have (Tollway, George [not W] Bush turnpike and now 121) make a huge difference in access to remote parts of the area.
And I fully agree that YMMV. Me, I don't want to ride the train or bus to work -- I had enough of public transportation in my youth, all wasted and extremely uncomfortable time. Driving means freedom. I don't want to walk to the store either -- I did enough of grocery lugging in my college and early post-college days. I'd rather walk (or jog, or ride the bike) for fun/exercise/relaxation. And there's plenty of space for that in decent suburbs.
And in fact, I'd much rather telecommute than commute -- which I've been mostly doing for the last 8 years. What is the point of transporting oneself between the two identical screens and keyboards when they are connected with 10Mbps+ link anyway? But I digress.
Considering that tax receipts increase relative to population density, and most people are paying the bulk of their taxes within their locality, I would say that people who live, work and own business in urban areas subsidize those who do not.
Wow, you're a long way from proving anything. You'll have to separate out what you mean by "tax receipts," given that there are Federal and State taxes, income, sales, and excise taxes, and of course property taxes. You'll have to decide how to classify income taxes paid by an urban worker who lives in suburbia and defend that classification. You'll have to show that higher-density residents don't consume more services for their higher taxes; police density and educational spending is higher in cities, for example.
I'm not saying you're wrong, I'm saying I can't tell yet.
the problem with some neighborhood designs is that it's near impossible to walk anywhere.
Those neighborhood designs also exist because of the preferences of residents. Many people prefer a cul-de-sac with little traffic (foot or car) and no outsiders to a grid street that anybody can use as a shortcut. Many people prefer to live far from commercial areas to avoid the noise, litter, and feral teenagers such areas attract. Non-grid suburban designs aren't the results of kickback from gas companies, they reflect how people prefer to live.
I don't know about that. Personally it really bothers me to be able to pull my daughter around in her wagon in our cul-de-sac without worrying about traffic. And I hate being able to get out with my dogs without having to go to a dog park. Watching hawks, owls, etc. from the back deck is a real bummer too. Sometimes I forget to lock a door and I still have stuff when I get home. I didn't realize it at first, but it's really a miserable way to live.
Wow, you're a long way from proving anything. You'll have to separate out what you mean by "tax receipts," given that there are Federal and State taxes, income, sales, and excise taxes, and of course property taxes. You'll have to decide how to classify income taxes paid by an urban worker who lives in suburbia and defend that classification. You'll have to show that higher-density residents don't consume more services for their higher taxes; police density and educational spending is higher in cities, for example.
Households in urban localities pay more in both state and federal taxes. Here's a fun graph I put together in excel:
http://alexi.sine.com/misc/popspending.png
People in high density areas pay much more in taxes than they receive in services. That's only federal taxes of course, but at least in New York state taxes follow the same pattern. New York city has an average population density of 2,050 people/sq. mile.
They pay more than they receive in "services"? I'm not sure what that means. Personally, I receive no "services" from the Federal government beyond military, law enforcement, and regulatory oversight like FDA. By "services" do you mean gross government spending, things like roads and military bases? I think putting missile silos in NYC is a wonderful idea. I'm all for it.
I mean gross federal spending per district. Grants, contracting, infrastructure development and probably a million other things you don't really notice.
Yes, things I don't notice and wouldn't miss. I would love to see the federal government cut to about 25% of what it does right now.
I'll bet that SOME New Yorkers pay much more in taxes than they receive in services. I'll also bet that (like most of the rest of the tax structure) those SOME are less than 20% of the tax-paying population.
Paying high taxes in your own locality to provide services that make the city a more attractive place to live is one thing. Paying high taxes to subsidize someone living an entirely different lifestyle far away from you is another.
In New York city, residents pay $22b more in taxes than they receive in services.
What does the city do with the money, burn it? And how sure are you that you've subtracted out Westchester-living financial executives, who pay city income tax?
Or are you lumping in Federal taxes too? If so, then how do you quantify the benefit to New Yorkers of I-80 through Pennsylvania, which serves as a major conduit for goods and tourists flowing in both directions?
What does the city do with the money, burn it?
What do you mean? The money goes to the federal and state governments, and then is spent somewhere else.
I'm not disputing that urban localities can be self-sufficient.
As long as they grow their food on rooftop gardens instead of shipping it in.
Touche. I should've clarified that I meant I wasn't disputing that urban localities can be self-sufficient insofar as taxation for infrastructure and services are concerned. Ditto suburban areas who have lots of people who still pay federal and state income taxes. Hell, the town I live in just incorporated a few years ago. For decades and decades it was a village that sustained itself with POA dues. We're due back-subsidies!
What do you mean? The money goes to the federal and state governments, and then is spent somewhere else
So, how do you quantify the benefit to New York's citizens of having an interstate highway system (to move goods on), prisons upstate (to put NYC's criminals in), the Border Patrol (OK, OK, we can put that down as $0 in value), the FDIC (for the monstro-banks HQ'd in NYC), and the U.S. Navy?
Also, how much of the difference in taxes v. benefits can be accounted for by (1) a combination of the progressive tax system and the tendency for cities to have higher paying jobs and (2) urban areas losing out on pork projects due to not having "good" (for lack of a better word) politicians?
Also, how much of the taxes v. benefits difference is accounted for by (1) a combination of the progressive tax system and the tendency for densely populated areas to have higher paying jobs and (2) urban areas losing out on pork money as a result of not having "good" (for lack of a better word) politicians.
First, you can go through every public cost in the federal budget and you're still not going to find the missing money. City residents have a higher cost of living, receive higher per-capita wages, and pay higher per-capita taxes on those wages. Concurrently, city infrastructure allows for the reduction of redundant infrastructure. You can bring power, water, and other city services to more people with less infrastructure.
To answer your question, cities may benefit from highways to some degree, but no more than they would from widespread freight rail. Also many cities happen to have large ports situated nearby. People who rely on highways for basic transportation in addition to their reliance on the goods transported by highways obviously receive a greater benefit. To put it another way: if the United States had invested in widespread rail infrastructure instead of automobile infrastructure, NYC would do fine, and the suburbs wouldn't exist.
As for the FDIC, neither the services provided by banks nor the harms posed by their failure are localized to the city they are headquartered in.
Finally, the spending on the U.S. military happens to be another way we subsidize less dense areas at the expense of cities. Defense subcontracts tend to go to low-population density areas without diverse industries, in order to maximize the impact of a contract on a local economy.
Finally, the spending on the U.S. military happens to be another way we subsidize less dense areas at the expense of cities
Given that the the urban core of a major city could be largely wiped out by one halfway competent terrorist, it is very, very unclear who subsidizes who here.
The reason for low density residential settlement patterns, the essentialists argue, is because of a deeply held, unalterable element of the natural human condition. The world is what people want! Ignore that for 50 years, this pattern was promoted by rock-bottom energy prices and no accounting for carbon impacts or the security concerns from an overdependence on foreign oil. Here's my question: even if a preference for living in the exurbs is inherent and unchangeable (which I don't think is true), doesn't it make public policy sense to tax energy as a way of internalize the costs of living-in-West-Virginia-and-working-in-D.C?
The NIMBYism that keeps MARTA out of Cobb and Gwinnett is just ridiculous though.
Why? The people of those neighborhoods evidently believe that the inconvenience of not having MARTA is better than whatever costs MARTA would impose on them. On what basis to you claim to know they're wrong?
"On what basis to you claim to know they're wrong?"
I think they're really short-sighted. They feel the costs MARTA imposes on them, to be perfectly frank, are undesirables without cars being able to visit those places. This strikes me as a somewhat xenophobic attitude that's really unwarranted. I know a lot of people that honestly are afraid to ride MARTA, which is quite safe and well-lit, because of incorrect perceptions they have about it.
The benefits, on the other hand, are cutting down on one of the worst commutes in the country, saving gas money, not being in your car 2-3 hours a day, etc. I mean, yes, those people don't think that's a good tradeoff. I disagree with them based on my experience living in both those counties and riding MARTA extensively when I lived downtown. And it's their right to keep voting to keep it out. It just seems to me like cutting off their nose.
This strikes me as a somewhat xenophobic attitude that's really unwarranted
Umm, no. This is a most sensible attitude. The physical separation based on relative property values is indeed a great thing about suburban layout.
But, I don't think the light rail would change things much one way or another. My suburban city -- Plano, TX -- does have DART light rail coming to it. The nearest station is at least 15 minutes of driving away from my house, maybe 30 minutes in rush hour. Do I care whether it's there or not? Nope. Neither myself, nor any undesirable, is going to walk that distance.
This strikes me as a somewhat xenophobic attitude that's really unwarranted.
I don't know if it's warranted in that particular case or not, but my experiences with public transportation--and, for that matter, private common carriers--have not been uniformly positive.
The fundamental problem underlying many urban-decay problems (and the corresponding rise of transit-free suburbs) is disorder. People want to live in pleasant areas without trash or criminals on the streets. They want to rub elbows with people with good personal hygiene and a decent respect for others. They want their children to be around others with similar values, whether in school or at a public park.
All those nice old Craftsman houses occupied by drug dealers or sitting vacant in Detroit or Atlanta (or even Portland) were once middle-class residences for ordinary people.
Solve the disorder problem and you fix a lot of what you're complaining about.
"Solve the disorder problem and you fix a lot of what you're complaining about."
Yeah, I know. That's the million-dollar question, isn't it.
Anyway, I completely understand married couples who make decent money wanting to live in a nice quiet suburb with good schools, away from everything bad about cities. There are a lot of people like that, and they have every right to.
But there are a lot of cities that have these same suburbs that have massively better public transportation options than Atlanta does. It doesn't have to be an all-or-nothing proposition.
The main problem with Atlanta is that the fear isn't proportionate. Extending MARTA north a couple stops so people in Alpharetta can take the train to their Buckhead job instead of having to deal with the horrors of 400 seems to me to be a really good thing. And the downside is...that bums and criminals will feel like taking MARTA 70 minutes from College Park or East Point to go hang out in a white-bread non-walkable suburb? Walk on the streets without sidewalks discarding trash and sleep on the non-existent park benches? I don't get it. They've already cut service through downtown past 9 PM most days.
Why not build a toll road instead? Probably cheaper.
Let the unwashed masses eat octane.
I understand why people want to move away from city cores and into the suburbs. What I don't understand is why businesses choose to stay downtown, instead of moving further out as well. Anyone?
That's the biggest wonder I have as well. If there's a decent amount of office space near the suburbs, then you just move to whichever suburb you work at and everyone has a short commute. I have to think it has something to do with zoning requirements; either no buildings over a few stories outside downtown or a limited percentage of office space in a non-commercial area (NIMBY again). Or they figure their employees are spread all over and they figure downtown is a central hub. Or it's just inertia. No clue.
"That's the biggest wonder I have as well. If there's a decent amount of office space near the suburbs, then you just move to whichever suburb you work at and everyone has a short commute."
As long as your spouse's job doesn't move to a suburb on the other side of the city.
I suppose it could also be a prestige thing. Your company's in a big nice office tower downtown and it feels like an important company. Recruits and clients are impressed when they come there. It's in a two-story unimpressive office building a few blocks away from a WalMart and quite the opposite.
Do things work like that?
A typical office might ship reams of paper in and out, so being closer to the courriers will definitely help in that regard. If it works closely with other local businesses, being closer to them will also help. Typical economies of scale will favor one tall building instead of several shorter ones, which given the price of commmercial rent, may be an incentive. Being in the city will increase the lunch options for both the workers and any clients they may be hosting on a given day, plus there may be a prestige issue with some clients.
Being centrally located with respect to the workforce also doesn't hurt, and maybe the average worker prefers a clean transition between their family life (in the suburb) and their work life (in the city center)?
Add zoning requirements (as someone has already proposed) and good old fashioned inertia, and guess what...
Maybe a matter of self selection? If you're located in a city, theoretically a lot of your employees are people that want to work in a city. Some might get married and decide they want to move to the 'burbs. They'll either find other work or deal with the commute. There might be turnover and you get new, younger employees who enjoy living in the city.
At what point do you decide to relocate to accomodate the married couples that stayed on and disadvantage the group that favors the city.
Not to say no companies move out to the suburbs - they do it all the time.
A lot of businesses require fast contact with other businesses. When I worked in the financial industry there were always couriers coming and going with Very Important Papers. Or coke. I don't know. If you need to be able to send things back and forth (like legal documents requiring original signatures), you're going to be more efficient if you're generally doing business where everyone else in your industry is.
What I don't understand is why businesses choose to stay downtown, instead of moving further out as well.
Law firms like to be near the courthouse. Other than that, prestige, snobbery, desire to say "Seattle" instead of "Issaquah," etc.
suburbanites currently pay less than it actually costs to maintain their infrastructure
Do you have anything resembling evidence for this? Are city taxes really paying for suburban sewers and pothole filling? Assuming you're referring to the use of Interstates for commuting, I must ask--again--how you account for the benefits that city residents derive from easy movement of goods and people in and out of the city?
I already answered this question. Everyone in America benefits from transportation system that allows people and goods to move around the country. However, suburban and rural residents benefit disproportionately, because they receive the additional utility of personal, day to day transportation.
This is a pretty straightforward contention. There's a great deal of literature discussing the increased per-capita efficiency and economic productivity of urban areas. The de-facto subsidization of the suburbs via federal highway funds is also fairly well-established.
Personally, I wouldn't mind if all interstate highways became toll roads overnight. Provided that money for their maintenance would no longer come out of gas tax, of course.
Paying high taxes to subsidize someone living an entirely different lifestyle far away from you is another.
If only you could prove that anyone was actually doing this.
Everyone in America benefits from transportation system that allows people and goods to move around the country. However, suburban and rural residents benefit disproportionately, because they receive the additional utility of personal, day to day transportation.
Yes, I can broadly agree with that. But it makes for a weak claim of "subsidization" because the 1) benefits to the cities from good transportation are so huge, the fact that Montana residents have nice highways is nothing but a footnote, and 2) because Federal taxes are uniform regardless of jurisdiction. To the extent that urbanites pay more in Federal taxes, it's mostly attributable to increased earnings (and, to some extent, the indefensible mortgage deduction). To the extent that urbanites pay more in "taxes" generally, much of the difference is the result of local taxes, which are mostly spent locally.
Rob, I'm not quite sure about Federal taxes, but for local government, neighborhoods with single family homes at the fringe of the same municipality on average cost more for infrastructure than densely populated inner cores. For example: the costs to lay sewer lines for 100 folks in a densely populated area with apartments is less than laying lines for 100 people in single family homes on 1/4 acre lots. Sanitation is also more expensive. And commuters do use municipal infrastructure everyday, quite a bit more than you might think. But densely populated areas are very expensive in terms of providing education. On average, those living in more densely populated communities use less energy...
However, the argument shouldn't be how people should live, this is still a free country...I think and for many people densly populated areas simply aren't their bag. They shouldn't be punished for it. The question should be how do we provide the most effective, efficient services to people no matter where they live? Using government authority to change legal behavior based on personal preference just seems...creepy to me.
Anyhow, here's a link to some info on local government spending for residential or industrial land. Basically, any residential areas, urban or suburban are a drain on local government budgets. http://ohioline.osu.edu/cd-fact/1260.html
Some more stuff:
Government Finance Group, Inc. September 1993. "Economic Benefits of Open Space." Public Finance Digest.
"Residential land is the most expensive for local government to support. Residential development costs the public more money than it pays in taxes and charges. Land with a low density of residents per acre such as commercial/ industrial or open space yields fiscal benefits to the local governments. This contrast can be seen quite clearly with the example of education costs within a local jurisdiction. Allocating practically all of the costs of education to residential land makes this the most costly type of land. Commercial land generates minimal education costs. While open space's education costs are higher than those of commercial/ industrial land, this type of land maintains these costs at a very moderate level due to its low population density.
A thorough analysis of the commercial/industrial land category's apparent economic advantages also reveals many of the to be illusory. For example, commercial/industrial development can attract new residents to the community to work at its businesses, but these new residents' demands for increased services appear to wipe out the initial advantages of this land type."
"The core reasoning behind this assessment of open space's economic benefits is that agricultural or undeveloped land demands fewer services and even with customary low tax rates generates more than enough to pay its way."
All I see in that study is a quantification of the fact, obvious in hindsight, that agricultural land and dense commercial land brings in much more tax revenue per unit than it consumes in "community services", while residential land brings in less.
This is only meaningful if you assume the goal is to have every resident produce tax revenues and consume community services equally on every square inch of land used by humans, and that the humans in question will support this goal. But even city residents do not necessarily do that. The major taxpayers in a city are typically businesses, a fact which that study seems to observe and support. But businesses do not produce tax revenue absent people to work within them, and it may well be that cities offering suburban residential surroundings can attract a broader and more productive classes of workers than if the only option was to live within the city and, presumably, dwell mainly in stacks of apartments and condos. Even Portland and Seattle with their temperate climates, attractive cityscapes, and strongly-enforced land use policies (Oregon especially) have not managed to acheive this, and have a significant number of people commuting from the outlying suburbs.
The study you cite has no way to account for, and dismiss if possible, any such symbiotic mechanisms and therefore cannot be used to support a claim that residential areas are parasitic on city areas. Tax revenues are a means to serve the population as a whole, not an ends unto themselves. If serving the population means collecting from all and dividing necessary services in order to produce a better living and working climate overall, so be it.
It wasn't my intention to try to prove that suburban areas are parasitic on urban areas. I just wanted to show that both are equally costly. Most suburbs are now incorporated, this is especially true in Atlanta, so the studies above only matter within the same municipality. Very few cities have unicorporated suburbs within the urban municipality, they are incorporated and provide services independent of those urban areas.
And I completely agree, businesses subsidize residential areas. As far as consumption of services, I thought that was the point of the discussion I was responding to, that suburbs are a drain on urban areas. My thought was that's not necesarily true on a local level as ALL residential areas are a drain on government areas. Suburbs may cost more in infrastructiure, but urban areas cost more in intangible services, which makes it difficult to compare the two. I might have been a bit clumsy in my comment, though, I thought the link explained it more fully and better.
This statement is true: "Tax revenues are a means to serve the population as a whole, not an ends unto themselves." But in terms of equity, it is important to realize where your revenue originates.
I find the discussion unbelievably naive.
Somehow a tax is going to solve anything.
In Canada our gas prices are substantially higher than the US. Taxes make the difference.
Has driving patterns changed? Not really.
Is city traffic congestion less. No.
Are the roads and bridges better maintained with all the tax revenue? No. Drive through the highest tax regimes in Canada and you will be afraid to go under the spalling concrete, plastic wrapped pylons, etc.
Has it prevented urban sprawl? No.
Last summer's high prices changed some travel patterns in the short term. People started looking for better fuel economy, but in most cases the cost savings were not enough to drive an expensive purchase.
All it meant were that food prices went up. I know we had to charge more because shipping was higher, and our costs were higher, which we passed on to our customers.
And government got more money, and wasted more. The roads still are in poor condition, etc. etc.
All a gas tax will do is give politicians more money to buy votes with some useless scheme. And being able to raise taxes once with no ill effect will only encourage more tax hikes.
Derek
Rob, I'm not quite sure about Federal taxes, but for local government, neighborhoods with single family homes at the fringe of the same municipality on average cost more for infrastructure than densely populated inner cores.
No doubt this is true. But it is not true that Beaverton gets a transfer payment from Portland, or Redmond from Seattle, or Calabasas from LA, or what have you. So while commercial and industrial property undoubtedly subsidizes residential in a given jurisdiction, the case that "urban" areas generally subsidize "suburban" areas remains to be proven.
I agree, I hope that's not what the comment sounded like. My point was both are equally draining inside a given municipality. But I should have added, most suburbs in US cities are incorporated and therefore provide their own services to residents. My above statements are only true inside municipalities that contain both suburbs and urban areas, cities like that are few and far between.
And derek wins the thread!
It's government greed. Period.
The apparent purpose of cap and trade is to benefit the environment somehow. But, the money doesn't go to the environment. It goes to the government! General revenues and health care--The Big O's plan.
So it's a rip-off.
Instead, if they really wanted to shift to green energy and green technology, here's how to really save the environment. Two quick moves.
1. A 100% tax credit with no income limitations for people to install home wind/solar/hydro energy generation and conversion units on their homeplaces. Then they can sell the excess energy back to the grid. Each home becomes an energy producer! Since the upfront costs to set up such systems are high, this will only affect taxpayers (which are only half the adult population), and only those with the resources to invest in such projects before getting their tax credit back. So the higher income people will rapidly adopt the technology and lead the way.
2. Then, to broaden the benefits to everyone--instead of cap and trade, have a green surtax on all power bills. All adult households and business have a utility bill--even poor people. So everyone benefits. This surtax is actually saved for them in a dedicated account (for real, not the Social Security illusion of a personal account), and they accumulate a balance. Then there's a list of approved green products and projects they can use their green surtax balance for. Home green energy projects, buying a fuel sipper or hybrid car, or scooter, or motorcycle, or bike, or mass transit pass, or green home chemicals, or recycling bins, or compost heaps or solar oven boxes or home gardens or whatever. All kinds of approved products/projects that actually help the environment.
If you know you have this usable money, you'll use it and it's requirements are for green things that actually benefit the environment. If you could buy a green car with a voucher vs. a gas guzzler all with your own other money, you'd strongly consider buying the green car and use your money for other things.
Obama wants to use behavioral economics to change our behavior to save the environment. My proposed solution actually accomplishes that.
Cap and trade is a just a racket of a greedy government.
We need these alt energy solutions fast because EPA is blocking permits and the mines are reducing shifts and closing and laying off, not for lack of demand. Regulatory interference. My utility bill has already gone up. Artificial scarcity. Power rates are about to skyrocket...you know that whole inconvenient truth about supply and demand. Pesky trufax.
On April 15 the tea parties got the attention but there were also citizen groups petitioning and protesting the utility commission because of increasing utility rates that they couldn't afford on low and fixed incomes. Cap and trade will sh*t on poor people even worse. Ah well, they don't need power. Watch for more heat stroke and cold exposure deaths to happen among the poor....
Even Portland and Seattle with their temperate climates, attractive cityscapes, and strongly-enforced land use policies (Oregon especially) have not managed to acheive this, and have a significant number of people commuting from the outlying suburbs.
And significant numbers of people commuting from their trendy urban neighborhoods to Microsoft and Nintendo (Redmond), Nike (Beaverton) and Intel (Hillsboro).
Seattle's land use and commuter "policy," incidentally, can mostly be summarized as "you can't drive on water."
If we really want to reduce our dependency on foreign oil, we should drill for more domestic oil. Right now, most of the coastal waters of the US are off-limits to oil and gas production. If we were to exploit these resources, we would reduce our dependency on foreign oil, create domestic jobs, and reduce imports/increase exports.
Raising gas taxes will only hurt poor poeple and any increase in gas taxes will probably not go to directly mitigate the harm of burning hydrocarbons but will end up in the general fund or subsidizing inefficient "green" jobs.
No thanks.