While we’re on the subject of overlooked academic studies, here’s another goodie (pdf link): an analysis of whether cars pay their own way. The basic question: do taxes paid by drivers equal public spending to support driving?
The short answer: Nope!
In fact, we’d have to raise gas taxes by somewhere between 20 to 70 cents per gallon for driving to pay for itself.
Find this article interesting? Support more research like this with a year-end gift!
I’d recommend reading the study itself for all the exciting details. But in a nutshell, the author racked up all of the costs of cars—from spending on highways, to interest on highway bonds, to the cost of police and ambulance service, to judicial and legal system costs related to driving, to subsidies for vehicle R&D, to potential military costs of Persian Gulf oil. And so on.
Then he compared those direct taxpayer expenditures with all of the revenues paid by drivers: gas taxes, license fees, parking and traffic fines, public parking costs, interest earnings from unspent capital funds, various dedicated property and sales taxes, etc. He even tallied general sales taxes on motor vehicles; corporate income taxes paid by car companies and their suppliers; and personal income taxes paid by auto workers.
Comparing the costs with the expenses, it’s pretty obvious: cars don’t pay their own way.
The extra money to fund driving comes from other taxes—at the federal level, from higher income taxes and the like; and in states, from higher income, sales, property, and business taxes. The end result is that people who drive a bit less than average are subsidizing those who drive more. If we really wanted cars to pay their own way, taxes on fuel (or, more properly, driving) would have to go up somewhere between a penny and 3.5 cents per mile.
And note: this doesn’t include all of the external costs of driving. It doesn’t cover the social cost of noise or pollution, or the time wasted in congestion, or various accident costs that are paid by private citizens. It just covers direct government expenditures. But even with this narrow definition of “costs,” road users still get a subsidy.
So if you’re not a driver, or drive less than average, you can be fairly sure that your tax dollars are going to subsidize someone else’s car trips. Bummer.
(Hat tip to Damon Fordham of the Oregon Department of Transportation for this find.)