July 03, 2007

Tolls Are Not Taxes

by PG

In an otherwise fine article, NYTimes business columnist David Leonhardt managed to irk me by declaring in passing that "tolls are really a kind of tax." Um, no. Tolls are a price we pay for using something that is otherwise free. I have used the New Jersey Turnpike and Garden State Parkway dozens of times, and the only charge to me were the tolls deducted from my EZ Pass. Compare that with my also-frequent use of the New York City subway system. I assume Leonhardt doesn't consider my purchase of a MetroCard to constitute "a kind of tax," yet I perceive no difference between that and my purchase of an EZ Pass. Each allows me to use transportation that I otherwise could not; each periodically takes a $40 chunk out of my credit card; each is run by local government; each gets kind of stinky depending on where you're passing through (Elizabeth, NJ, meet Chambers St. station).

Unlike sales, property and income taxes, tolls can be avoided while still engaging in the underlying activity, i.e. travel on the roads. Coming back to NYC on Memorial Day weekend, I avoided the Turnpike traffic and ended up avoiding its tolls as well, by traveling on small one-lane roads through New Jersey. (Which really is the garden state once you get off the tolled highways; I passed lots of farms, forests and -- alas for my hurry! -- pie stands.) In contrast, I can't buy a new toothbrush at Duane Reade without paying, in addition to the store's price, sales tax to the local government. I can't own a condo without paying, in addition to the previous owner's price and a host of closing costs, property tax to the local government. I can't give someone $20,000 without paying a gift tax to the federal government. In Texas, I can't go to a strip club without paying a special tax to go into the state's sexual assault treatment and prevention fund.

Being neither poor nor a Republican, I don't mind taxes. I accept that they are necessary to a civilized society. But I do distinguish between what I pay in order to use a particular road or subway myself, and what I pay whether I get direct use from it or not. I'm paying my federal income taxes even though the military isn't protecting my home from any invading army; I'm paying my local taxes even though neither I nor any dependent of mine is going to public school. To get back to the point of Leonhardt's article, if I noticed that tolls or subway tickets were getting too expensive, I could choose as an individual to abstain from using them. I cannot choose as an individual to abstain from paying taxes unless I want to make use of the tax-supported amenities of a federal prison.

UPDATE: Yes, I am familiar with the concept of a use tax, but at the point where we colloquially call any money that goes to the government, even when exchanged for a specific good, to be a "tax," we're getting rather circular. Toll roads can be run by private sector companies, and presumably such tolls aren't "taxes" in the sense of "a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc." One could construe Leonhardt as obviously talking only about public tolls, except that the phenomenon on which he's concentrating -- how electronic payment makes us inattentive to rising costs -- would be equally true if the Garden State Parkway were a private concern. I wouldn't accept that construction unless Leonhardt really were the sort of person who referred to an increase in subway fares as a "tax increase." I may just be circling around the fundamental source of my intuitive disagreement with Leonhardt, though I alluded to it when I said "Tolls are a price we pay for using something that is otherwise free," to contrast with the sales taxes we pay to the government in addition to the price we've paid to a private sector provider.

July 3, 2007 05:16 PM | TrackBack
Comments

It's an interesting distinction you're putting forward, but can you offer any authority to support it?

Posted by: Tom T. at July 4, 2007 05:23 PM

Tom T.,

can you offer any authority to support it?

It's people like you who keep me from writing a Note! ;-)

I don't have any authority for the "something the private sector might impose" versus "something only the government has the authority to impose" distinction, it just tracks with my intuition about where it's useful to say something is a "tax." Certainly I've noticed no tendency among NYC fiscal conservatives to call for keeping subway fares low despite a general hostility toward income, property, sales taxes.

Posted by: PG at July 4, 2007 10:02 PM
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