Rob the poor to subsidize the wealthy - Political Fever

Lumara · #1 (**permalink**) 05-14-2008, 07:21 AM

I enjoyed this article since it highlights yet another form of unfair subsidies. I already knew that AMTRAK was a taxpayer boondoggle which should be ended because there's no good reason why taxpayers should subsidize anyone's mode of travel. This article shows how widespread this practice of subsidizing other people's transportation has become. Unfortunately, AMTRAK is apparently just a drop in the bucket which didn't even rate a mention in this article.

Anyway, this is just an excerpt and the complete article can be viewed at Classically Liberal: Rob the poor to subsidize the wealthy.

Quote:

Rob the poor to subsidize the wealthy.

The New York Times has a piece on how spiralling petrol prices are sending some commuters to government mass transit programs. What it inadvertently does is also show us what is the problem with such mass transit programs.

The paper notes that all around the country the high petrol prices are pushing up ridership.

So how does this expose the problem?

Even with large increases in riders these systems are losing money every day. The paper notes: “Typically, mass transit systems rely on fares to cover about a third of their costs, so they depend on sales taxes and other government funding.”

In other words one third of the actual cost of riding mass transit is paid by the commuter and the other two-thirds is paid by people who don’t commute. And even with increases in ridership some services are seeing shortfalls increase.

The reason for the increase is that rely on taxes to pay the bill. And in some places tax revenue is falling due to the economic slowdown.

But think about the system of subsidies and taxes. And think about the typical system of transit.

I think San Francisco is fairly typical and I know the system fairly well so I will use it as an example. The Bay Area Rapid Transit system basically is a series of train lines that run from the bedroom communities to the financial district of San Francisco. Of course, along the way they run through other areas. But the feed is to and from the financial district. Similarly the Loop in Chicago is the center of interest for mass transit.

I rode the trains to Chicago when I worked at the Merchandise Mart building and lived in the suburbs. So I know that system as well. And here is what I know. Commuters on these lines often held fairly well paying jobs in the city centers. Let us give an example that the New York Times uses.

“Michael Brewer, an accountant who had always driven the 36-mile trip to downtown Houston from the suburb of West Belford, said he had been thinking about switching to the bus for the last two years. The final straw came when he put $100 of gas into his Pontiac over four days a couple of weeks ago.”

An accountant can easily between $40,000 and $50,000 per year. Of course many of the people commuting to the financial districts of the various cities earn a lot more than that.

Here is the question. If the transits systems only charge commuters one-third of the actual cost who pays the other two-thirds? And how does the earning power of the taxpayers compare with that of the recipients of government generosity?

One of the great secrets of the American political system of redistribution of wealth that the political process tends to redistribute wealth up the ladder not down.

When I commuted in Chicago my commute was subsidized. I rode in from the well-to-do suburbs with lots of people who were earning a hell of lot more money than I did. At that time the gas tax was used to help subsidize the mass transit system. And what studies found was that those commuters who drove to work, and hence paid the subsidies, earned far less than those commuters who used mass transit. Working class people subsidize the comfortable train rides of workers from the financial district.

And the subsidies are very generous indeed. The Department of Transportation looked at subsidies and taxes in transit over a twelve year period (1990 to 2002) and found that mass transit commuters received subsidies of $118 per 1,000 passenger miles. For every 1,000 passenger miles of automobile commuters they lost money. That is the services they received were less than what they paid for in taxes.

The Times article says that the favorite way of funding such subsidies are sales taxes. Yet sales taxes are very regressive and impact the living standard of poor people far more than it does wealthy people. I am not saying that there are no poor people who benefit from such systems. Obviously some do. But the systems primarily feed wealth suburbanites to good-paying jobs in the city center and home again.

BoneDaddy · #2 (**permalink**) 05-14-2008, 10:41 AM

There are some problems with this article.

Quote:

“Michael Brewer, an accountant who had always driven the 36-mile trip to downtown Houston from the suburb of West Belford, said he had been thinking about switching to the bus for the last two years. The final straw came when he put $100 of gas into his Pontiac over four days a couple of weeks ago.”

There is no "west belford" community in Houston. There is a "West Bellfort Road" which leads to the suburbs but it certainly isn't a "36-mile trip to downtown Houston."

West Bellfort would be Meyerland (610)...out to past Alief. They are in the process of extending the road pasty Hwy 6 now. Considering this guy's income, it is plausable for him to live out there. That would make it about a 36 mile round trip....but not one way.

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