Beruflich Dokumente
Kultur Dokumente
Volume 24 Number 1
August 2009 22-36
Brian D. Taylor
University of California, Los Angeles
Alexandra Tassiello Norton
Louisiana Recovery Authority
Nearly all transportation policy debates concern money, and nearly all transportation finance debates concern equity.
To some, this second assertion may seem puzzling, even counterintuitive. But the way public officials think of equity
in transportation finance is far different from that of most social scientists or transportation planners. Equity gets
defined differently by different interests at different times. This article examines transportation pricing and finance
equity from a variety of perspectives to clarify what can be a fuzzy and confusing issue. The authors distinguish trans-
portation finance and pricing equity from other forms of transportation equity and then discuss several competing
theories of equity long debated by social philosophers. These theories serve as a basis for understanding the complex
and often inconsistent notions of fairness that the public and elected officials have regarding the distribution of public
resources and particularly transportation investments. Given these competing theories of equity, the authors argue that
most conflicts over transportation pricing and finance are rooted in philosophical differences over justice and equity
and differing notions of the appropriate units of analysis—individuals, groups, or jurisdictions—for evaluating equity.
Accordingly, the authors offer an analytical framework to help planners and policy makers untangle these two issues.
This framework transcends the philosophical characterizations of equity to allow for a more practical consideration of
transportation finance and pricing fairness. They conclude with a discussion of the lessons offered by some recent
debates in transportation pricing and finance for decision makers searching for a fair price for transportation.
22
Downloaded from jpl.sagepub.com at GEORGIAN COURT UNIV on April 15, 2015
Taylor, Norton / Paying for Transportation 23
of them. Transportation is and transportation does; (poor vs. wealthy, drivers vs. nondrivers, etc.) fare rela-
that is, we can conceive of transportation as an end in tive to one another. Vertical equity is achieved, for
itself (is) and as a means to an end (does). With respect example, when taxes are levied on households propor-
to the latter, transportation analysts typically describe tional to the ability to pay.
the demand for transportation as a “derived demand.” Horizontal and vertical equity are central concepts
That is, with the exception of walks in the park or in taxation and finance. Legal scholars and political
cruising the boulevard on Saturday night, the demand theorists have debated questions of equity and fairness
for transportation is derived from a desire to consume for millennia precisely because there are so many ways
non-transportation-related products and services and of perceiving and defining fairness. Questions of equity
engage in non-transportation-related activities. One in public finance have their philosophical roots in
stands on a crowded subway each morning not for the the much larger concept of distributive justice. Distribu
thrill of the ride but to get to work on time. And one tive justice concerns the pricing and allocation of
searches for a parking space at the grocery store not goods and services limited in supply. The principles
for the pleasure of finding an open space but to stock defining distributive justice vary according to unit of
one’s house with food. As transportation is an impor- distribution—be it to geographic areas, groups, and
tant, often critical, link to education, paid work, recre- individuals—and the logic of distribution—such as
ation, health care, culture, and many other aspects the rationales of need, merit, and fortune. In addition,
of quality living, planners, policy makers, and pub- the logics behind different conceptions of distributive
lic officials are rightly concerned that most members justice are defined by various philosophical theories
of society have sufficient levels of mobility or, more that, drawing on the work of Lamont (2003), we sum-
accurately, accessibility to quality living. So in addition marize here into the following categories: strict
to public goods and market failure rationales, many egalitarianism, the difference principle of justice,
public officials justify public investments in transpor- resource-based principles of justice, desert-based the-
tation to provide basic transportation (i.e., access essen- ory, and libertarianism. we discuss each of these in
tial goods, services, employment, and housing) for turn below.
disadvantaged members of society, regardless of abil- Strict egalitarianism principles conceive of justice
ity to pay. as in terms of equality of outcome, whereby each mem-
In addition to ability to pay, access is affected by ber of society receives a magnitude of goods and ser-
age, sex, physical ability, cognitive ability, and cultural vices that will result in similar states of abundance
background. Indeed, a large body of research exam- and need. These notions (such as Karl Marx’s famous
ines how the young and the old, the disabled, and the aphorism, “From each according to his abilities, to each
poor suffer from lower levels of mobility and accessi- according to his needs”) were a foundation of many
bility (see, e.g., Blumenberg and Waller 2003; Bullard nineteenth-century socialist thinkers. The moral cri-
and Johnson 1997a; Deka 2004; Clifton and Lucas tique of this approach is that individual preferences
2004; Garrett and Taylor 1999; Hodge 1995). The vary; people neither want nor need the same goods
focus of this review, however, is on transportation as and services. Moreover, this principle may undermine
an end in itself and, in particular, on the public sector motivations for personal achievement and present
role in transportation. We ask, who pays for transpor- a practical difficulty in coping with wealth accumu-
tation? How do they pay? Who benefits from trans- lation and uneven starting points. Undaunted, advo-
portation? Where do they benefit? cates of strict egalitarianism counter these criticisms
by being a bit less strict: they suggest indexing tech-
niques to compare goods and services by user pref-
Theorizing about Equity erences, measuring egalitarian outcomes within certain
time frames, and so on (Rawls 1971; Carens 1981;
Many transportation economists and policy analysts Kai 1979).
characterize equity along two dimensions: horizontal Proponents of the difference principle of justice posit
and vertical. Horizontal equity considers how members the equality of individuals as basic rights and liberties
of the same group (the elderly, bus riders, etc.) fare but argue that society is better off if individual moti-
relative to one another. Horizontal equity is achieved, vations for achievement are allowed to benefit indi-
for example, when all members of the same income viduals directly. The most well known difference
class pay the same in taxes. Vertical equity, on the other principle of justice was articulated by Rawls in 1971
hand, considers how members of different groups and clarified further in his later work. Rawls proposes
that rational individuals can produce an objective con- and their stations combine to produce rampant inequal-
ception of justice so long as they are unaware of what ity and unfairly constrain the redistribution of resources
their station in such a system will be. Were indi- to the less capable.
viduals to establish rules for a system with an equal Libertarian principles go one step further by not
probability of being prince or pauper, they would have attempting to prescribe a framework for distribution
an incentive to evaluate fairness from an essentially but instead argue that legal—that is, neither coerced
objective position. The difference principle states that nor stolen—transfers within a society by definition
while only the political liberties to develop the struc- result in just allocation (Hayek 1960; Nozick 1985;
ture of society should be dispersed equally, posi- Steiner 1981; Bogart 1985; Christman 1991; G. A.
tions with greater social and economic status must Cohen 1995). Such views hold that individually just
be available to all and will result in the greatest ben- actions, such as purchasing and selling resources,
efit to the least advantaged members of society (Rawls result in individually, and therefore collectively, just
1971, 1993). outcomes. Libertarian principles require no further
A set of variations on the strict egalitarian and dif- metaethics of distribution.
ference principles of justice have been dubbed the How can we make sense of such a disparate set
resource-based principles of justice. The theory con- of competing theories, and how can they be applied,
tends that the difference principle does not account for separately or in concert, to practical questions of pub-
variation in individual behavior once goods and ser- lic finance? Arguments over transportation pricing
vices have been allocated (Dworkin 1981). Since some and finance frequently incorporate parts of many of
individuals in society squander their wealth while oth- the theories described above (see table 1), but often in
ers save and reinvest in productive activities, it may an internally contradictory, even illogical, fashion.
seem immoral to require the economically and socially Many times the public judges policies that distribute
ambitious to continually cross-subsidize those who do scarce resources based on instinct or feeling formed
not produce additional wealth or productive capacity. by limited introduction to the many theories of dis-
For this reason, resource-based theorists advocate equal tributive justice. Indeed, public opinion research has
distribution of goods and services at the outset but consistently found that most people’s conception of
little or no cross-subsidization from that point forward justice is highly variable and complex; studies of both
(Arneson 1990; Daniels 1990; Dworkin 1981, 2000). stated preferences and actual behavior show that people
Resource-based theorists, in other words, call for switch between characterizations of justice according
equal opportunity and expect unequal outcomes. to the situation (Frey 2003; Tetlock 2002; Rozin et al.
Criticisms of this theory center on how the unequal 1999; Gladwell 2002). Members of the public, and the
distribution of innate talents adversely affects indi- officials whom they elect, will frequently argue that
viduals in society. Should marginally productive roadway tolls, for example, would be unfair because
developmentally disabled adults, for example, be con- they would disproportionately affect the poor, and
signed by their fates to relative poverty? Variations yet officials campaign for and voters approve highly
in the difference principles theory argue that society income-regressive sales and other non-transportation-
should play a role in mitigating such conditions inside use-based tax increases earmarked for transportation.
or outside the individuals’ control. This may be because tolls are highly visible, while sales
Nevertheless, proponents of desert-based theories taxes—levied in small amounts over very large num-
of distributive justice criticize egalitarian principles of bers of transactions—are not. Or it may be that sales
justice in general for not sufficiently rewarding pro- taxes are common and familiar and therefore escape
ductive behavior. Desert-based theories define a just scrutiny, while things such as congestion charges are
social system as one that allocates resources based on less familiar, inviting skepticism (Derrick and Scott
individuals’ contribution to the social product (Miller 1998). But in either case such distinctions are not
1976, 1989), level of effort in productive activities, based on consistently applied principals of equity.
or compensation for labor (Sadurski 1985; Lamont
1997). Contemporary desert-based theorists maintain
that those who increase the wealth of society are enti- Making Sense out of Competing
tled to directly benefit from some proportion of that Theories of Equity
wealth. The desert-based theory of distributive justice
offers a moral foundation for capitalism. Critics of this As the foregoing theories of justice and equity
theory argue that the innate differences of individuals are frequently in conflict, one way to resolve this
Table 3
Confounding Notions of Equity in Transportation Finance
Type of Equity
Unit of Analysis Market Equity Opportunity Equity Outcome Equity
Geographic: States, Transportation spending in each Transportation spending is Spending in each jurisdiction
counties, legislative jurisdiction matches revenue proportionally equal across produces equal levels of
districts, etc. collections in that jurisdiction jurisdictions transportation capacity or service
Group: Modal interests, Each group receives transportation Each group receives a Transportation spending produces
racial/ethnic groups, spending or benefits in proportionally equal share of equal levels of access or
etc. proportion to taxes paid transportation resources mobility across groups
Individual: Residents, The prices or taxes paid by Transportation spending per Transportation spending
voters, travelers, etc. individuals for transportation person is equal equalizes individual levels of
should be proportional to the access or mobility
costs imposed
Borrowing from the theories of distributive justice The Geopolitical Equity Imperative
previously described, we can say that egalitarian phi-
losophies emphasize outcomes, difference or resource- Geographic equity frequently arises in the context
based philosophies emphasize opportunities (or vertical of federal transport policy. For example, the more
equity), and libertarian philosophies emphasize mar- populous, urbanized states tend to generate more in
kets (or horizontal equity). Each of these philosophies federal motor fuels tax revenues than they receive
can, in turn, be applied to different actors, or units of in fuel-tax-funded federal expenditures, whereas less
analysis, in transportation pricing and finance debates— populous, rural states tend to receive more in federal
individuals, groups, or jurisdictions. While “units of transportation funding than their motorists generate in
analysis” may seem itself an abstract concept, it makes federal fuel taxes. This redistribution of federal fuel
it easy for us to understand how and why people so tax revenues from “donor” states to “donee” states has
often talk past one another in debates over transporta- been hotly debated in Washington for decades and
tion finance. The concept likewise allows for specific- actually delayed the passage of both the Transportation
ity in describing divergent conceptions of equity that Equity Act for the 21st Century legislation in 1998 and
the more common concepts of horizontal and vertical the Safe, Accountable, Flexible, Efficient Transportation
equity simply cannot (see table 3). Equity Act: A Legacy for Users (SAFETEA-LU) leg-
In general, social science scholars of transporta- islation in 2005.
tion tend to focus on individual equity (Fullerton and Supporters of redistribution argue that it enables
Rogers 1993; Due and Mikesell 1994; Besley and wealthier states to cross-subsidize poorer states and
Rosen 1998; Derrick and Scott 1998; Bento et al. allows us to have an interconnected national highway
2005; Santos and Catchesides 2005; Shoup 2005; Jia system and a basic level of public transit in most urban
and Wachs 1998; Sanchez, Stolz, and Ma 2003; areas; such redistribution is often used to justify fed-
Blumenberg 2003), advocates and activists are more eral involvement in transportation finance. However,
likely to focus on group equity (Blumenberg and critics of the redistribution of federal fuel taxes have
Ong 2001; Raphael and Rice 2000; Raphael and countered that the redistribution reflects a rural bias
Stoll 2000; Hodge 1995; Garrett and Taylor 1999; in the federal transportation program (especially high-
Deka 2004; Forkenbrock 2001; Martens 2009), and ways), and research has shown that the practice actu-
elected officials are most concerned with geographic ally redistributes funds from poorer states to richer
equity. This focus on geography is because represen- states (Lem 1997) and from states with high levels
tation in the United States is organized spatially into of transit use to states where driving dominates (De
a hierarchy of jurisdictions. And because it is elected Cerreno and Seaman 2003).
officials who oversee the collection and distribution Critics of the redistribution of federal transportation
of transportation funds, most debates in transporta- revenues further contend that the national highway
tion pricing and finance center first and foremost on system is largely in place and that the most significant
questions of geographic equity. transportation investment needs are in congested urban
areas. If all federal fuel tax funds were simply returned of transit service, with little regard for the enormous
to states exactly proportional to their collection, there spatial variation in the consumers of transit service.
would be no rationale for a federal fuel tax; it could be The New York Metropolitan Transit Authority (NY
eliminated and states would then be free to collect as MTA) alone carries over 27 percent of the nation’s
much as they desire from higher state fuel taxes. Some transit riders each year (American Public Transpor
have even argued that federal transportation tax col- tation Association [APTA] 2003a). During the six years
lections should be dropped and that each state should between 1995 and 2000, federal capital and operating
be left to make do on its own (Roth 1998). subsidies combined averaged $0.20 per unlinked pas-
Some researchers have noted that many of the cur- senger trip on NY MTA. In contrast, riders on Chapel
rent systems of transportation pricing and finance Hill Transit in North Carolina, which carries three ten-
favor suburbs over central cities to the disadvantage of thousandths (0.03 percent) of the nation’s transit riders,
lower income or racially and ethnically diverse resi- enjoyed federal transit subsidies which average $0.97
dents. Chen (1994) argues that the intrametropolitan per trip during the 1990s (APTA 2003a, 2003b). Such
distribution of federal transportation dollars and local geographic disparities are not confined to federal
non-transportation-based taxes for transportation transportation finance. In California, the San Francisco
tend to favor developing over developed areas and Municipal Railway carries nearly half (45 percent) of
suburbs over central cities as well as highways over all Bay Area transit riders but receives just 10 percent
public transit and rail transit over buses. Chen in effect of the subsidies allocated through the state Transpor
criticizes market equity return-to-source rationales in tation Development Act (TDA). On the other hand,
favor of funding distributions based instead on oppor- Santa Clara Valley Transit Authority in the San Jose
tunity or outcome equity. Likewise, Bullard, Johnson, area carries 11 percent of all Bay Area transit riders
and Torres (2004) complain that higher rates of yet receives over one-third of the region’s TDA transit
street and highway expenditures in growing suburban subsidies (Metropolitan Transportation Commission
areas are biased against disproportionately minority 2003; Taylor 1991).
areas and, therefore, racist. The reason for these disparities is quite straight-
Similarly, Ong (2004) finds that automobile forward: representation in Congress and most state
insurance premiums for drivers with identical driv- legislatures matches the geographic distribution of
ing records can vary dramatically by metropolitan voters, not urban transit patrons. Geographic equity,
area residential location. In general, insurance pre- therefore, allocates public transit funding “equally”
miums are higher in central city areas and lower in among jurisdictions, often regardless of how they
suburban locations. While insurance companies may are used. The centrality of the imperative of geopo-
base such rates on variable claims rates among neigh- litical equity in transportation policy and planning
borhoods, Ong argues that it is nonresident drivers can hardly be overemphasized. It explains why Texas
(many of whom commute into job-rich central city has received $2.7 billion less in federal fuel tax
areas from outlying suburbs) who are responsible for revenues between 1956 and 1994 than motorists in
the higher crash rates, and claims rates, in central city Texas paid in federal fuel taxes. In contrast, Hawaii
neighborhoods. has received $2.2 billion more than motorists in
Given overriding political concerns with geographic Hawaii paid in federal fuel taxes; for every $1.00 in
equity in the distribution of transportation revenues, federal fuel tax generated in Hawaii, the state has
distortions arise when transportation use or demand received $4.11 in fuel-tax-funded appropriations
does not vary comparably across jurisdictions. Public (Poole 2001). It also explains why new rail transit
transit is perhaps the most striking example of this. systems were built in Atlanta, Miami, and many other
Transit ridership is concentrated spatially in the larg- sprawling Sunbelt cities over the past quarter century,
est, most densely developed cities. About one-third of while the long-planned Second Avenue subway in
all transit passengers in the United States are in the transit-oriented Manhattan has yet to carry a passen-
New York metropolitan area. The ten largest U.S. ger (Lawlor 1995).
transit systems carry over 60 percent of all riders; the Evidence of the geopolitical equity imperative can
hundreds of other, smaller systems carry less than be seen in the equity arguments over transportation
40 percent of all passengers (Taylor and McCullough pricing and finance. Arguments in favor of some
1998; Taylor et al. 2009). In the realpolitik of pub- transportation finance schema are often made on
lic transit finance, however, debates center on how jurisdictional equity grounds, while equity arguments
resources are doled out to jurisdictions and the suppliers against some given proposal are most often made on
But despite the obvious and well-documented rela- that others are already using the system at the same
tionship between the pricing of transportation systems time. For example, when a car gets on the freeway, it
and their use, public officials are frequently loathe to takes up space that other automobiles can no longer
even consider pricing transportation systems. What occupy, it imposes some delay on vehicles upstream,
to build and where to build it, for example, are often and it also causes some amount of pavement damage.
treated as entirely separate from who should pay and If there are very few vehicles already on the freeway,
how they should pay for it. But how both the supply then the cost of providing for that one additional car
of and demand for transportation are influenced by is very small. On the other hand, if there are many
user costs is neither abstract nor trivial. The fares, fees, cars already on the freeway, one additional vehicle
tolls, and taxes paid by travelers affect their decisions can slow other cars upstream and increase congestion
on where to travel, when to travel, how to travel, and to a surprising degree. In such cases, the marginal
even whether to travel. Use of the transportation sys- cost of accommodating an additional car is large. The
tem in turn greatly influences the maintenance and term social refers to the costs that society pays for
new capacity “needs” of the system, which affect the providing for that one additional vehicle. These social
finance system. Thus, the transportation finance system costs result mostly from congestion, pollution, noise,
and the performance (in terms of efficiency, effec- and road wear and tear from a trip. The same holds
tiveness, and equity) of the transportation system are true for the provision of public transit. The mar-
mutually reinforcing. ginal cost of providing additional peak-period or peak-
The issue of truck weight fees provides an exam- direction public transit is much greater than the mar-
ple of how the transportation finance system affects ginal cost of providing transit service in the off-peak
user decisions. Damage to pavements caused by or nonpeak direction. This is because transit agencies
heavy trucks significantly increases with weight per must size their labor force and vehicle fleets to meet
axle. Many people are surprised to learn that a rela- peak levels of demand, regardless of whether these
tively small share of trucks with heavy axle loads workers and vehicles sit idle at other times (Taylor,
does most of the damage to roads (Small, Winston, Garrett, and Iseki 2000).
and Evans 1989; U.S. Federal Highway Administration A large body of research shows that the current
[FHWA] 1997; Forkenbrock 2001). Yet for decades transportation finance programs do not make users
many states levied truck weight fees based on the pay the marginal social cost (delays imposed on others,
weight of empty trucks, and tollways frequently set pavement damage, emissions, noise, nonrenewable
rates based on the number of axles per vehicle. Both resource consumption, etc.) of vehicle use (U.S. FHWA
policies encourage truckers to load heavy weights 1997; Litman 2002b; Delucchi 1996; California
onto as few axles as possible and thereby maximize Department of Transportation 1997; Forkenbrock and
damage to roadways. Such truck fee systems increase Schweitzer 1997; CARB 1995; National Cooperative
maintenance and rehabilitation costs in comparison Highway Research Program 1994; Pozdena 1995;
to jurisdictions where fees are assessed in ways to Puget Sound Regional Council 1997). Yet as the role
encourage truckers to reduce axle weights. Thus, of the motor fuel tax has declined relative to non-
changing the way that fees are levied on trucks would transportation-related instruments such as sales and
change truckers’ behavior and, in turn, substantially other non-transportation-based taxes and bonds, we
lower maintenance costs without necessarily increas- are actually moving further away from marginal social
ing either taxes or revenues. cost pricing of transportation (Goldman and Wachs
2003; Sciara and Wachs 2007; Sorensen 2006).
So in crafting our current system of surface trans-
Why the Push to Reunite portation finance, we have often paid careful atten-
Pricing and Finance? tion to geopolitical equity questions regarding from
where revenues for transportation are collected and to
Most transportation economists agree that transpor- where they are expended. But in doing so we have come
tation finance programs should, as much as possible, to increasingly depend on highly income-regressive
charge users the marginal social cost of travel (Walters sales and other local taxes unconnected with transpor-
1961; Mohring 1970; Small, Winston, and Evans 1989; tation use. As a result, jurisdictional equity is trump-
Murphy and Delucchi 1997). The term marginal refers ing not only transportation efficiency and effectiveness
to the cost of providing for one additional trip, given but group and individual equity as well.
Transportation Pricing Equity: Current transportation user fees, like the motor
Compared to What? fuels tax and driver’s license fees, fare well under
market equity principles but less well under opportu-
As revenues for transportation have lagged far nity equity (Chernick and Reschovsky 1997; Lari and
behind the growth in travel and congestion in recent Iacono 2006; Poterba 1991; Wiese, Rose, and Schluter
years on many transportation systems, elected officials 1995). In contrast, transportation sales taxes—because
are looking for new ways to raise revenue for trans- they are income regressive and unconnected with
portation. But a waxing antitax climate amid concerns transportation system use—tend to fare poorly under
with rising fuel prices has made it all but impossible both market equity and opportunity equity princi-
to increase traditional sources of transportation reve- ples. Given that local option sales taxes for transpor-
nues, such as the motor fuel user tax, which have been tation and electronic roadway tolling are the two of
the foundation of transportation finance for nearly a the most frequently debated new forms of trans-
century. portation finance (Abrams 2007; Berger 2008; U.S.
Amid such a challenging fiscal climate, many pub- FHWA 2009; Transportation Research Board 2006;
lic officials are for the first time open to considering Hymon 2008; Hymon and Weikel 2008; Sorensen
various forms of marginal social cost pricing. Such and Taylor 2006), they are compared in table 5 with
openness is largely motivated out of desperation for respect to the multiple dimensions of equity previ-
transportation revenues and not by any newfound inter- ously outlined in table 3.
est in the potential for pricing to increase transpor- While many scholars have examined equity in sales
tation system efficiency or effectiveness. But these taxes (Derrick and Scott 1998; Due and Mikesell
officials for the most part remain wary of transporta- 1994; Poterba 1996; Santi 1994) and many more have
tion pricing; wary of something so new, of a possi- examined the equity of congestion pricing (Arnott,
ble political backlash, of something that might be, or de Palma, and Lindsey 1994; Bonsall and Kelly 2005;
seem to be, unfair (Langmyhr 1997; Kuehn 2008). Bureau and Glachant 2008; Y. Cohen 1987; Giuliano
It is in this climate that many equity arguments 1994; Glazer and Niskanen 2000; Maruyama and
against marginal social cost pricing of transporta- Sumalee 2007; Richardson and Bae 1998; Zhang
tion are posed. Many fear—some sincerely and others 2008), only one study has directly compared equity
tactically—that poor people will simply be priced off effects of sales taxes for transportation vis-à-vis con-
roads and transit vehicles, leaving free-flowing sys- gestion pricing (Schweitzer and Taylor 2008). They
tems for the wealthy. Such social equity concerns are examine the household incomes of the toll payers
indeed important, but they ignore the social inequities on the State Route 91 high-occupancy/toll lanes in
of our current transportation finance system. This is a Orange County, California, and compare them to the
critical point that is often overlooked in debates of household incomes of who would have paid had the
transportation pricing equity. four lanes of expressway capacity been financed with
Under the logic of market equity, equitable taxes are revenues from Orange County’s local option sales tax.
those levied on each individual in proportion to the They find that two kinds of transfers would occur with
costs imposed or benefits received by that individual. such a change. First would be a transfer of burden from
In practice, pricing benefits received is more complex, middle- and upper-middle-income households to the
ephemeral, and normative than pricing costs imposed highest and lowest income households. And second
and would not necessarily result in efficient outcomes would be a transfer from people who travel in the cor-
(U.S. FHWA 1997). When marginal social cost trans- ridor frequently to people who drive very little. With
portation pricing has been attempted, it has usually regard to the first burden transfer, the switch from
sought to internalize the normally external costs of congestion tolls to sales tax payments would cause
travel. Within this rubric, charging users according to the very highest income households to pay more in
the incremental social costs they impose on society absolute terms (because high income people spend so
when using the transportation system is equitable. much on goods and services subject to the sales tax),
On the other hand, opportunity equity suggests that a while the lowest income households would pay sub-
method of finance solely based on costs imposed may stantially more in relative terms (because such a large
disproportionately burden the poor. From this (verti- share of purchases by low-income households are sub-
cal equity) perspective, an equitable finance program ject to the sales tax). And with regard to the second
will treat fairly people who have different abilities to effect, the users of the toll lanes (who voluntarily
pay, with ability measured primarily by income. pay a toll ranging from $1.25 to $10.00 depending on
Table 5
Example: Comparing the Equity of Congestion Tolls and Transportation Sales Taxes
Type of Equity
Geographic: Congestion tolls: High if Congestion tolls: High if revenues Congestion tolls: Low unless
States, counties, expenditures are targeted to where are used to improve transportation expenditures targeted to areas
legislative they are collected service in jurisdiction where they with low levels of mobility
districts, etc. are collected
Sales taxes: High if expenditures are Sales taxes: Moderate because Sales taxes: Low unless
targeted to where they are revenues collected from all expenditures are targeted to
collected consumers are likely to improve areas with low levels of
service for travelers where the mobility
taxes are collected
Group: Modal Congestion tolls: High if revenues Congestion tolls: High if the Congestion tolls: Low unless
interests, racial/ are targeted to groups in rough revenues are spent to improve expenditures are targeted to
ethnic groups, proportion to their collection transportation services for groups groups with low levels of
etc. from which the tolls are collected mobility
Sales taxes: Low because light users Sales taxes: Moderate if the revenues Sales taxes: Low unless
of transportation systems are collected from all consumers are expenditures are targeted to
almost certain to cross-subsidize used to improve transportation groups with low levels of
heavy transportation system users services for the groups from which mobility
the taxes are collected
Individual: Congestion tolls: High if revenues Congestion tolls: Moderate because Congestion tolls: Low unless
Residents, are targeted to improve facilities, transportation toll revenues are expenditures are targeted to
voters, communities occupied by toll likely to indirectly benefit individuals with low levels of
travelers, etc. payers individual travelers mobility
Sales taxes: Low because tax Sales taxes: Low because Sales taxes: Low unless
payments are unrelated to transportation expenditures are expenditures are targeted to
transportation system costs unlikely to be returned to taxpayers individuals with low levels of
imposed or benefits received in proportion to payments mobility
direction and time of day to bypass nine miles of fre- be compared. This comparison takes into account
quently congested “free” lanes) carry the entire bur- the implementation realities of the finance program
den of retiring the debt on the $200 million (in 2008 and transportation system. As the table suggests, out-
dollars) capacity expansion, while sales tax finance come equity is currently considered a radical notion in
would spread the burden over hundreds of thou- public policy. Equal outcomes, given only limited
sands of consumers, most of whom never travel in public policy influence over inputs, require extreme
the lanes. Weinstein et al. (2006) undertook a general precision in targeting the particular units of analysis.
assessment of the equity of various financing mecha- While market and opportunity equity do not have to
nisms for the state of California, including various be incongruous, specific outcome equity objectives
tolling options and sales taxes. This report supports require more trade-offs with other types of equity and
Schweitzer and Taylor’s findings concluding that the units of analysis. For example, targeting expenditures
sales tax is the least equitable method of funding trans- to equalize outcomes among geographic areas seizes
portation, while tolls are more equitable from both funds and consumes resources that might otherwise
user benefit (market-based) and ability to pay (oppor- be available to increase outcome equity among
tunity) perspectives (Weinstein et al. 2006). Drawing groups with low levels of mobility or among indi-
on both Schweitzer and Taylor and the broader litera- viduals with low levels of mobility. For these reasons,
tures on sales tax and congestion pricing equity, table the evaluation of outcome equity below indicates gen-
5 presents the transportation finance equity evaluation erally low performance, unless the policies are pre-
framework developed above with regard to the mul- cisely targeted.
tiple dimensions across which the equity of congestion Given that transportation sales taxes represent the
pricing vis-à-vis sales taxes for transportation might most significant change in transportation finance over
the past two decades, table 5 suggests that, in com- Arnott, R., A. de Palma, and R. Lindsey. 1994. The welfare
parison to our current system of transportation finance, effects of congestion tolls with heterogeneous commuters.
Journal of Transport Economics & Policy 28:139-61.
a user fee system based on the principles of marginal
Bento, A., L. H. Goulder, E. Henry, M. Jacobsen, and R. von
cost pricing would clearly increase market equity and Haefen. 2005. Distributional and efficiency impacts of gaso-
may increase overall opportunity equity as well. As line taxes: An econometrically-based multi-market study.
noted earlier, travel behavior research has shown that American Economic Review, Papers and Proceedings 95 (2):
use of the highway system in congested conditions is 282-87.
positively correlated with income. That is, higher Berger, J. 2008. Congestion pricing: Just another regressive tax?
New York Times, April 20.
income travelers tend to spend a larger share of their Besley, T. J., and H. Rosen. 1998. Vertical externalities in tax set-
travel time in traffic congestion than do lower income ting: Evidence from gasoline and cigarettes. Journal of Public
travelers (Dittmar, Frick, and Tannehill 1994; Deakin Economics 70:383-98.
and Greig 1995; Frick, Heminger, and Dittmar 1996; Blumenberg, E. 2003. Transportation costs and economic oppor-
Sullivan 2000). Thus, a shift to a transportation finance tunity among the poor. Access 23:40-41. http://www.uctc.net/
access/23/Access%2023%20-%2007%20-%20THE%20
system that charges drivers more on congested routes
ACCESS%20ALMANAC.pdf.
and less elsewhere would fare well under the market Blumenberg, E., and P. Ong. 2001. Cars, buses, and jobs: Welfare
equity system when compared to our current finance program participants and employment access in Los Angeles.
system (Schweitzer and Taylor 2008). TRB Paper 01-3068. http://www.uctc.net/papers/544.pdf.
While equity may indeed be in the eye of the Blumenberg, E., and M. Waller. 2003. The long journey to
beholder, we have shown in this article that it is pos- work: A federal transportation policy for working families.
Transportation Reform Series. Washington, DC: Brookings
sible to systematically consider and evaluate any Institution, Center on Urban and Metropolitan Policy.
transportation finance instrument in terms of the Bogart, J. H. 1985. Lockean provisos and state of nature theories.
many possible dimensions of equity. But careful, sys- Ethics 95:824-36.
tematic evaluations of transportation pricing and Bonsall, P., and C. Kelly. 2005. Road user charging and social
finance equity remain quite rare. Instead, claims of exclusion: The impact of congestion charges on at-risk groups.
Transport Policy 12:406-18.
inequity or bias are often tossed about in debates over Brown, J., M. DiFrancia, M. C. Hill, P. Law, J. Olson, B. D. Taylor,
transportation pricing and finance with little or M. Wachs, and A. Weinstein. 1999. The future of California
incomplete supporting evidence, and sometimes quite highway finance. Berkeley: University of California, Berkeley,
cynically. We have tried to show in this review that California Policy Research Center.
while no scheme can satisfy all possible dimensions Bullard, R. D., and G. S. Johnson. 1997a. Epilogue. In Just trans-
portation, ed. R. D. Bullard and G. S. Johnson, 173-77. Stony
of equity, it is possible to offer comparative equity
Creek, CT: New Society.
assessments of various approaches to transportation Bullard, R. D., and G. S. Johnson. 1997b. Just transportation. In
pricing and finance and that efficiency and equity are Just transportation, ed. R. D. Bullard and G. S. Johnson, 7-21.
not always at odds. Finally, we have shown that the Stony Creek, CT: New Society.
current trend in transportation finance toward dedi- Bullard, R. D., G. S. Johnson, and A. O. Torres. 2004. Highway
cated non-transportation-based taxes (e.g., local sales robbery: Transportation racism and new routes to equity.
Cambridge, MA: South End.
taxes) is, by most measures of equity, less fair than Bureau, B., and M. Glachant. 2008. Distributional effects of road
most forms of marginal cost transportation pricing pricing: Assessment of nine scenarios for Paris. Transportation
(e.g., congestion tolls), about which equity concerns Research Part A 42:994-1007.
are most often raised. California Department of Transportation. 1997. Transportation
financing—Vehicle miles traveled (VMT) measurement and
References assessment. Sacramento: California Department of Transpor
tation, Transportation Planning Program.
Abrams, J. 2007. Frozen gas tax leads to toll roads. USA Today, Carens, J. 1981. Equality, moral incentives and the market.
May 20. http://www.usatoday.com/news/washington/2007-05- Chicago: Chicago University Press.
20-3066887318_x.htm. Chen, D. 1994. Social equity, transportation, environment, land use,
American Public Transportation Association. 2003a. Public trans- and economic development: The livable community. Paper pre-
portation ridership statistics. http://www.apta.com/rsources/ sented at the Transportation, Environmental Justice and Social
statistics/Pages/ridershipreport.aspx. Equity conference, Chicago. http://www.fta.dot.gov/library/policy/
American Public Transportation Association. 2003b. Transit envir-just/backcf.htm.
statistics. Chernick, H., and A. Reschovsky. 1997. Who pays the gasoline
Arneson, R. 1990. Liberalism, distributive subjectivism, and tax? National Tax Journal 50:233-59.
equal opportunity for welfare. Philosophy and Public Affairs Christman, John. 1991. Self-ownership, equality, and the structure
19:158-94. of property rights. Political Theory 19:28-46.
Clifton, K., and K. Lucas. 2004. Examining the empirical evi- Galston, William A. 2005. Political Pluralism and Freedom of
dence of transportation inequality in the U.S. and the U.K. In Conscience in the United States: History, Theory, Controversy.
Running on empty: Transport, social exclusion, and environ- Twin Conference in New York and Munich. New York. http://
mental justice, ed. K. Lucas, 15-36. Bristol, UK: Policy Press. www.council.unibayreuth.de/index.pl?lang=en&id=16579.
Cohen, G. A. 1995. Self-ownership, freedom, and equality. Garrett, M., and B. Taylor. 1999. Reconsidering social equity in
New York: Cambridge University Press. public transit. Berkeley Planning Journal 13:6-27.
Cohen, Y. 1987. Commuter welfare under peak-period conges- Giuliano, G. 1994. Equity and fairness considerations of conges-
tion tolls: Who gains and who loses? International Journal of tion pricing. In Curbing gridlock: Peak-period fees to relieve
Transport Economics 3:239-66. traffic congestion, vol. 2, 250-79. Washington, DC: National
Daniels, N. 1990. Equality of What: Welfare, Resources, or Academies Press.
Capabilities? Philosophy and Phenomenological Research 50: Gladwell, M. 2002. The tipping point: How little things can make
273-206. a big difference. Boston: Little, Brown.
Deakin, E., and G. Harvey. 1995. Transportation Pricing Strategies Glazer, A., and E. Niskanen. 2000. Which consumers benefit from
for California: An Assessment of Congestion Emissions, congestion tolls? Journal of Transport Economics & Policy
Energy, and Equity Impacts. Draft report to the California Air 34:43-54.
Resources Board and the TCM Working Group. Berkeley, CA: Goldman, T., and M. Wachs. 2003. A quiet revolution in transpor-
California Air Resources Board. tation finance: The rise of local option transportation taxes.
Deakin, E., and H. Greig. 1995. Transportation pricing strategies Transportation Quarterly 57 (1): 19-32.
for California: An assessment of congestion, emissions, energy, Harvey, G. W. 1994. Transportation pricing and travel. In Curbing
and equity impacts. Draft report to the California Air Resources gridlock: Peak-period fees to relieve traffic congestion, vol. 2,
Board and the TCM Working Group. Berkeley: California Air 90-114. Washington, DC: National Academies Press.
Resources Board. Hayek, F. A. 1960. The constitution of liberty. London: Routledge.
De Cerreno, A. L. C., and M. Seaman. 2003. Dividing the pie: Hodge, D. C. 1995. My fair share: Equity issues in urban trans-
Placing the transportation donor-donee debate in perspec- portation. In The geography of urban transportation, 2nd ed.,
tive. New York: New York University, Rudin Center for ed. S. Hanson, 359-75. New York: Guilford.
Transportation Policy and Management. http://wagner.nyu. Hymon, S. 2008. U.S. offers funds for toll lanes. Los Angeles
edu//transportation/files/dividingpie.pdf. Times, April 24. http://articles.latimes.com/2008/apr/24/local/
Deka, D. 2004. Social and environmental justice issues in urban me-congestion24.
transportation. In The geography of urban transportation, 3rd Hymon, S., and D. Weikel. 2008. MTA votes to seek sales tax hike
ed., ed. S. Hanson and G. Giuliano, 332-55. New York: Guilford. to fund L.A. County transit, roads. Los Angeles Times, July 25.
Delucchi, M. 1996. Total cost of motor-vehicle use. Access 8:7-13. http://www.latimes.com/news/local/la-me-salestax25-2008jul25,
Derrick, F. W., and C. E. Scott. 1998. Sales tax equity: Who bears 0,7015819.story?track=rss.
the burden? Quarterly Review of Economics and Finance Jia, W., and M. Wachs. 1998. Parking and affordable housing.
2:227-37. Access 13:22-25. http://www.uctc.net/access/access13.pdf.
Dittmar, H., K. Frick, and D. Tannehill. 1994. Institutional and Kai, N. 1979. Radical egalitarian justice: Justice as equality.
political challenges in implementing congestion pricing: Case Social Theory and Practice 5:209-26.
study of the San Francisco Bay Area curbing gridlock: Peak- Kuehn, D. 2008. Environmental justice and the distribution of
period fees to relieve traffic congestion. Special Report 242. benefits from highway pricing programs. Paper presented at
Washington, DC: Transportation Research Board. the annual meeting of the Transportation Research Board,
Due, J. F., and J. C. Mikesell. 1994. Sales taxation. Washington, Washington, DC.
DC: Urban Institute. Lamont, J. 1997. Incentive income, deserved income, and eco-
Dworkin, R. 1981. What is equality? Part 1: Equality of nomic rents. Journal of Political Philosophy 5:26-46.
resources. Philosophy and Public Affairs 10:185-246. Lamont, J. 2003. Distributive justice. In Stanford philosophy encyclo-
Dworkin, R. 2000. Sovereign virtue. Cambridge, MA: Harvard pedia. http://plato.stanford.edu/entries/justice-distributive/#Bib.
University Press. Langmyhr, T. 1997. Managing equity: The case of road pricing.
Ecola, L., and T. Light. 2009. Equity and congestion pricing: A Transport Policy 4 (1): 25-39.
review of the evidence. Technical report. Santa Monica, CA: Lari, A., and M. Iacono. 2006. Transportation finance, congestion,
RAND, Infrastructure, Safety, and Environment Program. and equity: some policy perspectives. Transportation Research
Forkenbrock, D. J. 2001. Comparison of freight rail and truck Record 1983:81-90.
external costs. Transportation Research, Part A 35A:321-37. Lawlor, M. J. 1995. Federal urban mass transportation funding
Forkenbrock, D. J., and L. A. Schweitzer. 1997. Environmental and the case of the Second Avenue Subway. Transportation
justice and transportation investment policy. Iowa City: Quarterly 49 (4): 43-54.
University of Iowa, Public Policy Center. Lem, L. L. 1997. Dividing the federal pie. Access 10:10-14.
Frey, B. S. 2003. Why are efficient transport policy instruments so Litman, T. 1996. Using road pricing revenue: Economic effi-
seldom used? In Acceptability of transport pricing strategies, ciency and equity considerations. Transportation Research
ed. J. Schade and B. Schlag, 63-74. Oxford, UK: Elsevier. Record 1558:24-28.
Frick, K. T., S. Heminger, and H. Dittmar. 1996. Bay Bridge Litman, T. 2002a. Evaluating transportation equity. World
congestion-pricing project: Lessons learned to date. Transpor- Transport Policy & Practice 8 (2): 50-65. http://ecoplan.org/
tation Research Record 1558:29-38. wtpp/wt_index.htm.
Fullerton, D., and D. L. Rogers. 1993. Who bears the lifetime tax Litman, T. 2002b. Transportation cost and benefit analysis.
burden. Washington, DC: Brookings Institution. Victoria, Canada: Victoria Transport Policy Institute.
Martens, K. 2009. Equity concerns and cost-benefit analysis: (contempt, anger, disgust) and three moral codes (commu-
Opening the black box. Washington, DC: Transportation nity, autonomy, divinity). Journal of Personality and Social
Research Board. Psychology 99 (4): 574-86.
Maruyama, T., and A. Sumalee. 2007. Efficiency and equity com- Sadurski, W. 1985. Giving desert its due. Dordrecht, Netherlands:
parison of cordon- and area-based road pricing schemes using Springer.
a trip-chain equilibrium model. Transportation Research Part Sanchez, T. W., R. Stolz, and J. S. Ma. 2003. Moving toward
A 41:655-71. equity: Addressing inequitable effects of transportation policies
Metropolitan Transportation Commission. 2003. 2002 annual on minorities. Cambridge, MA: Harvard Civil Rights Project and
report. http://www.mtc.ca.gov/publications/AnnualReport-02/ Center for Community Change.
MTC_02_Annual_Report.pdf. Santi, L. 1994. Estimates of the state sales and use tax on Arkansas
Miller, D. 1976. Social justice. Oxford, UK: Clarendon. households, 1989–1995. Arkansas Business & Economics
Miller, D. 1989. Market, state, and community. Oxford, UK: Review 27 (1): 10-18.
Clarendon. Santos, G., and T. Catchesides. 2005. Distributional conse-
Minken, H., and F. Ramjerdi. 2008. Efficiency and equity consid- quences of gasoline taxation in the United Kingdom.
erations in road pricing. In Efficiency and equity considerations Transportation Research Record 1924:103-11.
in road pricing, ed. C. Jensen-Butler, B. Sloth, M. M. Larsen, Santos, G., and L. Roley. 2004. Distributional impacts of road
B. Madsen, and O. A. Nielsen, 193-206. Berlin: Springer. pricing: The truth behind the myth. Transportation 31:21-42.
Mohring, H. 1970. The peak load problem with increasing returns Schweitzer, L., and B. Taylor. 2008. Just pricing: The distribu-
and pricing constraints. American Economic Review 60 (4): tional effects of congestion pricing and sales taxes.
693-705. Transportation 35 (6): 797-812.
Murphy, J., and M. A. Delucchi. 1997. A review of the literature Sciara, S., and M. Wachs. 2007. Metropolitan transportation fund-
on the social cost of motor-vehicle use in the United States. ing: Prospects, progress, and practical considerations. Public
Journal of Transportation and Statistics 1 (1): 15-42. Works Management & Policy 12 (1): 378-94.
National Cooperative Highway Research Program. 1994. Shoup, D. 2005. The high cost of free parking. Chicago: Planners
Alternatives to the motor fuel tax for financing surface trans- Press.
portation improvements. Draft Summary Report NCHRP Shoup, D., and P. Vincent. 1975. Equity in financing the California
20-24(7). Washington, DC: Transportation Research Board. transportation plan. Report to the California Department of
Nicholls, D. 1975. The pluralist state. New York: St. Martin’s. Transportation.
Nozick, R. 1985. Anarchy, state and utopia. New York: Basic Small, K., C. Winston, and C. A. Evans. 1989. Pavement wear and
Books. road durability. In Road work: A new highway and pricing invest-
Ong, P. 2004. Auto insurance redlining in the inner city. Access ment policy, 37-68. Washington, DC: Brookings Institution.
25:40-41. http://www.uctc.net/access/25/Access%2025%20 Sorensen, P. A. 2006. Cheaper gas and more expensive shoes:
-%2006%20-%20THE%20ACCESS%20ALMANAC.pdf. California’s transportation finance reform proposal. Transpor
Poole, R. W., Jr. 2001. Commercializing highways: A “road- tation Research Record 1960:1-7.
utility” paradigm for the 21st century. Los Angeles: Reason Sorensen, P. A., and B. Taylor. 2006. Innovations in road finance:
Public Policy Institute. Examining the growth in electronic tolling. Public Works
Poterba, J. 1991. Is the gasoline tax regressive? Tax policy and Management & Policy 11 (2): 110-25.
the economy. Cambridge, MA: MIT Press. Steiner, H. 1981. Liberty and equality. Political Studies 29:555-69.
Poterba, J. 1996. Retail price reactions to changes in state and Sullivan, E. 2000. Continuation study to evaluate the impacts of the
local sales taxes. National Tax Journal 27:169-79. SR 91 value-priced express lanes. Final report to the California
Pozdena, R. J. 1995. Where the rubber meets the road: Reforming Department of Transportation.
California’s roadway system. Los Angeles: Reason Foundation. Taylor, B. 1991. Unjust equity: An examination of California’s
Puget Sound Regional Council. 1997 system performance report. Transportation Development Act. Transportation Research
http://www.civilrightsproject.ucla.edu/research/transportation/ Record 1297:85-92.
MovingtoEquity.pdf Taylor, B. 2004. The geography of urban transportation finance. In
Raphael, S., and L. Rice. 2000. Car ownership, employment, and The geography of urban transportation, 3rd ed., ed. S. Hanson
earnings. Working Paper 179, Joint Center for Poverty and G. Giuliano, 294-331. New York: Guilford.
Research, Chicago. Taylor, B., M. Garrett, and H. Iseki. 2000. Measuring cost vari-
Raphael, S., and M. Stoll. 2000. Can boosting minority car own- ability in provision of transit service. Transportation Research
ership rates narrow inter-racial employment gaps? Chicago: Record 1735:101-12.
Joint Center for Poverty Research. Taylor, B., and W. S. McCullough. 1998. Lost riders. Access
Rawls, J. 1971. A theory of justice. Cambridge, MA: Belknap. 13:26-31.
Rawls, J. 1993. Political liberalism. New York: Columbia University Taylor, B., D. Miller, H. Iseki, and C. Fink. 2009. Nature and/or
Press. nurture? Analyzing the determinants of transit ridership across
Richardson, H., and C. Bae. 1998. The equity impacts of road U.S. urbanized areas. Transportation Research, Part A: Policy
pricing. In Road pricing, traffic congestion, and the environ- and Practice 43 (1): 60-77.
ment: Issues of efficiency and social equity, ed. E. Verhoef and Tetlock, P. E. 2002. Social functionalist frameworks for judgment
K. Button, 247-62. London: Edward Elgar. and choice: Intuitive politicians, theologians, and prosecutors.
Roth, G. 1998. Roads in a market economy. London: Avebury. Psychological Review 109 (3): 451-71.
Rozin, P., L. Lowery, S. Imada, and J. Haidt. 1999. The CAD Transportation Research Board. 2006. The fuel tax and alter-
triad hypothesis: A mapping between three moral emotions natives for transportation funding. Special Report 285.
Washington, DC: Transportation Research Board of the Wiese, A., R. Rose, and G. Schluter. 1995. Motor-fuel taxes and
National Academies. household welfare: An applied general equilibrium analysis.
U.S. Federal Highway Administration. 1997. Federal highway cost Land Economics 71:229-49.
allocation study final report. Washington, DC: U.S. Federal Zhang, L. 2008. The short and long-run impact of a vehicle
Highway Administration. mileage fee on income and spatial equity. Paper presented
U.S. Federal Highway Administration. 2009. Income-based equity at the annual meeting of the Transportation Research Board,
impacts of congestion pricing—A primer. http://ops.fhwa.dot Washington, DC.
.gov/publications/fhwahop08040/cp_prim5_04.htm.
Wachs, M. 1994. Will congestion pricing ever be adopted? Brian D. Taylor, AICP, is Professor and Chair of Urban
Access 4:15-19. Planning, and Director of the Institute of Transportation Studies
Walters, A. A. 1961. The theory and measurement of private and at UCLA.
social cost of highway congestion. Econometrica 29 (4): 676-99.
Weinstein, A., J. Dill, T. Goldman, J. Hall, F. Holtzman, J. Recker, Alexandra Tassiello Norton resides in New Orleans and cur-
and E. Goodwin. 2006. Transportation financing opportunities rently serves as the Director of Transportation, Coastal Protection,
for the state of California. San Jose, CA: Mineta Transportation and Environmental Policy for the Louisiana Recovery Authority
Institute. and State Recovery Act Administrator.