America's Fear of Trains

America’s political elite has an unusual phobia. They are terrified of large, metal machines that are guided by rails. This doesn’t apply to all large metal machines, such as SUVs. They just can’t abide the ones with rails underneath them. 

A recent blog from the Heritage Foundation provides the clearest example of this irrational fear by using the headline, “Transportation Secretary Wants Us to Be Like Communist China!” You might expect Secretary LaHood to appear wearing a Mao suit, but apparently his sin was to call for more investment in high-speed rail (HSR). He further offended Heritage by comparing America’s commitment to HSR to China’s and found it lacking.

China's High-Speed Rail in service. No sign of terrified Heritage Foundation writers in this picture. Photo courtesy of Khalidshou/Wikipedia

Those who oppose rail transit tend to gravitate towards the same talking points as in Heritage’s blog. They are:

1.       It’s fiscally irresponsible, since passenger railroads always need subsidies.

2.       The public will never ride in trains because they love their cars so much.

3.       A federally-funded HSR program is an intrusion on states’ rights.

The first point is perhaps the oddest. Heritage cited a Voice of America article that, in turn, cited China’s Academy of Science’s claim that fares from the Chinese HSR system would never be enough to pay off the construction loans. A large portion of these costs may be generated by corruption, which Heritage insinuates is inevitable in big government projects. Heritage appears to be unaware that government corruption in China isn’t just limited to big rail projects. 

I would imagine that the assumption that HSR and corruption go hand-in-hand would be quite a surprise to Germany, builder of the ICE bullet train, and Japan, home of the Shinkansen. Both nations ranked far higher than China on Transparency International’s Corruption Perceptions Index and slightly higher than the United States.

A corruption-free German ICE train. Photo courtesy of Sebastian Terfloth/Wikipedia.

Cost estimates for US HSR projects range from $50 million ---via an American Enterprise Institute scholar---to a range between $35 million and $50 million---courtesy of a former chairman of California’s High Speed Rail Authority.  That sounds pretty high, until you compare it to the cost of a toll-free interstate highway. A simple upgrade of the Century Freeway in Los Angeles and various routes in Orange County cost between $25 million and $29 million per mile (inflation adjusted from 1994 levels). That’s money thrown into the gas tank and burned, because in less than five years those improvements will have no effect on these roads’ level of service. Just try driving these routes in the late afternoon to verify. Plus, it’s all being paid for out of taxes (fuel and general revenues, mostly). How’s that for a subsidy?

So what about the second point? Will the public refuse to ride a high-speed train? Acela, the high-speed train running from Washington to Boston, certainly isn’t running empty. In the first six months of FY 2012 ridership hit 1.6 million passengers. That’s comparable to traffic out of Washington’s Reagan National Airport bound for New York and Boston on the US Air and Delta Shuttles. Acela isn’t exactly cheap, thanks to Congress’s attempts to starve Amtrak of subsidies, but it takes you directly to Manhattan. The Delta Shuttle out of Washington takes you to LaGuardia Airport in Queens. Expect a hefty cab fare to get into the city, because there’s no rail connection of any kind.

California’s HSR will tie the state’s two largest metropolitan regions together. Opponents claim its first leg will be underutilized, since it will not reach either San Francisco or Los Angeles. However, this is not unprecedented: the first long-distance superhighway built in the US, the Pennsylvania Turnpike, didn’t reach either Pittsburgh or Philadelphia. It stopped well short of both because builders were using the right-of-way of an unbuilt railroad to get at least some of it built quickly and cheaply. That’s EXACTLY what HSR planners in California are doing. We all know the impact of this first superhighway: rail travel, which had been dominant, declined and nearly died off entirely. The car became supreme because it was perceived as being faster.  That perception is steadily weakening on the highly-congested Interstate 5 corridor between San Francisco and Los Angeles, so HSR has some competitive space to get established.

This segues into Heritage’s final point that these decisions are best left to the states. The Pennsylvania Turnpike was a state effort, so opponents might point to this as an example of state-led innovation. However, efforts to expand the nation’s network of superhighways crept along at a Model T’s pace until passage of the Interstate and Defense Highways Act (aka the Federal-Aid Highway Act of 1956) under President Eisenhower. 

This includes Pennsylvania’s own efforts to add onto the Turnpike. The first stretch opened in 1940; it wouldn’t reach Philadelphia until 1950. The proposed extensions to other parts of the state would not get built until Eisenhower’s Interstate program came into existence in 1956. That’s right---it took federal involvement to get things done.

This is the inherent weakness in the argument of those who view federal programs as an intrusion into states’ rights. To think that California could build an entire HSR line without massive federal assistance is as absurd as expecting Pennsylvania or a more rural state like Alabama to build their interstate highway system without any help. 

Perhaps the final irony in all of this is that the Heritage Foundation, a group traditionally allied with the Republican Party, is arguing against the approach endorsed by that same party at its founding. As Patt Morrison pointed out in the Los Angeles Times, the Republicans incorporated in the mid-19^th century federal funding of a transcontinental rail link to California into their party’s platform.  They did not insist that Nebraska self-finance its section. Corruption was rife in the project, as China is experiencing with their HSR, but it’s hard to argue that the Transcontinental Railroad was a mistake. In fact, it’s hard to see how the US could have become an industrial powerhouse without it.  

A train in a museum display going nowhere, rather like Heritage's vision for the US transportation system. Photo by the author.

It’s just as difficult to imagine how the US can sustain its global economic position today if it fails to embrace the same transportation technology now in place in Germany, Japan, and China. Nobody gets ahead if they let their fears paralyze them. Let’s hope the Heritage Foundation and its allies get over their rail-phobia soon.

How to Pay for Roads: Part 2

I recently summarized the various ideas on funding transportation being batted about by legislatures and Congress. Some of these were unremarkable, such as raising the gas tax. Some made so much sense that it was hard to understand why they haven’t already been embraced, as with indexing the gas tax to inflation. Some could be viewed as intrusive, as in the case of assessing taxes based on how many miles you drive. However, one option appears to have been overlooked: taxing all vehicles according to their weight.

Many trucking companies pay registration fees that can vary by weight, but these tend to be rather nominal amounts. Missouri’s annual fees for single unit trucks range from $15.75 to $100.75.  Alabama’s fees vary from $23 to $845. Virginia charges a flat fee of $13, then adds a range of $2.50 to $12 per 1000 lbs. Basically, no two states are alike.

For personal cars, Alabama, Missouri, and Virginia assess registration not just at different rates, but also with different standards. Missouri uses horsepower, apparently in an effort to punish Corvette owners. Alabama charges a flat rate of $24.25. Virginia uses vehicle weight for a range from $26.50 to $31.50. Virginia’s paltry amount probably just covers repaving the Governor’s driveway.

However, Missouri and Virginia go further by charging a personal property tax assessed according to the market value of the vehicle. Missouri uses 1/3 of the market value with the actual amount varying according to locality. Virginia uses the National Automotive Dealers Association Official Used Car Guide to establish the market value, then divides that number by 100, multiplies that by the tax rate ($4.57 in Fairfax County, a prosperous suburb of Washington, DC), then reduces the amount via a personal property tax relief measure enacted by a Republican governor in 1998. Clearly, simplicity in the tax code is not a high priority in Virginia.

Rather than these complicated maneuvers, what if we just used the weight of each and every vehicle to determine the tax to be paid? In fact, what if we dispensed with fuel taxes altogether and relied on weight alone? Let’s look at the positives first:

1.       Heavier vehicles, which inflict the most punishment on road surfaces, would be liable for the most tax. Essentially, it makes this into a use tax. Use up the road; pay to replace it.

2.       Lighter vehicles are more fuel efficient. It’s hard for a heavy Range Rover to get more than 20 miles per gallon, unless it’s rolling downhill with a hurricane pushing it along. A small Toyota Yaris can get twice that mileage, unless you drive angry. So, by taxing according to weight, we encourage the use of light vehicles that happen to be fuel efficient. 

3.       Encouraging more fuel efficiency decreases the necessity to either import oil or extract it from shale formations (via the infamous “fracking” process). The former reduces the strategic importance of the Middle East, where much of our defense budget disappears. The latter could protect shale-rich Appalachia from, believe it or not, earthquakes (the National Research Council found that pumping water into the ground can cause minor seismic events---fun!). 

4.       Growth in the economy and population will automatically yield growth in revenue. Both increase traffic, so more vehicles will be hitting the road. That means more revenue, though it could be slightly offset by declining vehicle weights as car buyers opt for lighter vehicles. A side benefit could be that revenues will increase fastest in those states experiencing rapid growth. These states typically find that they can’t keep up with rising transportation demand, as in the case of Virginia, Georgia, and several other Sunbelt states. But, with basing taxes on weight, that very demand growth generates an ever-growing revenue stream.

5.       It’s fairer this way. Does it really make sense to tax the driver of a Lexus CT hybrid (curb weight 3146 lbs) more than the driver of a Toyota Tacoma pickup (curb weight 3250 lbs)? The hybrid weighs less, so the road damage will be less. Plus, the hybrid uses less gas, thus making it more environmentally and geopolitically friendly. However, Missouri and Virginia will hit the hybrid owner with a higher tax bill because the car’s value is $10,000 higher than the pickup’s. 

Alas, every list of positives must be followed by a list of negatives:

1.       The trucking industry will cry foul. Trucks weigh more than cars, so guess who the greatest burden will fall upon? However, their business is also highly dependent on the good health of the crumbling interstate highway system. 

2.       Owners of large SUVs and pickups will be rather unhappy. They already are pretty unhappy with the fuel bills.  It’s always a bit of a shock to pull up at a gas pump and see that the previous customer racked up over $100. Tell that same person their tax may go up, and they vent their anger at the polls. Eliminating the fuel tax in return might take some of the sting out, though.

3.       Many states don’t charge a personal property tax. Any politician who attempted to introduce one without an offset like fuel tax elimination will feel considerable voter anger. This happened in Virginia, which is why officials introduced the partial rollback I mentioned earlier.

4.       The federal government and state governments would have to work together to apply this approach across all states. Otherwise, chaos will reign as individual states opt for extremely high tax rates on vehicle weights while others opt out entirely. 

So, is taxing by weight and removing all other fees the way forward? Or, is it a political dead-end like all of the other revenue proposals currently circulating? It’s something to think about the next time you drive across a long, rusty highway bridge.