s***@gmail.com
2008-08-01 07:08:25 UTC
Gilded Highways
Why the government is spending $100 billion a year to get you to drive
more.
Daniel Gross
Newsweek Web Exclusive
Updated: 11:36 AM ET Jul 31, 2008
The Transportation Department reported that Americans drove 9.6
billion fewer miles in May 2008 than in May 2007, a 3.7 percent drop.
The result: rising demand for mass transit and declining revenues for
the Federal Highway Trust Fund, which is funded by gas taxes. The Bush
administration's counterintuitive policy response, as the New York
Times reported, has been for the Highway Trust Fund to borrow funds
from the department's mass-transit account.
Naturally, many urban-dwelling, car-hating socialists (as well as
suburban-dwelling, Jeep-driving moderates like me) believe this is
precisely the time to put more government funds—not less—into
alternate modes of transportation: natural-gas powered buses, bicycle-
sharing programs, trains, light-rail systems, subways, ferries, and
rickshaws. The notion that the government should invest more in mass-
transit infrastructure has always raised conservative hackles. As they
sit on the Amtrak Acela, or ride the New York City subway or
Washington, D.C., Metro, to their think-tank jobs or to the Wall
Street Journal's offices, free-market types frequently fulminate
against the systems that ferry them around. (New York Times house
libertarian John Tierney's "Amtrak Must Die" from 2002 is a classic in
the genre.) To such critics, money spent on mass transit, such as the
$1.3 billion 2007 appropriation for Amtrak (here's Amtrak's 2007
annual report) represents an
unconscionable waste of taxpayer funds. With their top-down
bureaucracies and public ownership, they argue, mass-transit systems
can never hope to compete economically with the private-sector
alternative—driving gasoline-powered cars. They can't compete
culturally and socially, either, since rugged American individualists
prefer sitting by themselves in traffic to rubbing shoulders with
strangers. And for those few areas where it does make sense to have
mass transit, the market will step in and provide.
This is one of the oldest political arguments in America. For a good
chunk of the 19th century, the prospect of the federal government
supporting "internal improvements"—i.e., canals, ports, roads—was a
major source of partisan contention. Ultimately, the Jeffersonians and
Jacksonians (and their heirs) lost out to the Whigs (and their heirs).
Whether it was the Erie Canal, the first transcontinental railroad, or
the interstate highway system, state and federal resources have
repeatedly been deployed to build new types of transportation
infrastructure that the private sector couldn't, or wouldn't, fund.
Over time, these investments paid huge economic, social, and national-
security dividends to the country.
What hasn't been acknowledged is that the automobile is supported by a
government subsidy that dwarfs anything provided to mass transit. How
big is the subsidy? By my (admittedly extremely crude) calculations,
it could total nearly $100 billion per year. Americans can drive so
much because there is an extremely extensive system of (largely free)
roads for us to use. Despite some private-sector efforts, maintaining
and building the nation's roads remains almost exclusively the
preserve of government. Data from the Census Bureau on construction
spending shows that this year, public spending on highways and streets
is running at an annual rate of about $75 billion.
But that's not all. Tax credits and breaks for particular types of
economic activity constitute a public subsidy of that activity.
Taxpayers effectively subsidize home ownership through the mortgage
interest deduction. They subsidize the use of mass transit through
programs that permit people to purchase mass-transit tickets with
pretax money. And taxpayers subsidize the purchase and operation of
gas-powered automobiles in at least two big ways.
First, just as they can with other types of equipment, businesses and
self-employed individuals can write down the cost of cars and trucks
they own against their taxable income. This decade, the relevant
portion of the tax code dealing with the issue, Section 179, was
changed to provide extra taxpayer support for the purchase of very
large cars. In 2003, as part of an effort to stimulate business
investment, the law was changed to significantly increase the amount
of deductions businesses could take on equipment, including vehicles
that weighed more than 3 tons. (In the past, that category would have
been limited to commercial vehicles, such as pickup trucks and moving
vans. But in SUV-crazy America, that also means Hummers and
Escalades.) So if a Realtor bought a $75,000 Hummer and used it mostly
for business, she could take a $25,000 deduction from her taxable
income in the first year of ownership. The stimulus package passed
earlier this year included
provisions that boosted the amount of total deductions businesses
could take on equipment. But taxpayers aren't just subsidizing the
purchase of gas-guzzlers by businesses. Thanks to tax credits for
hybrids, they're also subsidizing the purchase of gas-sippers by
individuals.
Self-employed individuals and businesses can also deduct the costs of
operating a car for business purposes from their taxable income. In
light of higher gas prices, the Internal Revenue Service this year
boosted the mileage allowance to 58.5 cents per mile. A self-employed
salesperson who drives 5,000 miles a year and is in the 33 percent tax
bracket can thus save about $1,000 in tax payments. (The language of
the allowance suggests that it applies only to cars—not to bicycles,
scooters, or motorcycles.)
URL: http://www.newsweek.com/id/149693
***********************************************************
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www.zazzle.com/stanrail
Stan'S Railpix;-A-Rail-Photo-Gallery !!
http://www.trainweb.org/railpix
Will remain a FREE site with 2426+1/2 images posted.
***********************************************************
Why the government is spending $100 billion a year to get you to drive
more.
Daniel Gross
Newsweek Web Exclusive
Updated: 11:36 AM ET Jul 31, 2008
The Transportation Department reported that Americans drove 9.6
billion fewer miles in May 2008 than in May 2007, a 3.7 percent drop.
The result: rising demand for mass transit and declining revenues for
the Federal Highway Trust Fund, which is funded by gas taxes. The Bush
administration's counterintuitive policy response, as the New York
Times reported, has been for the Highway Trust Fund to borrow funds
from the department's mass-transit account.
Naturally, many urban-dwelling, car-hating socialists (as well as
suburban-dwelling, Jeep-driving moderates like me) believe this is
precisely the time to put more government funds—not less—into
alternate modes of transportation: natural-gas powered buses, bicycle-
sharing programs, trains, light-rail systems, subways, ferries, and
rickshaws. The notion that the government should invest more in mass-
transit infrastructure has always raised conservative hackles. As they
sit on the Amtrak Acela, or ride the New York City subway or
Washington, D.C., Metro, to their think-tank jobs or to the Wall
Street Journal's offices, free-market types frequently fulminate
against the systems that ferry them around. (New York Times house
libertarian John Tierney's "Amtrak Must Die" from 2002 is a classic in
the genre.) To such critics, money spent on mass transit, such as the
$1.3 billion 2007 appropriation for Amtrak (here's Amtrak's 2007
annual report) represents an
unconscionable waste of taxpayer funds. With their top-down
bureaucracies and public ownership, they argue, mass-transit systems
can never hope to compete economically with the private-sector
alternative—driving gasoline-powered cars. They can't compete
culturally and socially, either, since rugged American individualists
prefer sitting by themselves in traffic to rubbing shoulders with
strangers. And for those few areas where it does make sense to have
mass transit, the market will step in and provide.
This is one of the oldest political arguments in America. For a good
chunk of the 19th century, the prospect of the federal government
supporting "internal improvements"—i.e., canals, ports, roads—was a
major source of partisan contention. Ultimately, the Jeffersonians and
Jacksonians (and their heirs) lost out to the Whigs (and their heirs).
Whether it was the Erie Canal, the first transcontinental railroad, or
the interstate highway system, state and federal resources have
repeatedly been deployed to build new types of transportation
infrastructure that the private sector couldn't, or wouldn't, fund.
Over time, these investments paid huge economic, social, and national-
security dividends to the country.
What hasn't been acknowledged is that the automobile is supported by a
government subsidy that dwarfs anything provided to mass transit. How
big is the subsidy? By my (admittedly extremely crude) calculations,
it could total nearly $100 billion per year. Americans can drive so
much because there is an extremely extensive system of (largely free)
roads for us to use. Despite some private-sector efforts, maintaining
and building the nation's roads remains almost exclusively the
preserve of government. Data from the Census Bureau on construction
spending shows that this year, public spending on highways and streets
is running at an annual rate of about $75 billion.
But that's not all. Tax credits and breaks for particular types of
economic activity constitute a public subsidy of that activity.
Taxpayers effectively subsidize home ownership through the mortgage
interest deduction. They subsidize the use of mass transit through
programs that permit people to purchase mass-transit tickets with
pretax money. And taxpayers subsidize the purchase and operation of
gas-powered automobiles in at least two big ways.
First, just as they can with other types of equipment, businesses and
self-employed individuals can write down the cost of cars and trucks
they own against their taxable income. This decade, the relevant
portion of the tax code dealing with the issue, Section 179, was
changed to provide extra taxpayer support for the purchase of very
large cars. In 2003, as part of an effort to stimulate business
investment, the law was changed to significantly increase the amount
of deductions businesses could take on equipment, including vehicles
that weighed more than 3 tons. (In the past, that category would have
been limited to commercial vehicles, such as pickup trucks and moving
vans. But in SUV-crazy America, that also means Hummers and
Escalades.) So if a Realtor bought a $75,000 Hummer and used it mostly
for business, she could take a $25,000 deduction from her taxable
income in the first year of ownership. The stimulus package passed
earlier this year included
provisions that boosted the amount of total deductions businesses
could take on equipment. But taxpayers aren't just subsidizing the
purchase of gas-guzzlers by businesses. Thanks to tax credits for
hybrids, they're also subsidizing the purchase of gas-sippers by
individuals.
Self-employed individuals and businesses can also deduct the costs of
operating a car for business purposes from their taxable income. In
light of higher gas prices, the Internal Revenue Service this year
boosted the mileage allowance to 58.5 cents per mile. A self-employed
salesperson who drives 5,000 miles a year and is in the 33 percent tax
bracket can thus save about $1,000 in tax payments. (The language of
the allowance suggests that it applies only to cars—not to bicycles,
scooters, or motorcycles.)
URL: http://www.newsweek.com/id/149693
***********************************************************
Stans Railpix railphotoexpress.com Store !!
http://www.cafepress.com/stans_railpix
www.zazzle.com/stanrail
Stan'S Railpix;-A-Rail-Photo-Gallery !!
http://www.trainweb.org/railpix
Will remain a FREE site with 2426+1/2 images posted.
***********************************************************