TRB Special Report 303: Equity of Evolving Transportation Finance Mechanisms (2011) / Chapter Skim
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3 Equity Through Different Lenses
3 Equity Through Different Lenses
Pages 55-82
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From page 55... ...
While plaintiffs have generally argued in favor of greater income-based or social equity for those who are most dependent on transit services -- low-income groups, persons with disabilities, and minority inner-city residents -- transit officials have argued that achieving greater geographic equity requires them to invest in commuter-oriented suburb-to-centralbusiness-district transit services (see, for example, Brown 1998; Garrett 2006; and Grengs 2002)
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From page 56... ...
The final part of the chapter discusses ways in which the impacts of a transportation finance policy -- cost and other burdens, as well as benefits -- may be distributed as individuals and institutions modify their behavior in response to the policy. Examples, some hypothetical and some drawn from practical experience, are included throughout this chapter; however, no attempt is made here to capture all the empirical evidence on the equity implications of evolving transportation finance mechanisms.
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From page 57... ...
In most highway financing debates at the federal level, return to source or geographic equity focuses on whether states get back an equitable share of the fuel taxes they send to Washington. Other Equity Concepts In addition to the three well-known equity concepts already noted, other less familiar equity concepts -- costs imposed and process or participation -- have begun to attract attention, often in the context of concerns about what has become known as environmental justice.
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From page 58... ...
Process The concept of process, or participation, equity is an increasingly important aspect of decision making for the transportation system. Process participation can take a wide variety of forms, ranging from responses to formal solicitations for public comment, to organizing neighbors to support or oppose a local transportation project, to weighing in at the ballot box on transportation measures.
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From page 59... ...
. As a result, at least in part, of the ensuing public outcry, the Chicago Transit Authority subsequently decided to keep the Brown Line running with reduced service during its reconstruction, even though the project, which ran from February 2006 through December 2009, took longer and cost more than it would have if the reconstruction had been done with a complete shutdown (Joseph Schofer, committee chair, personal communication, 2010)
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From page 60... ...
CATEGORIES OF PEOPLE Most of the equity concepts just discussed require identifying impacts on different people. Useful criteria for grouping individuals for the purposes of assessing equity impacts are listed in Box 3-1.
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From page 61... ...
For example, urban highway users subsidize rural users (Levinson 2005) , and urban transit riders, particularly bus riders, generally cross-subsidize suburban transit users, particularly rail users (Golob et al.
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From page 62... ...
. Economic Status Economic status is another common grouping used in assessing a policy's equity implications.
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From page 63... ...
. Nonetheless, generational equity concerns have recently come to the fore as some states have relied on debt more heavily to avoid increases in current taxes and others have given up long-term revenue streams in exchange for large up-front payments from the private sector.
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From page 64... ...
As a result, future toll payers are likely to be paying to retire debt on past improvements that will have been subsequently retired, rebuilt, or replaced. avoid costly future investments and disruptions to operations; conversely, ignoring climate change now could result in even more deleterious effects and heavy cost burdens on future generations (TRB 2008)
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From page 65... ...
Thus, U.S. Department of Transportation regulations issued pursuant to ADA expressly require public entities operating fixed-route transit systems to provide complementary paratransit service for mobility-impaired groups comparable to their fixed-route service.
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From page 66... ...
The solution to such dilemmas calls for a broad perspective and is almost never formulaic. In assessing the equity implications of a transportation finance policy, it is important to remember that the financial and other burdens imposed on individuals and groups are a consequence of investments in facilities and services benefiting individual travelers, businesses, and society as a whole.
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From page 67... ...
In addition, transportation investments affecting land use often have both short- and long-term equity implications. For example, people living close to the stations on a new light rail line may enjoy increased mobility in the short-term as a result of the policy makers' decision to invest in the line.
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From page 68... ...
Technically a tax cannot be regressive if low-income people do not pay it, but using regressivity alone to assess the impact of increased gas taxes is misleading. Being forced to depend on alternatives to the car may place substantial time and other burdens on households; many studies in the United States and abroad suggest that using public transit to access many destinations may impose great costs in time and inconvenience (Blumenberg and Manville, 2006; Giuliano and Schweitzer 2010; Sanchez 2008)
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From page 69... ...
do not exist in a vacuum, and their equity implications need to be assessed in comparison with alternatives such as sales taxes and gas taxes, both of which are also regressive. In practice, analyzing the impacts of wholesale shifts in financing strategies is challenging and depends on how broadly policy alternatives are defined.
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From page 70... ...
In general, the more competitive the industry, the more fully its members can shift the tax forward while Motor Fuel Tax Income Tax Reduced Deduction Tax Revenues Fuel Distributors Business Travel More Efficient Vehicles Private Fuel Drivers Retailers Personal Reduced Auto Travel Travel (fewer trips, more transit) Reduced Auto Travel Businesses More Efficient Vehicles (Shippers, Carriers)
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From page 71... ...
The example of the gas tax highlights two of the most far-reaching implications of incidence analysis. First, the ultimate burden of a tax or other financial charge depends in part on the nature of the competition in affected markets.
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From page 72... ...
As with the gas tax, the response to a weight–distance tax (or, indeed, to any usage-based toll imposed on trucks) depends on both the level of the tax and the structure of competition within the directly affected industry -- in this case, mainly the motor carrier industry, but to some extent the competing railroad industry as well.
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From page 73... ...
In general, it is impossible to account fully for all the simultaneous price changes that are triggered by a change in a tax affecting truck movements, especially since they all affect each other as well as being affected by outside forces such as international trade, unionization, safety regulations, and technological innovations. Because of the complexity of analyzing multiple interconnected markets, every quantitative incidence analysis -- and therefore every quantitative equity analysis -- requires models that approximate the economic changes triggered by the policy being considered.
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From page 74... ...
The examples of a gas tax increase and a weight–distance tax on trucks illustrate ways in which a tax may be imposed on one party but really paid by another -- that is, shifted. Shifting of benefits may also occur.
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From page 75... ...
They may nonetheless benefit if toll roads increase the value of their land. Landowners are also likely to have very different characteristics than toll-paying travelers, and accounting for shifts in the burden of toll financing could change an equity analysis quite drastically.
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From page 76... ...
For example, in the event of an increase in the gas tax, a price-sensitive traveler wishing to avoid higher travel costs resulting from the tax increase may have several options available: • Choosing to purchase a more fuel-efficient vehicle to reduce fuel (and fuel tax) costs without making any changes in travel behavior; • Choosing to substitute walking, biking, public transit, or carpooling for some trips; • Traveling to closer destinations or chaining various activities together so as to travel fewer vehicle miles to complete the same number of activities; or • Avoiding undertaking some desired activities altogether.
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From page 77... ...
in transportation finance policy can be viewed from a variety of overlapping, and often contradictory, perspectives. In surface transportation policy debates, geographic equity has traditionally dom inated considerations of fairness.
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From page 78... ...
• Recognizing the diverse perspectives on equity and the different groups potentially affected by a policy can help decision makers – Anticipate which groups may raise equity concerns when road pric ing and other evolving transportation finance mechanisms are considered, – Anticipate what those concerns may be, – Clarify conflicting and overlapping equity issues, and – Seek ways to modify the finance plan or to find remedies to offset inequities, or both. • The burden (or incidence)
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From page 79... ...
respond to shifts in land prices? REFERENCES Abbreviations FHWA Federal Highway Administration TRB Transportation Research Board Alm, J., E
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From page 80... ...
Presenta tion to Committee on Equity Implications of Evolving Transportation Finance Mech anisms, Washington, D.C., December 18.
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From page 81... ...
Conference Proceedings 46: Women's Issues in Transportation: Summary of the 4th International Conference -- Volume 1: Conference Overview and Plenary Papers. Transportation Research Board of the National Academies, Washington, D.C., pp.
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From page 82... ...
2009. The Empirical Research on the Social Equity of Gas Taxes, Emissions Fees, and Congestion Charges.
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