2021 Leg Session, Ari Armstrong, TABOR, Taxes, Transportation, Uncategorized

Armstrong: Transportation bill creates slew of misincentives

The transportation bill the Colorado legislature sent the governor (Senate Bill 260) creates a slew of misincentives, which is not too surprising given the Democratic legislature acts as though Progressive sloganeering about “environmental justice and equity” and the like can somehow keep unintended consequences at bay.

The bill also violates at least the spirit of the Taxpayer’s Bill of Rights by calling new taxes “fees” rather than “taxes” to avoid a vote of the people. Although the courts have upheld this fantasy legal distinction, we should note that the Democrats, who have relentlessly hounded Republicans for their “anti-democratic” ways, in this case are overtly, even proudly, anti-democratic.

Mencken said, “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” Colorado Democrats disagree. They think people don’t know what they want and so cannot be trusted with a vote, yet they deserve to get it good and hard anyway.

To make doubly sure the voters cannot sully their elitist creation, legislators, in order to dodge the Constitutional voter check on all non-“emergency” bills, end their bill with the lie, “This act is necessary for the immediate preservation of the public peace, health, or safety.”

Another issue is that the transportation bill screws the poor, as Ben Murrey points out. One way a future legislature could address this is to in effect refund these taxes (er, “fees”) to lower-income people, as through a tax break.

To consider the issue broadly, generally, the users of roads should pay for the roads. An advantage of the gas tax is that the amount paid relates very strongly with road use. Sure, heavy trucks use more gas than do light cars, but heavy vehicles also subject roads to more wear. In a world of gas cars, a straight per-gallon gas tax is a pretty-good way to fund roads, economically speaking. If we’re worried about affordability for the poor, we can (again) issue refunds.

But in a world in which electric vehicles slowly replace most gas ones, as many people predict, a gas tax doesn’t work as well for obvious reasons. It’s possible to instead tax electric vehicles and vehicle recharges. A big problem with that is distinguishing home electricity use from home car charging. It’s also possible to tax people’s per-mile driving, but I really don’t like the Big Brother tracking implications of that.

What we would not do, if we’re interested in straightforward transportation funding, is pay for transportation projects through discriminatory taxes (“fees”) that build in protectionism and social engineering. So, of course, that is precisely what the Democrats’ transportation bill does. Because in many contexts Colorado’s Democrats think people are stupid and cannot be trusted to make their own decisions without government “help.”

As the Colorado Sun reports, in addition to a new straight per-gallon gas tax, the bill imposes a “30-cent-per-trip fee on Uber and Lyft rides starting in 2022 that would increase based on” inflation, except the “fee would be cut in half for people carpooling in a rideshare, or riding in an electric vehicle.”

Uber and Lyft . . . hmm, is anything missing? I inquired via Twitter whether taxis were included. The answer is no. Rep. Matt Gray pointed to language saying that taxis didn’t have to pay the tax, but there’s a “commission” that in two years will “report on parity between taxis” and their competitors. In other words, the legislature is going to impose straight-up protectionism and leave it to a future legislature to worry about it.

There is a broader problem. Imposing additional taxes on ride shares of any sort disadvantages them relative to driving your own car. Government should not be playing favorites in this way. Such discriminatory taxation is especially stupid given that Democrats also passed a bill that could lead to cities reducing “the requirement to build new parking spaces” with new developments, as CPR reports. And Democrats want people to take more mass-transit. So the legislature is simultaneously incentivizing people to ditch their cars and to drive them more.

Here is an even more perverse imposition of protectionism: The bill imposes a “27-cent fee on deliveries, including those from Amazon, FedEx and Grubhub,” the Sun reports. In other words, if you drive yourself to a store to pick up an item, you don’t pay that tax, but if you order the item from a store, you do. Yet you driving yourself to the store often uses radically more gasoline (or electricity) relative to getting stuff delivered. But, hey, stick it to Amazon, right?

Maybe you’ll say the effects are small. But incentives matter at the margins. And I worry about the precedents the bill sets for potential future manipulation.

You’d think that Democrats concerned about global warming would worry about incentivizing people to burn more gas. But no. Colorado’s Democrats would rather play favorites even at the expense of their own stated energy goals. That’s just how Progressives roll (not that conservatives are usually much better). Real-world outcomes take a back seat to rewarding or punishing the “right” interest groups, and consumer choice be damned.

Ari Armstrong writes regularly for Complete Colorado and is the author of books about Ayn Rand, Harry Potter, and classical liberalism.  He can be reached at ari at ariarmstrong dot com.

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