GM Declares Bankruptcy

[DanS]

The $0.40/gallon figure that I used includes #3 and the slight bump up in highway spending that has occurred without a like increase in taxes.

#1 and #2 are real, but gas taxes are unsuitable tools, IMO. Those are issues near and dear to my heart (we have the technical means to make cars drive themselves), but insurance acts as the payment mechanism on #2 and drivers are being charged in time on #1. Adam Smith has talked a lot about time of day variable pricing and how effective it is at reducing congestion at modest costs.

[Jon Miller]

I would prefer gas taxes or title taxes over toll roads.

Toll roads suck.

JM

[KrazyHorse]

Dan

What would you prefer? Obviously the ideal is a gps chip that tells the government exactly where your car is at all times, but that raises severe privacy concerns.

[KrazyHorse]

Can you explain to me why you hate toll roads, Jon? I have only one problem with them: the way the tolls are collected. There is a significant cost associated with congestion at and around the toll plaza (even with an electronic system like EZ pass)

[Jon Miller]

Yeah, it is the collection of the tolls.

And if you are travelling, and don't have something like the EZpass, it is even worse.

JM

[KrazyHorse]

Per vehicle costs are somewhat silly as the externalities all scale linearly with the amount of driving you do. Gas taxes are obviously better as they somewhat control for this. They're the obvious ideal candidate for pricing carbon/other emissions, but for (1) and (2) they overcharge large car owners and undercharge small/efficient car owners, in addition to not controlling for time and location of driving (which are key)

[DanS]

I did a whole bunch of cross-edits.

[Jon Miller]

#1 and #2 are real, but gas taxes are unsuitable tools, IMO. Those are issues near and dear to my heart (we have the technical means to make cars drive themselves), but insurance acts as the payment mechanism on #2 and drivers are being charged in time on #1. Adam Smith has talked a lot about time of day variable pricing and how effective it is at reducing congestion at modest costs.

Insurance does take care of some of the costs for #2. However, insurance supports more people driving and doing things to pay insurance.... while some system where a profit wasn't being made would do the preventative measure of encouraging drivers to not be on the roads.

This is a similar issue with our current health system. Our health system promotes getting expensive procedures and 'fixing' a problem that has occured over preventative measures.

JM

[BlackCat]

I would be interested in knowing what the objective rationale is for that particular level of taxes.

In the US, the level of taxes is supposed to be commensurate with the need to support the method of transportation. This seems entirely fair and makes eminently good sense.

It's a mix. Historically (post WWII), tax on gas and cars was used to reduce import. Technically, the income was also earmarked for building and maintenance of road infrastructure. Last is CO2 reduction. While it may sound reasonable, it also has turned into a nice tax income that is hard for the politicians to give up.

Besides the gas taxes, we also have a minor tax on cars. F.eks. a Ford Mustang GT V8 Convertible costs something like $150.000 here. Maybe not a good choice for comparison, but US cars are scarce.

Despite these obstacles we still have cars - in 2005 we had 1.9 mill cars to a pop of 5.5 mill driving 52 bill km.

[KrazyHorse]

Dan, you misunderstand the issue in (2):

Insurance costs make drivers pay for accidents THEY CAUSE. The externality which is unpriced currently is the increase in accidents CAUSED BY OTHERS which occurs when I drive. When I choose to drive I increase EVERYBODY ELSE'S insurance costs!

[Ben Kenobi]

I'd prefer toll roads to a gas tax to be honest. People hate tolls and anything to get people hating on their taxes is a good thing!

[Jon Miller]

There is a slight increase that is based on how much you drive (in insurance costs). I think that this is too small a factor, if we use insurance as a mechanism to do this.

It is also self reported, and I have had no one check up on me to see if I am driving under 10k a year (I am actually averaging slightly over it).

JM

[KrazyHorse]

The way you can think about it is this way:

When any individual drives, he makes a certain number of "mistakes" per hour. Some drivers are very safe, and make almost no mistakes. Other drivers are dangerous and make a lot of mistakes. However, not every mistake leads to an accident. The more cars which are on the road at any one time, the more likely a given mistake is to lead to an accident. At-fault insurance makes me pay for my (averaged) number of mistakes*average cost of a mistake. However, when I drive I increase the chances that any other driver's mistake leads to an accident (i.e. I increase the average cost of mistakes). This cost is not captured. As an extreme example, imagine a driver who never makes any mistakes. His insurance costs nothing because he will never cause an accident. On the other hand, there's a non-zero chance that he will be involved in an accident with somebody else!

[KrazyHorse]

Insurance does take care of some of the costs for #2

NO! It does not. This is the whole point!

[DanS]

KH: I didn't misunderstand. There is a payment mechanism for those costs in the aggregate. Not that it is entirely suitable, since the costs are based on one set of criteria while the payments are based on another. And not that it really covers all of the costs (e.g., I don't think it really pays for all of the pain and suffering). But this issue as a big issue should go away over the next 20 years or so.