Capital New York’s Dana Rubinstein reported yesterday that Ray LaHood, former U.S. secretary of transportation and co-chair of the commission, thinks Virginia’s transportation funding model is worth considering in New York. “They went from a gas tax to a sales tax,” LaHood told Capital. (Virginia repealed its gas tax in favor of a wholesale tax paid by gas station owners and a sales tax increase paid by consumers, raising $880 million each year.)
Speaking to Brian Lehrer on WNYC this morning, LaHood said he was unfamiliar with the “Fair Plan” promoted by “Gridlock” Sam Schwartz and the non-profit Move NY, which would raise revenue for transit by creating a more rational citywide toll system. LaHood went on to say, “People think [the Virginia sales tax model] has great potential.”
But a sales tax is one of the most regressive revenue-raisers out there. Of the types of taxes states typically levy — on property, income, and sales — “sales and excise taxes are the most regressive, with poor families paying eight times more of their income in these taxes than wealthy families, and middle income families paying five times more,” according to the non-partisan Institute on Taxation and Economic Policy [PDF]. In New York, sales taxes already hit the poorest fifth of the state’s households more than twice as hard as the wealthiest fifth, when measured as a percentage of income [PDF].
Compare that to who would pay under the Move NY toll reform plan: Tolls would increase only for people driving to Manhattan south of 60th Street, while tolls would drop on outer borough crossings. Car owners are wealthier than car-free New Yorkers, and a Move NY analysis shows that drivers who will pay more under the plan have household incomes far higher than transit users. Asking them to pay a higher toll to support train and bus service, while lowering tolls in the outer boroughs, transfers resources from the haves to the have-nots — it isn’t regressive at all.