ShareThis Page
Featured Commentary

Antony Davies and James R. Harrigan: Rob Peter to pay Paul

| Saturday, June 16, 2018, 3:50 p.m.

Potholes are an annual concern in the region, and Gov. Tom Wolf pledged this month to do something about them. The governor has put together more than $180 million toward the project, including $60 million from PennDOT cost-saving efforts and $30 million from the federal government.

But Pennsylvania has the highest gasoline taxes in the country, and Pennsylvanians consume around 5 billion gallons of gasoline annually.

Why did the governor have to go looking for $180 million to fix potholes?

Our exorbitant gas taxes should have generated plenty of money. Last year's 8-cent tax increase generates $400 million annually. That doesn't include the other 50-cents-per-gallon tax that generates another $2.5 billion annually. And that doesn't count the more than $1 billion the Pennsylvania turnpike collects in tolls each year.

Nor does it count the approximately $75 million the state police collect each year for traffic tickets. Why do traffic tickets matter? Because Harrisburg routinely raids gasoline tax revenues to pay for the state police. Last year, the governor took $700 million from PennDOT's Motor License Fund to help pay for the police and public schools.

This fungibility problem — the ability of government to use money intended for one thing to pay for another — arises when we socialize goods and services. We socialized roads when we decided that government, rather than private companies, should provide them. There are many good reasons for this, but the fungibility problem remains. When the government taxes us to pay for roads, politicians can divert tax revenue intended for roads to other things they'd rather spend money on instead.

Presidents Roosevelt and Johnson socialized retirees' pensions and health insurance. Later politicians raided trillions from those trust funds to pay for all sorts of other things. Sen. Bernie Sanders, I-Vt., pushes to socialize health insurance for everyone. Our public schools are fully socialized. Our colleges and universities are partially socialized.

Contrary to what some politicians would have us believe, socializing something doesn't make it free. It actually makes it more expensive since we must pay both for the thing and for the bureaucracy to administer the thing. And since people pay for socialized things in taxes instead of at the point of sale, socializing things makes it easy to hide what those things actually cost.

Given the economic and political costs of socialization, we should only socialize those things that are impractical to pay for on a per-use basis. It's not practical to set up toll booths at every intersection to charge people for roads, or to insert coins into street lights when it gets dark. But when we do socialize a thing, we should ensure that the taxes collected to fund the thing actually go toward it.

Raiding one tax source to pay for something else yields a vicious cycle. Politicians use crumbling roads as a justification to raise gas taxes. They use underfunded state worker pensions as a justification to raid the gas tax revenues, leaving potholes unfilled. Then potholes become an excuse to raise gas taxes further.

It's great that Wolf has come up with $180 million to fix our potholes. But it would have been better if he had fixed our potholes with the money we paid for that purpose in the first place.

Antony Davies is associate professor of economics at Duquesne University. James R. Harrigan is CEO of FreedomTrust. They host the weekly podcast Words & Numbers.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me