Home Fare Hikes Proposed MTA fare hike the worst kind of regressive tax

Proposed MTA fare hike the worst kind of regressive tax

by Benjamin Kabak

Of all of the charges levied against Mayor Bloomberg’s congestion fee by the plan’s opponents, I am most entertained by those weakly arguing the congestion fee is a regressive tax designed to hit poor more than it affects the rich. Well, newsflash, folks: The poorer people aren’t the ones driving and paying for a car in New York City.

To find an example, though, of a crippling regressive tax at work, look no further than today’s announcement by the MTA describing the potential fare hikes. The proposal, detailed here by William Neuman of The Times, involves jacking up the base fare and the prices on Unlimited Ride Metrocards, doing away with the buy-five-rides-get-six discount and instituting lower off-peak fares.

William Neuman, in an earlier post at the Cityroom blog, has more:

A person who buys a pay-per-ride MetroCard would be charged $2 to ride the subway or bus during the morning and evening peak periods. Travel during off-peak periods, including midday, would cost $1.50. The intention would be to encourage some riders to travel during off-peak hours, which could reduce crowding during the rush periods.

If that proposal were adopted, the 7-day and 30-day unlimited-ride MetroCards would increase to 8 percent from 6.5 percent. A new 14-day unlimited ride MetroCard would be created, at a cost of $48. The authority would no longer offer 20 percent bonuses for purchases over $10.

An alternate proposal would involve a more traditional fare increase. The base fare would increase to $2.25 from $2. The pay-per-ride MetroCard would continue to operate as it does today, with riders receiving a 20 percent bonus if they put at least $10 on the card. The cost of weekly and monthly unlimited ride passes would each go up 4 percent. And a new 14-day MetroCard would cost $45.

Based on this information, the MTA, projected nearly a $1 billion surplus this year, is going to, as Straphanger Campaign lawyer Gene Russianoff noted, foist its desired money onto commuters instead of forcing the state or city to pick up a tab. This development comes after both the state and city comptrollers issued reports noting that common sense measures could result in the necessary financial allocations without the need for a fare increase.

All of which brings me back to my original point: By charging people more for peak-hour rides, the MTA, if it opts to go with the peak/off-peak plan, will be instituting a regressive tax on everyone who rides the subways to and from work during rush hour. The MTA’s proposal, in an attempt to alleviate overcrowded rush hour subways, penalizes those who commute to work during the rush hour time slots and rewards those who use the subway outside of rush hour.

But who are the people who must ride the subways during rush hour? And who are the people who can afford to ride the subways in off-peak hours? Generally, those people making the least are the ones riding during the peak hours. The 9-to-5ers with little job flexibility will have to shoulder the burden of the fare increases.

Meanwhile, people beholden to no one — or few others — can take the subway at a more leisurely and cheaper hour. People who work themselves and set their own hours, people who are their own bosses, they can take the subways during the $1.50-fare periods. The people who are most able to afford the fare hike won’t be the ones suffering because of the fare hike.

While even the plan simply to have an across-the-board fare hike is a regressive tax, the one with tiered fares is more egregious than the other. The only way to avoid a regressive tax when trying to raise more revenue would be to avoid a fare hike. But as SUBWAYblogger noted, these fare increases, one way or another, are going to be a reality. I just hope those sounding the alarm of the congestion fee as a regressive tax take up the mantle when it comes to opposing this subway fare hike too.

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22 comments

peter September 25, 2007 - 7:59 am

There should be no fare to get in, but a Two-Drink Minimum.

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JF September 25, 2007 - 9:46 am

Hm, I know how much Assemblymember Brodsky cares about regressive taxes. Have you contacted his office about this, Ben?

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a.v. September 25, 2007 - 2:06 pm

Two points. One, shouldn’t we be encouraging people to take the subway during rush hour? Aren’t we all better off if they are on the train than if they are on the street? People don’t ride at rush hour because they like it, they do it because that’s when they need to go to work. If capacity is the issue, then increase capacity. That’s expensive, yes, but that’s what we’re paying for.

Two, I don’t think we should be reducing revenue during off-peak hours. That’s just going to make it easier to argue that off-peak service should be cut when money is tight. “After all, it doesn’t bring much money in anyway…” In fact, all sorts of people might start taking the train instead of cabs in the evenings if it weren’t for the gamble that it might require 20 minutes of standing on a hot platform. I always thought they should cut the trains in half after about 8 p.m. Five cars with one operator at twice the frequency: same costs, better service.

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anita September 25, 2007 - 3:03 pm

“Well, newsflash, folks: The poorer people aren’t the ones driving and paying for a car in New York City.”

I beg to disagree with you here.

There are lots and lots of business people (meaning, individuals) who make a living as painters, roofers, carpenters, masons, tilers, plumbers, electricians, etc., as well as a vast number other types of construction and installation related workers that VERY much require and depend on their cars or trucks for their living.

so not only are they burdened with high vehicle insurance costs, high parking costs, but now (potentially) the congestion pricing plan.

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Chris September 25, 2007 - 3:45 pm

anita: It is unfortunate, but people who work in those sectors will have to pass that cost off to the consumer. I don’t think that $8 a day (or less, if they’re coming into the city from elsewhere) is too much to ask in the grand scheme of how much these servicemen charge for their services.

As a “poorer person,” I don’t ever call on the services of painters, roofers, carpenters, masons, tilers, plumbers, or electricians. Given the fact that nearly all of the construction in Manhattan seems to be benefitting the super-rich, passing the charge on to them is “trickle up” economics.

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wayne's world September 25, 2007 - 3:53 pm

As to the congestion plan, there could be an exception for small business owned by a single person that employ less than a certain number of people. That would lessen the impact on the people about whom Anita writes.

I agree with Ben that the transit fare is a totally regressive tax. The rich companies for whom they work get all sorts of tax breaks from the city and the working stiffs have to pay this extra money. Of course, the city will argue that the jobs for these working stiffs wouldn’t be there at all if they didn’t give tax breaks to the rich comanies.

The congestion fee, fairly administered, is the way to address the transit fare issue. It creates a win/win by shifting the costs to those who can most afford it and, hopefully, will also help the environment.

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Tommy September 25, 2007 - 4:10 pm

I think the people this will really hurt are the homeless people selling swipes on unlimited-ride MetroCards.

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anita September 25, 2007 - 6:41 pm

chris, what is the definition of “poorer” anyway?

perhaps the demographic that, while they have been to great schools and who happily read and write blogs and who can intelligently comment on the multitudinous issues (in english by the way) that face our fair city, can self-righteously refer to themselves as “poorer” because they are part of the educated elite who have chosen to work either in the public sector or the arts and can still be cool while playing the ‘poor me’ act.

but the truth is that many small,independent contractors are in exactly the same place you are … they aren’t all working for “the rich guys” who can deal with a cost increase. they are in fact working for their fellow middle to lower-middle-class fellows. their lives are just as difficult as yours, despite the fact that their ambitions, necessarily, travel a different trajectory.

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Benjamin Kabak September 26, 2007 - 12:08 am

anita: Just as you accuse us of playing the part of people who are optionally choosing a less-than-renumerative career, I’m going to say that you’re making up a large group of New Yorkers too. How many of those business people you list live in the Outer Boroughs and drive into Manhattan for work? Probably not too many.

Most – if not all — of the individuals employed in those business are uber-local. If a carpenter or electrician lives in Brooklyn, he works in Brooklyn. Sure, there are exceptions, but those are the people with wealthy clients. As Chris pointed out, the wealthy clients are going to be the ones shouldering the $8 congestion fee in increased bills for services.

Meanwhile, increased subway fares affect everyone, and there’s no way for the low-wage employees of the world to bill their employers for more money to cover the increased subway fare.

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anita September 26, 2007 - 7:42 am

benjamin,

i think reality is probably somewhere in the middle in terms of who is going to get hammered by a congestion pricing “add-on.” i maintain that small to very small contractors who work in manhattan and the outer boroughs (including the bronx) whose clients are individuals as well as small businesses and government are one group who will suffer. and i’m not “making up” any group of new yorkers here. drive up the west side highway at any time during the day and you will see many of them. and their trucks ain’t so nice because they have to fight for every single dollar they make. even IF their clients are wealthy.

but, i agree with you on the regressiveness of fare hike. there is absolutely no doubt in my mind as to who will bear that burden.

also, i have always maintained that several years ago there was a fork in the road for transit funding and the perception as to who would, again .. ‘bear the burden’ of this cost. this, to me, was when new yorkers (and i speak of “new yorkers” as a group, not just new york city dwellers), voted DOWN the commuter tax. state government does many things that are antithetical to new york city (and the state) because they want to keep their upstate constituents “happy.” it was an extremely, extremely foolhardy measure as far as i’m concerned.

and we continue to pay the price for it.

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Angus Grieve-Smith September 26, 2007 - 8:57 am

Here’s what Councilmember Gioia had to say about outer-borough businesses delivering to Manhattan:

“My dad owns a flower shop in Queens. My dad used to deliver in a truck to Manhattan–it’s no longer profitable thanks to the “time tax”– it takes too long, the gas is too expensive. There are business owners in the outer ring who are making the decision every day about getting into Manhattan, and the congestion fee is just putting a number on that.”

http://www.dmiblog.com/archive.....ideas.html

In other words, there’s already a burden on these kinds of businesses: the cost of sitting in traffic. With congestion pricing many of them will be able to serve more customers and get more productive work for their drivers’ salaries. This can easily translate to more than $8 per day.

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Gotham Gazette - The Wonkster » Blog Archive » Fair Fare? September 26, 2007 - 9:34 am

[…] Second Avenue Sagas sees the proposed peak/off peak fare as a particularly bad idea. ?While even the plan simply to have an across-the-board fare hike is a regressive tax, the one with tiered fares is more egregious than the other? because ?9-to-5ers with little job flexibility will have to shoulder the burden of the fare increases,? it said. ?Meanwhile, people beholden to no one ? or few others ? can take the subway at a more leisurely and cheaper hour.? […]

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Alon Levy September 30, 2007 - 5:18 pm

The option of eliminating the 20% bonus is basically a grant to tourists. A tourist today has to pay $2 per ride. A New Yorker, whose tax money helps cover the MTA’s budget, pays $1.67 per ride or $76 per month, whichever is lower. Under the new system, the tourist will actually pay less, while the New Yorker will pay more unless he regularly works the graveyard shift.

A juster solution would be to hike the fee to $3 per ride, but increase the bonus for buying more than $10 to 50%. The unlimited MetroCards should have their prices seriously increased as their users are effectively subsidized; the average system fare is down to $1.08, if I remember correctly. I’m not big about an off-peak charge, because the cost of operating a 6 train at 8:30 am with 1,500 riders is a lot less than ten times the cost of operating it at 1 am with 150 riders.

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