Taxes”—Do We Hate the Word or the Thing?

The revolt against taxes is as perennial as taxes themselves; even those who approve wholeheartedly of taxes in general often find themselves trying to dodge some particularly onerous one. But since we are always identifying new goods and services that we want government to provide us with, we make it necessary for government to keep finding new sources of revenue. The simplest way to increase that revenue, of course, would be to raise taxes, but that is frequently politically impossible. So the trick that governments must practice is to raise revenue—that is, take money from the public—without formally raising taxes. This turns out not to be hard, because most of the tax-paying public seems to be fixated on the word tax, and to be relatively insensitive about forced payments to one level of government or another, provided it is not so labeled.

We seem to be happy so long as our taxes do not go up, even while we find ourselves paying ever-increasing fees, charges, tolls, duties, tariffs, assessments, premiums, levies, excises, withholdings, and so on—so long as the government can come up with other ways of naming it, we pay what are in effect higher taxes, perhaps with a groan, but without actual rebellion. If the only bad effect of this were to make bureaucrats spend an inordinate amount of time consulting Roget, it could be tolerated as among the least of our problems, but it causes some truly serious problems, which are the Critical Reader’s business because they all spring from a fixation on a word rather than on the substance behind it.

Some of the disguised increases in the tax rate call for nothing more than the appearance of a new item or two on our utility bills or on Form 1040, but some of the disguises themselves are very expensive, and their cost must be paid for by taxpayers. One clear example of this is the toll road and the toll bridge; another is the parking meter. Like all subterfuges for collecting revenue from the public without using the dread word tax, they are extremely inefficient as tax collectors. The costs associated with tolls are:

1. Land use: a toll road requires toll plazas, which consume valuable land.

2. Construction & maintenance costs: a toll plaza requires the building of toll booths and of amenities for the people staffing them. All these facilities need regular on-going maintenance, forever.

3. Personnel costs: at least some toll booths at every toll plaza must be manned, and the people manning them must be paid, given medical coverage, paid vacations, sick leave, and in many cases retirement benefits. Some of these benefits extend even to members of their families.

4. Waste of motorists’ time: even in ideal circumstances, most motorists must come to a complete stop at toll booths, then start up again. The cumulative waste of time even in this ideal case must come to hundreds of thousands of man-hours per year. In more common, non-ideal circumstances, motorists must join long lines of cars waiting to pay tolls, and spend as much as several minutes moving slowly toward the toll booth before resuming normal travel speed. The cumulative waste of time in this more normal case must be on the order of millions of man-hours per year.

5. Consumption of fuel and pollution of the atmosphere: the slowing and stopping and eventual resumption of normal highway speed by millions of vehicles daily clearly adds greatly to waste of fuel and to the discharge of noxious emissions into the air.

6. Wear and tear on vehicles and on drivers: Every vehicle sustains a small amount of wear and tear each time it stops and restarts. Toll roads impose hundreds of millions of such events daily. Every driver sustains a small amount of fatigue every time he has to stop, wait, and restart; again, toll roads impose hundreds of millions of such events daily.

Additional problems associated with Parking Meters:

1. Expense of construction, installation, servicing (coin collecting), and maintenance: All these costs are considerable; a large part of the money collected by meters must be plowed back into meeting these costs.

2. Obstruction of thoroughfares: Parking meters on narrow sidewalks are obstacles to foot traffic, forcing people sometimes to step into the gutter rather than risk head-on collisions with other pedestrians, baby carriages, strollers, wheelchairs, bicycles, etc.

3. Eyesores: Parking meters are ugly. They contribute to urban blight.

4. Theft and vandalism: Parking meters are under constant assault from petty thieves and vandals.

5. Law enforcement problem: The attempt to catch and penalize parking-meter violators requires a special uniformed, quasi-police force, an appeal mechanism, and many of the other trappings of real law enforcement and real judicial process. All this is costly in money, time, and human frustration.

Apologists for the present system of regulating parking by the imposition of usage fees (and, when necessary, punitive fines) ask us to believe that revenue collection is only one, and not the most important, of the purposes of that system. There are, they tell us, two other benefits yielded by that system: first, meters give motorists an incentive to conduct their business promptly, rather than dawdle and waste their time as they presumably would do if parking were free, and second, where parking is forbidden at any one meter for longer than (say) two hours even if the motorist is prepared to feed it more money, the objective of fairness is served; that provision sees to it that other drivers get their chance at that parking space.

An adequate reply to the first of these claims is that it is no business of the government's to teach us not to waste our time, even if it were really true that given free parking, motorists would do so. As for the achievement of social justice through forcing motorists to leave a spot after some fixed time period, all such a restriction accomplishes is to cause someone shopping or conducting business i to keep glancing nervously at his watch, and at some arbitrary moment to dash out to drop another quarter in the meter, or, if he’s exceeded the maximum permitted time at that spot, to drive away and find another nearby parking meter where the silly game can continue.

The “fairness” argument claims that forcing motorist A to vacate a parking spot he has occupied for some arbitrarily determined length of time frees a spot for motorist B, who has presumably been waiting patiently for his turn at the spot. But if A’s business is unfinished when he is chased away from his parking spot—and why else, in general, would he still be there?—and B takes his spot, A will simply drive around, adding to traffic congestion and air pollution, until he finds another spot within walking distance—perhaps a spot where a third driver, C, has had to vacate a spot before his business was finished—and then rush back to the store or office where he hopes he’ll be able to resume his transaction without too much loss of time and information. Why not allow A to remain in his spot until his business is done, and let B, who arrived later, find the spot C will vacate? The notion that limiting the time a driver can stay parked in one spot is just being fair to other would-be parkers is simply incoherent. It seems to assume that parking at some shopping or business location is fun, and a privilege subject to abuse — something that people will do to excess unless disciplined by the law.

The inefficiencies and inconveniences with which toll and parking regulations burden our daily lives would be sufficient reasons to abolish them (especially the time-limited meter), but while highly undesirable, they are not the greatest trouble those regulations cause. There are two far greater evils they bring, one economic and one a matter of public policy. The fundamental economic objection to such methods of collecting revenue is that they are enormously and unnecessarily expensive, greatly increasing the amount of additional revenue the government must take in so as to realize the net increase to the treasury that is needed. To collect tolls from motorists crossing a bridge or traveling some stretch of public road requires all the expensive infrastructure itemized in the numbered lists above; I haven’t the resources to be able to quantify the costs, but clearly they are enormous; even if it cost no more than 10% of the revenue collected to perform that collection, the national annual costs of doing business that way must surely be in the billions.

The public policy objection is that such charges, especially those imposed on road usage and bridge crossing, have a divisive effect on society, encouraging us to impose the costs of some public facilities on a very small number of our fellow citizens—namely, those whose use of those facilities is direct and easily monitored. This is bad public policy. A bridge across a river does not benefit only those who actually cross it, it benefits all of us. A truck from California that can cross the Missouri River by bridge rather than by waiting for a ferry or taking the long round-about route that would be necessary in the absence of the bridge, saves the owner time and money, and means that he can carry his freight more cheaply to his East Coast destination, where consumers who have never even seen the bridge benefit from the lower price the bridge made possible. And East Coast bridges will by the same token save money for California consumers. The reason why the trucker has to pay a toll to cross the bridge is not that he is the one who benefits from it, but that he is the one easiest to catch.

And all the waste, inefficiency, and inconvenience that I have sketched here spring from one little flaw in human nature: the tendency to fixate on a word—in this case, tax—instead of the thing it stands for. We put up with all the evils listed here just so that we can comfort ourselves with the thought that there has been no increase in the tax rate. What would be the right way to handle the matter? We would abolish tolls not only on roads, bridges, tunnels, and parking, but on all other government-provided services—there would be no “point-of-sale” cost to register your car or to get license plates, or driving, hunting, or fishing licenses, or passports or birth certificates, or anything else we now pay for on the spot when we deal with government agencies.

In return, we would pay more in taxes. The benefits would be enormous: first, because collection costs would drop greatly, the total amount of money the government would have to take from us to realize a given amount of revenue would likewise drop substantially. Second, we would never be embarrassed or inconvenienced by not having sufficient cash on hand at the moment when we need some service. Third, the offices providing such services would not have to handle cash, and this would eliminate a good deal of work for them, and almost all fraud. Fourth, because they would not involve on-the-spot payment, all transactions at government offices would be significantly expedited. Fifth, and possibly most important, we would be facing reality like grown-ups, and not deluding ourselves that a constant tax rate meant we were keeping control of costs, even though we were continually being asked for payments at every turn. We would for the first time know exactly how much our government was costing us, and would be in a position to make rational decisions about what we wanted the government to provide, and at what cost.