During 2013, transportation companies in the United States added more than $9.2 billion in operational costs due solely to congestion on the roads causing delays. The American Trucking Research Institute (ATRI) estimates that delays caused the loss of more than 141 million hours of productive driving time during 2013, the equivalent of 51,000 truck drivers sitting idle for the entire year!
The ATRI study on congestion broke down the 100 worst bottleneck areas in the country and identified California followed by Texas as the states with the highest congestion costs ($1.7 and $1.1 billion respectively in 2013). When examining the data on a per truck basis, congestion resulted in an average of just over $5,000 per truck in 2013 related to delays on the road. The result of the study points toward a commonly known problem for the transportation industry and the United States as a whole – infrastructure improvements are needed.
While everyone can agree that the country needs to invest in infrastructure (estimates average the need for $3.6 trillion in infrastructure spending by 2020), how to pay for these projects is up for debate. There are several options that have advantages and disadvantages. One or a combination of these options will be required to fund future infrastructure improvements.
- Higher federal income tax rates – This method would spread the cost to every taxpayer in the country by increasing income tax rates specifically for infrastructure funding. The advantage is spreading the cost over a large base of taxpayers. The main disadvantage is this could disproportionately affect the taxpayers since it is not directly linked to the usage of infrastructure.
- Higher fuel excise tax – Currently transportation companies pay
.24 per gallon of diesel fuel to the federal government in fuel excise tax. Additionally individual citizens pay .18 per gallon on gasoline for their vehicles. Increasing the tax would have the advantage of allowing the heavier users of fuel and the roads to pay a larger share of the burden of replacement. However, there are a few disadvantages as well. First, if this tax is increased, lower and middle-income individuals are disproportionately affected, especially those in areas not served by mass transit systems. A second (and potentially larger) reason to not use this method is that as the fuel economy continues to improve, the collection of excise tax will continue to drop on a per vehicle basis with less fuel consumption needed to cover the same number of miles.
- Per mile tax or implementing congestion pricing – An alternative to increasing the excise tax while still basing the tax on usage of the roads would be a per mile tax or charging higher tolls for driving at certain times. A tax of this type would avoid the potential problems down the road of increased fuel efficiency reducing tax collected while maintaining a sense of fairness in the sense that heavier users would pay a larger portion of the tax. A major problem with these methods would be the need to potentially implement an entirely new collection system. Increasing tolls based on time of day also presents a whole new set of challenges for transportation company freight networks. Simply google congestion pricing and you will be presented with hundreds of cases for and against using this methodology.
The one guarantee is that the United States needs to invest in its transportation infrastructure to alleviate the problems of congestion as the economy continues to grow. How and who will pay will be the true challenge in the coming years.