Libertarians and transport economists for decades have advocated tolling as an alternative to fuel taxes, which have always been a poor proxy for charging users and have since become obsolete. That’s why it was so disheartening to read Rachel Alexander’s recent Townhall article “Toll Roads and Double Taxation: The Left and Libertarians Converge.” Instead of bringing greater market discipline to road funding, Alexander pushes the view that perpetuating certain government subsidies is consistent with libertarian principles.
This argument is based on a faulty premise. Instead of asking, “How should we pay for roads?” we should be asking, “How should we be paying for roads?” This distinction may seem minor, but it is not. Alexander accuses libertarians of “agree[ing] with the left on double taxation.” In this context, “double taxation” is a buzzword for a myth propagated by the trucking industry, which wants to continue receiving government subsidies.
Tolling opponents argue that roads have already been paid for, so any further funding for their upkeep therefore constitutes “double taxation.” Construction has been completed, they claim, so why should we continue to charge users for something they’ve already paid for? The idea that roads, once they have been built, are paid for is absolutely false. The majority of costs associated with a given highway over time are operating, maintenance, and rehabilitation costs—not initial construction. In fact, tolling can make it possible for users to internalize the social costs of accidents and congestion.
Another favorite argument of the “double taxation” crowd is that we are already paying for roads through other means. This is technically true, but what are those other means? Primarily, it comes in the form of non-user taxes such as property taxes or general revenue bailouts of transportation trust funds. As Alexander highlights, the majority of road spending in the United States does not come from user fees. This is a problem; it means that federal, state, and local authorities are taxing everyone to subsidize the road use of some. The proper and pragmatic libertarian solution would be to expand tolling in order to shrink the share of non-user revenue and eventually phase it out completely.