Tuesday, November 1, 2011

The Political Acceptability of Toll Roads: Tax All Foreigners Living Abroad

Jarrett Walker at Human Transit has a post describing Arizona's proposal to institute tolls on I-15 in the NW corner of the state. It's a 30 mile stretch of road, and is drawing opposition. The opposition isn't coming from Arizona, however. It's coming from Utah. The road doesn't actually serve people in Arizona. Walker explains:
Arizona's Interstate 15 segment is later described as being "in the state's northwest corner," but why not state the obvious?  It's not connected to the rest of the state, Arizona has no towns on it, and it's frankly a bit hard for Arizona to get to.  It's the segment between Mesquite, Nevada and St. George, Utah in this image (click to sharpen):
Az nv ut
So if a journalist can't print a map, they could at least clarify that virtually no Arizona residents use this highway, which would be enough to make the politics clear.  Arizona's toll-road bid is the opposite in spirit of Virginia's, designed exclusively to soak out-of-state drivers.  Given the road's location, and its irrelevance to most Arizonans, the positions of all sides are totally understandable.  Would that really spoil the "conflict" that journalism supposedly needs?

What is happening in this situation is the ideal tax for Arizona: tax all foreigners living abroad (a Monty Python line). This is a well known phenomenon in road tolling. David Levinson has written a lot about this, and tolling at states lines was advantageous for many of the small Eastern US states. Here is one piece Levinson has written, and here are more resources.

In the case of Arizona's I-15, since the state bears the negative externalities from the road, plus the land costs, I don't have any trouble with them charging drivers and collecting the revenue. Here is a paper I wrote (with Mike Manville and Donald Shoup) that provides additional details about this. Of course, Arizona has monopoly power in the case of I-15 and there aren't really any substitutes, so if this passes US Congress (it's an Interstate, not a state road) the price will have to be regulated.
Post a Comment