Image from Paul Keleher

This month’s edition of the Hill Rag has the usual ‘Numbers’ column from the folks at the DC Fiscal Policy Institute.  This month’s subject is the decisions made by the DC Council in order to close DC”s recent budget gap.  The DCFPI folks make the case that the DC Council relied on regressive taxes rather than more progressive measures in order to close the budget gap, and they argue that the poor are being asked to shoulder too much of the burden.

My point here isn’t to judge the actions of the Council.  Nor am I trying to argue the substance of DCFPI’s position that taxation ought to have a more progressive structure.  My issue is with DCFPI’s characterization of what’s progressive and what’s not, and the implications for urbanism of those assumptions.

A PDF of the Hill Rag article is available online here.  In the print version, the article is accompanied by a table showing the ‘regressive’ actions the Council took, compared against ‘progressive’ actions the Council did not take.

Most of the regressive actions are, indeed, regressive taxes.  Sales taxes, for example, are considered regressive because the burden of the tax is greater on those with a lesser ability to pay.   Increasing the sales tax and the gas tax would both be regressive actions, in the strict, abstract sense of the term.

However, DCFPI also characterizes an increase in the sales tax on parking as a progressive action (last line item under the blue column).   In a strict sense, this is simply wrong – any sort of sales tax is regressive.  Amongst the pool of people that are purchasing parking, an increase in the sales tax rate on that parking would be regressive, with the burden falling disproportionately on those with less ability to pay.  Yet they label this as a progressive action.

At the same time, an increase in the gas tax is labeled as regressive.  In a strict sense, this is correct.  However, it’s curious to see the two main transportation items – both regressive taxes – framed in these opposing ways.

If I had to guess as to why DCFPI distorted the academic definitions in this way, I would guess that they see gasoline as a necessity, while off-street parking is a luxury (hence taxing a luxury at a higher rate is progressive).  I can see the logic in this approach, but it’s not a very useful distinction for transportation policy.   At the same time, the logic that determines parking spaces are a luxury for the rich could also conclude that driving (and hence gasoline consumption) are a luxury for the rich, as well – particularly since we’re dealing with a gas tax applied only to an urban jurisdiction with fairly low vehicle ownership rates and good public transit usage.

From a transportation perspective, I’d argue that both taxes are good ideas (again, in the abstract – ignoring the larger decisions of the need to raise revenue) within an urban area.  Parking ought to be priced via a market mechanism, but in general it should be more expensive than it usually is.  Gasoline, on the other hand, is definitely too cheap from my perspective.  Raising the gas tax, both at the local and federal level, should be a no-brainer.

Either way, a more holistic understand of parking and transportation policy would be useful to interject into larger issues of taxation and budgeting.  It’s disappointing to see the DCFPI deal with these concepts on such a basic level, ignoring the larger implications of the taxes at hand – beyond just ‘progressive’ and ‘regressive’ taxation.