Road tax

“ The question of whether or not it is wise for a state to match the Federal Aid appropriation for the purpose of building roads is a debatable one. When people see the amount of their taxes going up by leaps and bounds they naturally look for some place for retrenchment. The road tax being, now, one of the largest in the state is naturally subject to attack. ”

“ Motor vehicle imposts were relatively unaffected by the Depression. The major problem in highway finance arose from the failure of the property tax to fulfill its customary role in support of the highway function, which had been a major recipient of property tax income in most States. The municipalities were almost totally dependent on the property tax for road and street funds, and the counties and local rural governments only a little less so. ”

“ Property taxes levied for road support varied widely from State to State and from county to county within the same State. As the Office of Public Roads (OPR) observed in 1904,
Unquestionably the bitterest controversies in counties and townships in connection with the subject of road improvement are over proposed increases in the rates of property taxation for road purposes. It is common in many parts of the United States for uninformed though honestly-disposed citizens, to make a determined opposition to a very moderate and perfectly reasonable increase in the tax rate. ”

“ That said road tax is levied without authority of law, and in violation of the 39th section of the charter of the city of Little Rock, which declares that "the inhabitants of Little Rock are hereby exempted from working upon any road beyond the limits of the city, and from paying any tax to procure laborers to work upon the same." ”

“ License fees on motor cars and sales taxes on gasoline belong to the class of indirect taxes, and are attempts to charge the user of the road in proportion to the wear and tear produced by him or his consumption of it. If the motor car is an express truck, a bus, or a taxicab the tax is passed on to the patron, and this patron charges it to the cost of living and attempts to pass it on to his employer through increased wages or those who do business with him. It is finally paid for by that visionary personage the ultimate consumer—everybody. ”

“ There is also a general act referred to, which, among other things, confers upon all incorporated Cities exclusive jurisdiction over all streets, roads, bridges, and ferries within their corporate limits, and exempting the inhabitants from any assessment for road tax except by the corporate authorities of the same. ”

“ At any rate, just as we must soon have a reform of the road system or suffer decline in our communications and therefore in our national life, so we must soon settle a reform in the matter of road maintenance and road taxation. For the new main arteries that should be built we must depend upon the general resources of the community, while for special taxes upon traffic we must establish as soon as possible a simple and universal system. ”

“ The Commonwealth of Massachusetts has spent more than $25,000,000 of the taxpayers’ money in road construction, much of which has already been ground to powder under the wheels of the five-ton truck; and the damage must to-day be repaired at perhaps double the former cost. Our State tax has mounted in recent years by leaps and bounds; the contribution of the truck-owner to road construction is so trivial that most of the burden will fall upon the taxpayer, on whose now overloaded back a huge additional levy is about to fall at the very moment when he is expecting relief. ”

“ On the basis of anticipated costs and traffic service, the Committee estimates that urban sections of the system, improved as recommended, will generate during the life of the improvements road-use-tax revenues approximately three times as great as the cost of creating and maintaining the improvements. ”

“ A State must not play favorites in the operation of its taxing system between business confined within its boarders and the common interests of the nation expressed through business conducted across State lines. Such favoritism is barred whether it is overtly designed or results from the actual operation of a taxing scheme. The Maryland tax does not obviously discriminate against interstate commerce. But a tax for the privilege of road use may impose serious disadvantages upon that commerce. ”

“ It may be argued that, since State gasoline taxes have been justified as charges for road use, such tax earnings should contribute to the support of the system of toll roads in proportion to the gasoline consumed on them. Assuming gasoline tax earnings at 0.28 cent per mile for passenger cars and 0.56 cent per mile for trucks and busses the average annual earnings in the period 1945-60 would amount to $15,270,000. ”

“ Yet clearly a flat fee is not geared to mileage, weight or any other factor relevant in considering the fairness of compensation for road use. Thus, unless we are to depart from prior decisions, the Maryland tax based on the cost of the vehicles should be judged by its result, not its formula, and must stand unless proven to be unreasonable in amount for the privilege granted. ”

“ But such an apportionment would ignore important reasons warranting construction expenditure on the system in a ratio to total expenditure higher than the ratio of traffic served. First of these is the greater and more urgent needs of improvement existing on the important routes constituting the system. The nature and urgency of these needs have already been described in detail. A second and equally cogent reason is the far greater return of benefits and road-user-tax earnings to be expected from expenditure on the system. ”

“ The commissioners have the power to fine or imprison defaulters. Counties may, however, adopt an alternative plan for working the roads: in such counties a special tax is levied on property, the proceeds of which are spent on the roads, and able-bodied men between eighteen and fifty years of age are subject to road duty for not more than five days each year, or they may pay a small commutation tax instead. ”

“ Originally, Federal aid was limited to $10,000 per mile for bridges under 20 feet and 50 percent of the cost for bridges over 20 feet. Because bridges are so costly to build, many are financed through bonds or as toll facilities.
Part of the pressure that led to the development of a more organized body of highway tax theory during this period was produced by a changed attitude on the part of the railroad industry. The industry had been a supporter of highway development in the beginning, viewing road improvements as a means of providing better feeders to their lines. ”

“ A state may defray the cost of constructing a highway, in whole or in part, by means of a special assessment upon property specially benefited thereby. But it is not obliged to do so. Road building is a public purpose which may by effected by general taxation. The cost may be defrayed out of state funds, or a tax district may be created to meet the authorized outlay. The preliminary inquiry whether it is desirable to construct the road, is one in which all landowners within the district are interested. ”

“ When occasionally a road supervisor insisted on a full day’s work for a day’s credit he was a skinflint and at the next election lost his job.
The tremendous amount of money necessary to construct present types of roads must, in the long run, be obtained from the citizens through some medium of taxation. A tax [310] is a compulsory contribution levied upon persons, property, business, occupations, privileges, or enjoyment of the people for the support of government or governmental functions. When levied upon persons it is usually called a poll or head tax ”

“ Do not think that city people escape the tax of bad roads. In St. Louis four hundred thousand people consume five hundred tons of produce every day. The cost of hauling this produce over bad roads averages [Pg 50] twenty-five cents per mile and over good roads about ten cents per mile, making a difference of fifteen cents per mile per ton. For five hundred tons, hauled from farms averaging ten miles distance, this would be seven hundred and fifty dollars per day, or a quarter of a million dollars a year—enough to build fifty miles of macadamized road a year. ”

“ Unable to obtain an increase in the gas tax from the Legislature to finance major improvements for the old winding road, the Highway Commission asked for authority to build a toll road financed by State bonds. The bonds, backed by the faith and credit of the State, sold for a net interest rate of only 1.58 percent. The toll road, built in only 1 year, opened to traffic in 1950 and was enormously profitable from the outset—so much so that the Legislature decided to build two more toll roads in other parts of the State. ”

“ The license-tax, as it is called there, applies to railroads, insurance, telegraph, and telephone companies. Railroads are taxed from five dollars per mile of operated road to four per centum of gross earnings, as follows: If the road earns less than $1,500 per mile, it is taxed five dollars per mile; on those earning more than $1,500 and less than $3,000 per mile, the tax is five dollars per mile, and two per centum on the excess over $1,500 per mile; on those earning $3,000 or more per mile, the tax is four per centum on gross earnings. ”

“ There is need of much intelligent care in framing legislation in the interest of the movement for better roads. Annoying prohibitions should be no part of the policy of the road reformers. For instance, large loads carried on wheels having narrow felloes and tires do great damage to roads; hence it has been proposed to prohibit narrow tires on heavy wagons. A much better policy is that adopted in Michigan, of giving a reduction of one half their road taxes to those who will use broad tires. The movement for good roads shows a lusty vigor. ”

“ The great want of the country road is daily care, and the sooner we do away with the system of "working out" our road taxes, and pay such taxes in money, the sooner will it be possible to build improved roads and to hire experts to keep them constantly in good repair. ”

“ In the large cities franchises for the use of the public streets at, above, or beneath the surface are sufficiently valuable to warrant good returns to the public. It seems logical that such money be used for street improvements. Bus and truck lines fall directly under this head, and since they are very largely conducive to the distruction of pavements, it would seem as though they ought to pay for at least a part of this damage. The tax might be graduated according to weight as is now in most states the automobile license tax. ”

“ Nor is it important that a part of the fees collected is not devoted directly to highway maintenance, the cost of which the state pays in part from the proceeds of a general property tax. The use for highway maintenance of a fee collected from automobile owners may be of significance, when the point is otherwise in doubt, to show that the fee is in fact laid for that purpose and is thus a charge for the privilege of using the highways. ”

“ I cannot agree that the commerce clause of the Federal Constitution has left interstate traffic vulnerable to such local permissions and burdens. Because the immediate impact of the tax is on a railroad, we should not delude ourselves as to its real effect. It is a tax on traffic-on the movement of goods-and its weight is shifted from the carrier to the consumer. There is, of course, a 'local incident,' a stoppage in transit, a reloading. 'Local incidents' of some sort can be identified in all interstate transportation. ”

“ Thus the public good demanded that the time of the freeholders and the money of the government be expended upon the highways. Of late years in the United States the “working out” of road or poll taxes has been practically abolished and the taxes are collected in money which is expended in road construction and maintenance by persons regularly delegated for that purpose. With the increased use and the building of better types of roadways more and more money is demanded so that the financing of highway improvements has become a matter of vast importance. ”

“ It is far too late to question that a state, consistently with the commerce clause, may lay upon motor vehicles engaged exclusively in interstate commerce, or upon those who own and so operate them, a fair and reasonable, nondiscriminatory tax as compensation for the use of its highways. ”

“ Historically, the highway function in this country had always partaken of the nature of a public utility, with aspects both of a private-enterprise and a governmental activity. Before the coming of the motor vehicle, local taxpayers could not meet the demand for land transportation over long distances, and it was left to private capital to provide these facilities. For a while, the pricing mechanism was tolls, and the user-tax principle was partially developed during the period of the early toll roads. ”

“ About three-fourths of a cent per vehicle-mile is now being collected in the form of road-user taxes. These amounts may be compared to the cost of owning and operating a vehicle, which for passenger cars is variously estimated at from 8 to 10 cents per mile, and for trucks at correspondingly higher figures. The cost of the highway itself is but a small part of the total cost of motor-vehicle transportation. ”

“ Since it is unfair and unjust to tax motor-vehicle transportation unless the proceeds of such taxation are applied to the construction, improvement or maintenance of highways, after June 30, 1935, Federal aid for highway construction shall be extended only to those States that use at least the amounts now provided by law for such purposes in each State from State motor vehicle registration fees, licenses, gasoline taxes, and other special taxes on motor-vehicle owners and operators . ”