Transit Funding Solutions, Parisian Edition

We want mass transit in American cities, right? Right. So how are we going to pay for it?

1429512270_188b3f36f2_m.jpgPhoto by wallyg via Flickr.

Today on the Streetsblog Network, Yonah Freemark at The Transport Politic suggests looking across the Atlantic for some answers to that question, taking New York’s MTA and Paris’s RATP as examples of the differing approaches in the U.S. and in Europe. His detailed analysis of the funding of the Parisian transit authority, which relies in large part on payroll taxes and to a much greater extent than the MTA on government subsidies, leads him to a couple of conclusions, among them:

So, on the surface level, [the Parisian transit authority] appears to be funded much like the MTA,
with funds coming from dedicated taxes and from government subsidies. There are two important differences, however: one, revenue from the taxes that pay for transportation in Paris are less likely to vary significantly during economic downturns; two, the government subsidies are designed to compensate when tax revenue falls short.

MTA’s reliance on sales and real estate transfer taxes puts it at a great risk of losing expected funds, because consumption of consumer products (sales tax) and of property (urban tax) decreases dramatically during recessions; so do the balance sheets of corporations, which the MTA also taxes. On the other hand, taxes on income do not see changes that are nearly as significant, especially in France, where firing people is incredibly difficult. 

Not in the mood for pie charts and revenue graphs? There’s plenty of other stuff on the network, too. Like a harrowing tale of road rage from A Year of Bike Commuting; some disturbing views of auto-dependent landscapes from Reinventing Urban Transport; and, from Austin on Two Wheels, a look at the slick marketing campaign for the B-Cycle bicycle-sharing program.

5 thoughts on Transit Funding Solutions, Parisian Edition

  1. On the variation in tax revenues, decades ago the political class picked up on an arguement that New York City is vulnerable and needs extra help because it relies on a local income tax, which varies with the economy, rather than property taxes, which are more stable. Like the obsolete “seniors on fixed income” mantra, it’s been trotted out over since, since our political class has been stagnant for 30 years at the state level.

    In the 1980s, however, there was a housing and commercial real estate bubble, and in the subsequent bust real estate taxes collapsed while income taxes fared better. The opposite of what had been predicted.

    The stock market bubble of the late 1990s, on the other hand, inflated (Wall Street) incomes, and in the subsequent bust income tax revenues tanked but real estate taxes held up.

    So it appears that New York City was blessed by having a diversified tax base. Until the final blowout of Generation Greed in the last few years, which is being followed by a bust in real estate AND Wall Street incomes.

    The bottom line is the income of city, state, and MTA region residents. That’s what any spending ultimately comes out of. Our state and local taxes are about the highest in the country as a share of that income, and in addition costs were deferred to a future, now arrived, when incomes will be lower.

  2. I would expect another major distinction is the compartative tax rate, though perhaps NYC approaches French levels.

  3. I would expect another major distinction is the compartative tax rate, though perhaps NYC approaches French levels.

    I doubt that. Europe tends to sock it to the rich in a way that’s been politically impossible in the US for decades.

  4. Rhywun is right about taxes in France socking it to the rich. If I’m reading this Wikipedia article right, in France you pay 40% of taxable income above ~67,000€ (compare to a 35% top bracket in the US), plus an additional dedicated 7.5% of your income to pay for social services, plus an annual percentage of net assets above 760,000€ that starts at 0.55% and tops out at 1.8% of assets over 15,810,000€. That last one isn’t very broad-based, but even in FRANCE people find it to be controversial for how redistributionary it is. Then beyond that there are local taxes but I can’t handily find information on those.

  5. In general I think it’s a bad idea to compare government agencies in the U.S. with those in Europe. Striving to be like France, with their massive taxes and government intervention, is generally a conversation nonstarter. Since government intervention is inevitable for improved public transportation, the best way to fund transit in this country would be with initiatives like tolls, congestion pricing and gas taxes; programs that are noted for their environmental impact but work as a hidden tax for much needed mass transit.

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