Saturday, December 22, 2012

Turnpike Tax Tango

After having some fun goofing on my state's governor, I started thinking some more about the Ohio turnpike and the proposed plans for it.

Yes, I must be bored.  Now, let's continue.

It always amazes me what lengths politicians will go to in order to avoid raising taxes, even though most of those lengths involve raising taxes--they're just not called that.  Politicians must think the average citizen is too dumb to figure that out.

Alas, I think the politicians are right.

Take Governor Kasich's plan for the Ohio turnpike.  Many commentators think it's a great idea, especially when compared to his previous idea of privatizing the turnpike, but the new idea is probably also a bad idea.  Here's why.

Bonds are just taxes that one has to pay in the future.  Indeed, they're usually more costly than regular taxes since one has to pay interest on top of the original bond price.

Now, fees on users such as turnpike tolls might be all right since the people using the service are the ones who should have to pay for it, but fees are basically taxes anyway.  In fact, they may be more expensive overall than just plain old taxes since with fees one has to employ people especially just to collect the fees instead of having the usual tax collector gather it up.  For example, on the turnpike, one has to pay for the tollbooths and the tollbooth collectors and whatnot.

Now, this could still bring in extra money for the state if most of the people using the turnpike aren't from Ohio and are just passing through, but I suspect quite a few Buckeyes go from Cleveland to Toledo or use the turnpike to go to Cedar Point and so on and so forth.  According to the new report on the turnpike, it's about half-local and half-out-of-state traffic and $43 million or so is spent collecting tolls.  Well, I haven't read the entire 142 page report yet (I'm not that bored), that's still $43 million in expenses that likely could be eliminated just by making the turnpike another free highway.

Of course, the state would lose a lot of money since the turnpike seems to bring in $231 million in revenues through the tolls (remember, about Buckeyes are paying about half that amount, so the net gain for the citizens of the state is really about $73 million and we haven't gotten to how much it costs to maintain the turnpike yet).  Thus, we get Kasich's plan for bonds to be paid back by future tolls.  One problem, of course, even if the out of staters end up footing most of the bill for Ohio's sake, they'll be sure to get us back by just raising the prices of all those goods the trucks on the turnpike bring to Ohio and in other ways.

It still might be cheaper in the long run to just pay more on the gasoline tax or whatnot to fix up Ohio's roads and make the turnpike free.  But, with Kasich's plan, more people get to have a slice of the pie, from Republicans collecting the fees for issuing bonds to Democrats collecting salaries for collecting tolls, and, in the end, that's probably what all this turnpike tax tango is all about.

Beware of politicians not raising taxes.

They'll still raise them, but call them bonds and fees and it'll usually end up costing us more.    

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