It Is Possible To Neutralize Much Of The Redistribution (ePub)

paying for the externalities they create is a reasonable way to redistribute money. In the case of paying taxes for causing traffic jams, the following fact is very concerning: in the UK, poor people do not have their own cars, they walk, cycle or take the bus. The total fuel purchases of the richest 10% are at least 30 times the same amount of the poorest 10%. The conclusion here is that paying for congestion not only improves efficiency but also redistributes wealth by raising taxes on the better-off.

This is good news for those who favor externality taxes in the UK, but it appears to have no effect in the US, where the poor still drive a lot and therefore have to pay a large amount. large taxes as a percentage of their income. However, you do not need to object strongly, because this tax was not created to redistribute too much wealth from the rich to the poor. In the case of roads, the government can eliminate the vehicle tax because it is a high upfront tax, while it will start to impose a congestion tax every time people travel back and forth.

This would help capture the efficiency benefits of paying for congestion without much impact on distribution. It is possible to neutralize much of the redistribution caused by external taxes while retaining the efficiency-increasing effects. This is a variation on Tiger Woods' lump sum tax outlined in Chapter 3: we can use lump sum taxes to redistribute without losing efficiency.