Paying for the New York Subway

Running a subway system costs money; who should pay? New York’s lawmakers think that it should be people who watch Netflix, or engage in various other purchases and activities even if they rarely or never ride the subway, and derive no special benefit from it. Georgists think that such a service should be financed by some combination of fares and taxes upon the land values which it creates. If a new subway station is opened near your land, your land value normally rises, and you can charge people more money to rent an apartment or a storefront there. Shouldn’t you pay for the special benefits you receive?

I remember a column in the Financial Times a few years ago, reporting that Hong Kong had a subway (from the airport, if I recall correctly) which charged no fares, being financed from land taxes; the columnist treated this as something scandalous. I wrote a letter to the editor, which the paper printed, saying that this was just the way infrastructure should be financed.

On the other hand, my Georgist friend Rick Rybeck has argued that at least some of the revenue for mass transit should come from fares, or the transit authority may come to see actually getting passengers from point A to point B rapidly and comfortably as an inconvenience which it doesn’t have to bother with.

Well, off to work by bus and Metro.