For the first time in over two decades, transit ridership in New York City is on a downward trend—and we should have seen it coming.
Once a trailblazer for investment in mass transit, New York’s subway system is starting to show its age with consistent delays, numerous breakdowns and overall crumbling service. Despite its relatively high rate of farebox return (73 percent), the Metropolitan Transit Authority is scrambling to pull together resources to keep the system afloat for its 5.7 million daily riders. So far, fare hikes and cutbacks on train frequency have proven to be about as successful as Band-Aids covering a crack in the Hoover Dam.
Funding for transit systems around the U.S. have been plagued for decades, as they rely heavily on government subsidies, which receive just a small slice of the Highway Trust Fund pie. And that piece continues to shrink as the federal gas tax remains unadjusted for inflation since 1993.
To solve the problems that are only now surfacing in New York, Mayor De Blasio has proposed a logical, yet bold plan in an election year: to increase taxes on the wealthiest 1 percent of city residents, individuals making more than $500,000 a year. The hike would mean their income tax rate would go from 3.88 to 4.41 percent, raising nearly $800 million a year to fix the deteriorating subway. In addition, a portion of the funds would go toward helping riders who fall below the federal poverty line with half-price fares, nearly 800,000 individuals.
The initiative is logical from an economics perspective because it equally distributes economic burden, but it’s also one of first times a sitting politician has proposed such a “Millionaires’ Tax” to fix a transit network that is traditionally, and predominately, relied on by lower- and middle-income residents. The mayor’s strategy can be further classified as a vertical equity scheme, where those who have the ability to pay more, should pay more.
As cities like New York, and others around the globe, continue to battle the growing urban crisis of crumbling transit infrastructure and widening inequality, strategies like the one proposed by Mayor De Blasio may be a sign of how future public utilities will be financed—especially with a shrinking middle class and a federal government unwilling to step in.
Taxing the wealthy to improve public transit has been successful across the globe. In Nottingham, home of the legendary Robin Hood who stole from the rich and gave to the poor, new parking fees (a proxy for taxing income) helped pay for two new tram lines and other bus and rail improvements in just four years In Seattle, a new ordinance increases the income tax for high-earning residents to pay for affordable housing programs, public transit and other critical city needs. When asked for comment, the mayor called it a “fight for economic stability, equity and justice.”
Still, a similar measure in New York would be a significant, given its size, wealth and global importance. As De Blasio’s proposal moves ahead, several questions must be considered: Is this model sustainable? Can it be adopted elsewhere? Will it raise enough funds to fix the Transit Authority and reverse ridership declines?
In the meantime, all eyes are on New York…so “start spreading the news.”