The voices of Tax Policy Center's researchers and staff
Road trips are a staple of my family’s summer. We load up the van and head to the nearest state park, flash our Michigan Recreation Passport and off we go, hiking and biking. That “passport” is an annual $11 fee that we add to our license plate renewal payment. In exchange, we get unlimited access to all state parks, and the state uses the money, along with day-trippers’ fees, to maintain and improve the facilities.
Oregon, one of five states with no sales tax, just passed such a tax on bicycles to help fund trail maintenance and improvement. That decision generated a good bit of controversy, and as a bicycle-riding, trail-loving taxpayer, I wondered why a bicycle tax that supports bicycle trail use is so contentious.
Here are some details: Starting in October, Oregon will collect $15 on the purchase of every bicycle that retails for $200 or more. The state expects the excise tax to generate $1.2 million annually that will be used to “expand and improve commuter routes for non-motorized vehicles and pedestrians, including bicycle trails, footpaths and multi-use trails.”
Not every Oregonian is a fan. One bicycle retailer says the tax will take up to $15,000 off his bottom line each year. He’s not sure whether he’ll pass its cost on to his customers.
And some cycling advocates are steamed as well. Jonathan Maus, publisher of BikePortland, said, “We are taxing the healthiest, most inexpensive, most environmentally friendly, most efficient and most economically sustainable form of transportation ever devised by the human species.”
I share his concern, if not his affinity for hyperbole.
Would the excise tax result in less cycling? A general principle of economics says that if you want less of something, tax it. Will Oregon’s bicycle tax reduce the use of expensive two-wheelers? Maybe it will encourage the sale of bicycles costing $199 or less… or bikes without seats or pedals, which would be purchased separately.
Or, would the tax simply be a fee easily paid by cyclists—the prime users of bike trails? A public finance principle holds that if you can identify who uses public services and if you can collect a fee efficiently, charge those users that fee. Is $15 a fair price?
Which principle will hold true in Oregon? To hazard a guess, I asked some Facebook friends what they thought. I know they might not represent a random cross-section of Americans, but I thought it would be fun to poll them, unscientifically and informally. I divided 200 active Facebook friends into two randomly assigned groups of 100.
One Saturday morning in mid-July, I asked one group the following question:
“Would you be willing to pay a one-time $15 bike trail fee when you buy a new bicycle costing $200 or more? Click ‘like’ if the answer is yes, click ‘angry’ if the answer is no.” In the space of about four hours (what feels like eternity in Facebook time), 12 people said yes. Nobody said no.
At the same time, I asked the second group a similar question, except I used the word “tax” instead of “fee.” This time, seven people said yes to a bike tax and nobody said no (the lower response rate might suggest that fees are indeed more popular than taxes).
In other words, 10 percent of my Facebook friends are willing to pay to support state bike trails. And none said a $15 charge would keep them off their bikes. The rest? Well, maybe they had put down their phones to enjoy a nice weekend morning in the woods.
There are other surveys, of course. In Wisconsin, a bicycle advocacy group recently found that 80 percent of its members are okay with voluntary bike fee or a tax. The state’s lawmakers have yet to pass a state budget, and the organization is on alert for a bike tax like Oregon’s.
Colorado also may follow Oregon's lead. GOP State Senator Ray Scott sees the issue as one of fairness, though he might also be eyeing a new source of revenue. He argues that since bicyclists share the roads, they should help pay for them. And, he asks, “if we’re not going to tax bicycles, then let’s not tax boats, ATVs, and every other vehicle out there that already pay all these taxes… how many rights do we give to cyclists that we don’t give to everybody else on the road?”
How far does that logic go? TPC’s Len Burman, a tax expert and avid biker—quipped on Facebook that Oregon’s bike tax “is better than putting toll booths on bike paths.” But, he wondered, “Will they add a sneaker tax so walkers pay their fair share?”
States have a lot to consider when it comes to navigating the taxation of preferred policy outcomes, writes Jared Walczak of the Tax Foundation. “To some, [a strong cycling culture] only contributes to the urgency of bringing a significant number of commuters back into the tax code. To others, a bike tax is an impediment to a continued shift to cycling.” To put it another way, do states want the cash or do they want to change behavior—behavior which could save money in the long run, since bike paths are much less expensive than roads or mass transit?
Our children, ages 10 and 12, illustrate that tension rather nicely. Would they be okay with paying an extra $15 on their next bike to help maintain bike trails?
“It seems reasonable, and I’d pay it,” mused the younger one. “But I don’t think everybody would want to. I mean, there weren’t even a lot of people on the bike trails when we rode them.”
His older sister disagreed: “Yeah, but the tax goes to keeping the trail nice, no matter how many people are on it. I would pay for what I know I’d like, no matter what I actually did.”
That’s the thing about riding a bike and developing tax policy: You need balance.
The Tax Hound, published on the first Wednesday of every month, makes a tax issue relevant to everyday concerns and average taxpayers. Curious about a tax issue? Comment below or send an email to Renu Zaretsky.
Posts and Comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Don Ryan/AP Photo