Saturday, May 17, 2008

Road building and the Great Depression

I was reading today a book on the history of roads in 20th century America called The Geography of Nowhere. I was a bit disappointed in the book itself – I was looking for a more detailed treatment of the funding and scope of government road projects – but I came across this interesting bit about road expenditures before the Great Depression: "A commission under President Hoover concluded that the automobile was the 'most potent influence' on the rise of local taxes between 1913 and 1930." This caught my eye because according to Amity Schlaes' The Forgotten Man, property taxes were the most difficult tax for Americans to pay during the Great Depression. In a time before the widespread adoption of income and sales taxes, property taxes made up the lion's share of local government revenues: two-thirds of all revenue according to Dick Netzer, and over 90% of all taxes levied in cities of more than 30,000 according to David Beito.

Because this was in an era before politicians recognized the incremental wisdom in at least pretending to fund roads with user fees, this run-up in taxes was part of a larger trend of the pre-WWII era: property owners and renters were subsidizing roads for the benefit of the wealthy. Real estate developers who ran private forms of mass transit (mostly streetcars) and who were in direct competition with government-financed roads were some of the biggest payers of taxes, which makes the transfer especially ironic. I'd known that road construction was a big driver of industry and commerce in the first half of the twentieth century, but I hadn't realized the exacerbating effect those costs had during the Great Depression.

1 comment:

Market Urbanism said...

Great topic! I posted a link from marketurbanism.com

I think this is a topic that deserves much more attention by academia and the press.