WHY NOT SET UP A TRANSPORTATION TAX CREDIT?

My first encounter with a negative income tax was Wisconsin's homestead tax credit, in which a renter or a homeowner alike would pay less in state income taxes in some proportion of the property tax he paid.  In some circumstances, the homestead tax credit could exceed the income tax due, and the taxpayer would get a check from the state.  There is such a property tax credit in Illinois, which cannot exceed the amount of tax due.

The concept might have some value as a way of preserving the resource allocation properties of a congestion toll on the roads while making the toll less burdensome on people who make less money.

A new report by UCLA transportation experts outlines ways that California could implement congestion pricing while minimizing the financial burden on those residents.

The study suggests that if congesting pricing were enacted in California’s six largest urban areas, about 13% of households in those areas might be unduly burdened because of the combination of their travel habits and low incomes. But while tolls could create an equity problem, the report suggests that the revenue generated by tolls could ultimately solve that problem.

The idea is a lot like the property tax credit, if the taxpayer can verify both income and tolls paid. "The most promising solution, they write, would be to provide direct cash assistance to low-income residents from revenue collected by the tolls."

To the extent that highway authorities collect tolls using transponders mounted on cars, there are methods for the taxpayers to claim and the state revenue auditors to verify the credit that is due.