Everyone knows that New York City is the heart of the United States, Manhattan is the heart of New York City, and the subways are the arteries that keep that heart pumping. Thus, when the Metropolitan Transportation Authority (MTA) warns that it will have to make “doomsday cuts” if Congress doesn’t give it another $12 billion, and that such cuts would “devastate the city for years to come,” people listen.
At the same time, New York officials say that subway riders should not have to suffer any fare increases to keep the system running. After all, the whole country benefits, so why should the lowly subway riders have to pay the full cost of their rides?
But who really benefits from the New York City subway? The extensive subway network has allowed Manhattan to grow to and maintain population and job densities found nowhere else in the country. So Manhattan property owners benefit, but how does that benefit the rest of the country? Six years ago, the land alone in Manhattan was estimated to be worth more than $1.7 trillion, which is more than $120 million an acre, and a considerable portion of this value is due to the subway system.
Supposedly, the financial firms located in Manhattan also benefit from frequent face-to-face communications and speedy electronic trading. That explains why JPMorgan Chase, the nation’s largest bank, and Citigroup, the nation’s third-largest bank, are headquartered in Manhattan. But it doesn’t explain how Bank of America, the nation’s second-largest bank, can get by being headquartered in Charlotte, North Carolina, not exactly renowned for its population density or subway system. Or why Wells Fargo, the nation’s fourth-largest bank, is located in San Francisco, which is dense but nowhere near as dense as Manhattan.
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If subways are so critical to the nation’s financial sector, then maybe the banks should pay for the subways. The $12 billion MTA says it needs would be little more than spare change for the banks. After all, JPMorgan Chase earned $36 billion in profits last year. Citigroup earned more than $19 billion. Morgan Stanley earned $11 billion, Goldman Sachs $8 billion, American Express $7 billion, and BNY Mellon $4 billion.
In subsidizing the subways, are American taxpayers really just subsidizing these banks and other highly profitable companies headquartered in Manhattan? Back in 2008, we gave many of these banks a giant bailout in the form of the Troubled Asset Relief Program (TARP) loans. Most of them have paid back their TARP loans, but any money given to the MTA will never be repaid.
Instead of giving more federal dollars to the MTA, why not let the property owners, banks, and other companies that benefit from the subway pay for it? That would include not just the projected 2021 deficit but also MTA’s $45 billion debt, $40 billion maintenance backlog, and $20 billion in unfunded pension and health-care obligations. If they don’t want to pay for it, they can move to Charlotte or some other city that isn’t so dependent on a poorly managed, overpriced transit system.
If only the Antiplanner had that same mentality when it comes to rural infrastructure. Why must NYC Citizens/Subway riders and businesses send their tax dollars to fund rural infrastructure in rural areas?
BTW – While Wells Fargo is headquartered in dwtown San Francisco but they have twice as many employees in Minneapolis and 3, 3 1/2 times as many in downtown Charlotte.
Just pointing this out since like the auto industry, finance has been shifting most of it’s actual production to the southeast ( + overseas )
Here’s some rural perspective, the 5 year ~$25B capital program the MTA is wrapping up is enough money for to maintain _ALL_ North Dakota highways at current standards for the next 20 years ( aka, great roads for an entire generation ).
MTA already got $4B dollars in 2020. They’re asking $12B more bringing them to $16B.
North Dakota has been getting around $20 million – not billion – million from Federal highway fund each year.
ND is getting 1/1000th of what NYC is demanding for just their MTA.
And that doesn’t even being to touch on the $30B new hudson tunnel which they seem to want ~$12B in federal funding for. Nor the ~$6B in federal funding they want for a new L line subway. Nor……
So ya, let’s talk about who’s getting shafted.
Do you know how much in federal taxes NYC pays compared to North Dakota?
“Do you know how much in federal taxes NYC pays compared to North Dakota?
I tried Googling search terms “federal benefits vs taxes paid by state” and came up with several references:
https://www.businessinsider.com/federal-taxes-federal-services-difference-by-state-2019-1
https://taxfoundation.org/states-rely-most-federal-aid/
https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700
Generally it seems blue states pay more in benefits than they get back. However they tend to be denser with higher incomes. Rural states with low incomes tend to get more back from the federal government than they pay in. However this is a complex issue. Even within states poorer rural communities probably are subsidized in practice. I can remember 50 years ago a San Diego supervisor telling a group how a rural resident was complaining about their taxes. The supervisor pointed out the taxes paid in his community wouldn’t even pay for the roads, let alone any other services.
Sketter,
When have I ever advocated subsidies to rural infrastructure? I have always argued that all transportation infrastructure should pay for itself out of user fees.
Come to Baltimore, we have banks We need the jobs.
Were in the center of the east so were not far from anywhere
By “doomsday cuts”, they mean that the subways will actually employ the number of people needed to run the system, not the numbers being paid over the years.
So the entire basis of the arguments is false. There is no reason for the funding other than to keep a money losing train system from having to make cuts and hard decisions like the rest of us.
None of which is relevant if the topic is federal transportation spending. Federal spending on highways and transit comes primarily from fuel taxes.
Since NYC residents consume less fuel than ND residents, they pay less per capita in fuel tax revenue to the federal government. About 560 gallons of taxable motor fuel are consumed per capita in the US. The corresponding figure for the state of New York is about 361 (which overstates the consumption of NYC residents, which is even lower). By contrast, the same figure for ND residents is just over 1,000.
Yes, “per capita” is important because there are 25.5 New Yorkers for every North Dakotan, so New York pays far more in fuel taxes than North Dakota.
Which again does not matter in reference to the original argument I was responding to. Like all states, New York has a guarantee built into the federal appropriations process that ensures they will get back a minimum of 90% (I think it is now 95%) of the fuel tax revenue they remit to the federal government. They have no business demanding more.
In short, the “donor/donee” claim in this case is a straw man. The per capita expression of taxable fuel consumption is just a normalization to make comparable the amounts for two states of vastly different population sizes. The principles do not change.