Thursday, November 29, 2007
It is always more palatable for government to give a “tax break” for behavior it wants to encourage, rather than to impose extra tax for behavior that it doesn’t. This is true even when the category of “good” citizens might be as large as that of “bad” ones. So, instead of trying to penalize residents for long, gas-guzzling commutes (such as through a higher gas tax, as relentlessly advocated by Thomas Friedman), the state of Maryland is rewarding citizens for having a short commute. A new program rewards homebuyers up to $5,000 to defray settlement and closing costs, if the new home is within 10 miles of their work, or within the same county.
Such a program undoubtedly will affect some residents’ buying choices, even in a fairly dense state such as Maryland (and let’s hope, for taxpayers sake, that the documentation that the state gets is better than that collected by subprime lenders over the past decade). But, like any subsidy, it may have some unwanted consequences. More than half of Maryland’s population lives in a handful of large suburban counties that spread more than 20 miles in either direction. Thus, a lot of buyers in sprawling subdivisions far from Baltimore, Annapolis, and Washington will be subsidized as “short commutes.” Next, because many inner suburbs tend to be wealthier than outer suburbs (as low-cost housing drifts further out), much of the subsidy may end up going to buyers of big old close-in houses instead of less affluent buyers on the low-cost fringe. And, finally, if some homeowner decisions are affected by the grant, might the subsidy also affect some decisions of employers as to where to locate –- such as away from an urban area and into the middle of a sprawling new suburban realm?