Taxes can be good, part 1

This is the first installment of a hopefully infinite series where I will try to highlight how taxes, when used properly, greatly benefit society.

First up is an example of how taxes, in the form of congestion pricing, can make us happier while raising revenue.  It’s pretty axiomatic that there is a strong negative correlation between commute time and personal happiness.  Here’s David Brooks from his column today:

If the relationship between money and well-being is complicated, the correspondence between personal relationships and happiness is not. The daily activities most associated with happiness are sex, socializing after work and having dinner with others. The daily activity most injurious to happiness is commuting.

Why does commuting suck for the individual?  Because it’s stressful, frustrating to feel out of control (traffic is exogenous), and, most importantly, takes us away from other people.  (I would like to see the research on happiness and commuting by mass transit.  I, for example, fly from Minneapolis to Newark and back every week and love it, but I don’t have to do any driving: it’s passive commuting.)  Obviously, there are two mutually reinforcing ways to decrease commute times: congestion pricing so as to reduce traffic or constructing much denser housing.  The former is a lot easier than the latter.

Matt Yglesias picks up on this logic as well.  Yglesias’ analysis:

Brooks doesn’t pivot from this into any real policy specifics. But the upshot of the commuting point is very clear—we should charge people a fee to drive on crowded roads at peak hours. If you look at it in strict dollars and cents terms, the policy looks great. A relatively small fee can eliminate large economic losses due to congestion, and then the fee can finance useful public services or reductions in other taxes. But when you add in the fact that commuting time makes people miserable, you can see that the social gains from congestion pricing in our most-trafficked metro areas would be extremely large.

And the environmental effects of encouraging less car transit and denser housing have the potential to be huge over time.