Taxing Development: The Law and Economics of Traffic Impact Fees

Boston University Public Interest Law Journal, No. 16, 2006

Independent Institute Working Paper No. 65

51 Pages Posted: 16 Sep 2010

See all articles by Benjamin Powell

Benjamin Powell

Texas Tech University - Free Market Institute; Texas Tech University - Rawls College of Business

Edward Peter Stringham

Trinity College; American Institute for Economic Research

John B. Estill

affiliation not provided to SSRN

Date Written: 2006

Abstract

This paper focuses on traffic impact fees and illustrates a series of difficulties with their use. Contemporary U.S. law suggests that fees be based on a rational nexus of costs and benefits and on rough proportionality of a fee with the external cost imposed by new development. But how are these external costs measured? Can government know the marginal impacts of all homes before they are built? Do all developments have the same marginal impact on infrastructure, and, if not, should they all be charged different fees? Unless government knows the exact marginal impact of each development, they will undercharge some and overcharge others, making “economically efficient” development impossible. In the absence of markets with actual prices for these common pool resources, government will face numerous calculation problems.

Suggested Citation

Powell, Benjamin and Stringham, Edward Peter and Estill, John B., Taxing Development: The Law and Economics of Traffic Impact Fees (2006). Boston University Public Interest Law Journal, No. 16, 2006, Independent Institute Working Paper No. 65, Available at SSRN: https://ssrn.com/abstract=1674455

Benjamin Powell

Texas Tech University - Free Market Institute ( email )

Box 45059
Lubbock, TX 79409-5059
United States
806.742.7138 (Phone)
806.742.1854 (Fax)

HOME PAGE: http://www.fmi.ttu.edu

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States
806.834.3097 (Phone)
806.742.1854 (Fax)

Edward Peter Stringham (Contact Author)

Trinity College ( email )

Hartford, CT 06106
United States

American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States

John B. Estill

affiliation not provided to SSRN ( email )

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