Congestion pricing an open question,
but equity concerns are bogus
by Rafael Perez | October 10, 2025
New York City in January became the first city in America to implement congestion charges in an effort to curb traffic, reduce pollution and raise funds to improve transit systems. Los Angeles is currently producing a study about whether it would be prudent to introduce similar changes in downtown LA and other areas, including on some freeways.
Simply put, congestion pricing imposes fees for road use during rush-hour and other heavily congested periods. New York’s effort was controversial, with the Trump administration suing to stop it. However, courts blocked the administration and the system remains in effect. Gov. Kathy Hochul touts its success, claiming “traffic is down throughout the region, business is booming, transit ridership is up, and we are making historic upgrades to our transit system.”
Mainly, critics say that it’s a tax increase that targets suburbanites. Every taxpayer and motorist already is paying a variety of taxes to sustain local infrastructure—so this just adds additional costs on those who are least able to afford them. Some view it as akin to a “sin” tax. And, these critics add, big-city transit systems wouldn’t need the additional revenue if they operated in an efficient and customer-friendly manner.
Nevertheless, it’s well documented that congestion pricing has produced several benefits in places such as Singapore, London and Stockholm, including congestion relief, reduced pollution and fewer car accidents. Yet, a lingering point of contention for a growing group of critics is that these policies result in inequities that unfairly harm the least well-off.
How does congestion pricing produce inequality? To start, the charges may be prohibitively expensive for some low-income motorists or moderate-income commuters. Since they might go out of their way to avoid the toll zones, their travel times will increase. If they have no choice but to pay the tolls, it will represent a larger share of their income than that of the wealthy.
Another equity-related complaint is that congestion charges are often implemented in high-income areas to benefit elite residents. This certainly is true of Manhattan, where the median price of a home (usually a condo or coop) is $1.2 million. The result is that poor people are forced to pay tolls if they want to access the area, and wealthy people get to enjoy living with less traffic. Locals are often granted exemptions.
The main justification for such Pigovian taxes (those where the costs are borne mainly by third parties) is that individuals have a right to compensation when they suffer harm caused by the negative “externalities” created by someone else. In this case, residents of Manhattan say they should be compensated for the traffic and associated problems caused by commuters and visitors. The latter argue that they contribute to the economic life of the area.
When we consider the potential public good produced by congestion pricing (faster travel times, reduced pollution, fewer vehicle accidents and improved public transportation) the inequality argument is less convincing, particularly because there are good reasons to believe that congestion in our cities harms the least well off the most—most notably in the form of additional pollution.
Some congestion-pricing advocates argue that congestion pricing also benefits the poor in a variety of ways. As an article in the car publication Jalopnik explains, “The people willing to pay extra to drive into the city help fund improvements to public transportation, which makes life better for the folks already struggling to make ends meet.” That’s a stretch, but it’s an increasingly common talking point.
These arguments get too deep into the philosophical weeds and obfuscate the central question: Does congestion pricing make urban life better or is it simply another tax that governments impose and perhaps just the latest effort at social engineering? Is it, as Sal Rodriguez asked in his Free Cities Center article, “a bold experiment or just another money grab?”
Those are reasonable questions—and New York’s experiment will certainly help our nation answer them. But the point here is the inequality argument is a dud. Congestion pricing is mainly a traffic-management and congestion-mitigation policy. Any tax or public expenditure naturally imposes the highest costs on those least able to pay the extra costs. Policy makers should instead focus on whether it’s worth it—whether the public benefits really outweigh the costs.
Here, the role of government is not to take into account the relative wealth of those being charged, it is simply to approximate the degree of harm in dollars and impose a corresponding cost to those responsible. Given our nation’s system of federalism, most Americans are fortunate that they can see how this plays out from afar.
Fixating on the system’s inequities also leads to some absurd remedies. Researchers at Stanford’s Autonomous Systems Laboratory looked into methods to decrease inequality through congestion charges. Their proposal suggests that this can be accomplished by refunding the revenue gathered by the programs. Low-income motorists would receive more than they pay while high-income motorists would be rewarded with lower travel times.
Too often, cities—particularly progressive ones—see each individual policy decision as an opportunity to fix all of the ills of society. In this case, the authors would transform congestion pricing into a wealth-redistribution scheme rather than a simple, albeit controversial, attempt to reduce traffic and parking problems during rush hour.
Whether New York’s or any other city’s attempt at imposing congestion charges is justified will depend on how well they secure the desired outcome of less traffic and so forth—not whether it feeds nebulous concerns about inequality. To find the answer, we’ll just have to wait, watch and see.
