Price parking. Fund roads. Give the surplus back to every Portlander. No head tax required.
PBOT faces a $6 billion maintenance backlog. Gas tax revenue is declining. The bureau can barely keep staff on payroll, let alone fill potholes. Everyone agrees something must be done.
The proposed Transportation Utility Fee would charge every single-family household $12/month and every apartment dweller $8.40/month—a flat per-unit charge regardless of income, car ownership, or how much you actually use the road network.
A flat per-unit fee is a head tax. A single mother taking the bus pays the same as a two-car household. A studio apartment renter pays $8.40; a homeowner on a 10,000-square-foot lot pays $12. When the fee is measured per acre of land consumed, apartment dwellers pay up to 600% more than large-lot homeowners.
We've seen this movie before. The Portland Arts Tax—another flat head tax—has become an administrative nightmare with dismal collection rates and perpetual public resentment. The TUF as proposed risks the same fate, with the added problem of being economically distortionary.
Some proposals would scale the TUF by lot size, charging more for larger parcels. The instinct is right—large lots consume more public infrastructure. But there are two problems:
If you live in a 20-unit building, you're already paying roughly 1/20th the land cost of a single-family homeowner on the same parcel. The price system has already rewarded your efficient land use through lower housing costs. A density-scaled TUF double-counts that benefit.
A 10,000 sq ft lot doesn't generate twice the road wear of a 5,000 sq ft lot. Driving causes road damage—vehicle miles traveled, vehicle weight, tire type. A lot-size fee looks like an efficiency improvement, but it's pricing the wrong thing. It's addressing a cost-allocation problem, not correcting an externality.
Oregon's Measure 5/50 caps property taxes. A fee scaled to lot area is substantially correlated with land value—a plaintiff could argue it's a property tax with extra steps. Flat per-unit fees have survived legal challenge in 31 Oregon cities. Lot-area fees have not been tested.
Collect revenue with simple, flat marginal rates. Redistribute through universal lump-sum transfers. The result is progressive effective rates—without brackets, phase-outs, or means tests. — The foundational insight of optimal tax theory
Instead of a head tax on residents, we propose pricing the thing that actually damages roads—driving—and returning the surplus to the people. Two instruments, one vision.
Here's the punchline: Portland may not need the TUF at all.
Portland currently meters roughly 20,000 on-street parking spaces in five districts, generating about $30–35 million/year. That's maybe 5% of total on-street curb space in the city. The other 95% is given away for free—a massive in-kind subsidy to car owners that creates deadweight loss by definition. When you give away a scarce public resource for free, you guarantee it will be misallocated. This is what economists call the gift card fallacy: the city bears the full cost of providing that street space, but the benefit to the person storing their car there is worth less than that cost. The gap is pure waste—and it's invisible, because we all think "yay, free parking!" without considering we're paying for it through higher taxes, worse roads, and fewer services.
The late Donald Shoup—widely revered across the urbanist spectrum—spent a career documenting this. Demand-responsive pricing fixes it by converting an invisible subsidy into visible revenue.
Conservative estimates suggest that expanding demand-responsive pricing to even a modest fraction of unmetered curb space—commercial corridors, dense residential areas, high-demand neighborhoods—could generate an additional $30–70 million/year. That's comparable to or exceeding the TUF's projected $47 million, and it comes from pricing an actual externality rather than imposing a head tax on residents.
When NYC launched congestion pricing in January 2025, critics predicted economic catastrophe. One year later, the results are staggering: 27 million fewer vehicles entered the congestion zone, an 11% reduction. Traffic delays dropped 25%. Rush hour speeds improved 23%. Bus speeds increased. Subway ridership hit post-pandemic highs. Air pollution fell 22%. Noise complaints dropped 45%. Traffic fatalities fell 20%. Revenue exceeded projections at $550 million in the first year—$50 million over target. And Manhattan's economy boomed: office leasing surpassed pre-pandemic levels, vacant storefronts declined, and private sector employment grew at double the national rate. A 2026 Nature study confirmed vehicular emissions fell 16–22%. Every single doomsday prediction was wrong.
Parking pricing is congestion pricing's close cousin—you're charging for the direct use of transportation infrastructure, in real time, with prices that respond to demand. The nexus is legally airtight. The supply of street space is perfectly inelastic, so the fee creates approximately zero deadweight loss. Portland already operates demand-responsive meters in several districts. This isn't novel—it's extending a proven practice citywide.
And crucially, parking pricing captures non-residents. Joe Cortright has documented that the majority of vehicle traffic damaging Portland streets originates outside the city. The TUF can never touch those drivers. Parking pricing can. Every commuter from Vancouver, Lake Oswego, and Beaverton who parks in Portland pays into the system. That alone is a reason to prioritize parking pricing over the TUF.
Additional measures within council authority: a per-delivery fee on e-commerce shipments (already floated by PBOT at 25–50¢/delivery, raising $5–9M/year) and a priced residential parking permit program scaled to the number of vehicles registered at each address.
Here's where it gets exciting. If parking pricing generates revenue in excess of what the TUF was projected to raise, the surplus goes directly to every Portland adult as a universal annual credit—delivered through the same infrastructure the city already uses for the Arts Tax. No means testing. No new bureaucracy. Everyone gets it.
The result: Portland funds its roads and gives its most vulnerable residents an economic lift that more than offsets any added cost. A low-income resident who doesn't drive pays nothing in parking fees and receives the full credit—they come out ahead. A wealthy two-car household pays thousands in parking fees, receives the same small credit, and bears the overwhelming share of the cost. The effective rate is automatically progressive, and the people who damage roads the most pay the most.
The credit also more than offsets the Arts Tax's $35/year burden, effectively neutralizing Portland's most hated head tax without touching it legislatively. You don't repeal the Arts Tax. You just make it irrelevant by paying people more than it costs them.
Imagine Portland in 2027: congestion is down. Air quality is up. PBOT is funded. Every adult Portlander receives a check. The Arts Tax still technically exists but nobody cares because the universal credit dwarfs it. And the city did it all without imposing a single new head tax—by pricing a resource that was being given away for free and returning the surplus to the people.
The TUF as proposed raises $47 million/year from residents. Conservative estimates suggest expanded parking pricing could raise $60–100 million/year from everyone who drives and parks in Portland—residents and non-residents alike. Here's what a parking-primary model looks like.
With ~500,000 Portland adults, even a modest $20M surplus funds a $40/year credit per person—enough to offset the Arts Tax with $5 to spare. At the high end, a $47M surplus funds a $94/year credit, putting every Portlander ahead while funding roads entirely from driving behavior.
| Household | Head Tax (current TUF) | Parking-Primary Model |
|---|---|---|
| Single renter, no car | $101/yr | −$40 to −$94/yr (net gain) |
| Couple, apartment, no car | $101/yr | −$80 to −$188/yr (net gain) |
| Family, SFH, 1 car, drives occasionally | $144/yr | ~$100–400/yr (parking) − $80–188 (credit) ≈ modest net cost |
| Wealthy household, 2+ cars, drives daily | $144/yr | $1,000–3,000/yr (parking) − $80–188 (credit) = significant net cost |
The people who drive the most and consume the most public space pay the most. The people who drive least or not at all come out ahead—they receive money. No one was means-tested. No one filled out a form. And PBOT is fully funded by the people actually using and damaging the roads, including the non-residents the TUF can never touch.
Let's clear up a common confusion. We are not arguing against progressive taxation. We are arguing for it—but through a mechanism that's simpler, more efficient, and more transparent than graduated brackets or scaled fees.
The key distinction is between marginal rates (what you pay on each additional dollar) and effective rates (the share of your total income that actually goes to taxes after credits). A flat marginal rate combined with a universal credit produces deeply progressive effective rates—automatically.
Imagine a flat 40% income tax rate with a $10,000 refundable tax credit for every person. Here's what actually happens:
| Gross Income | Net Income | Effective Rate |
|---|---|---|
| $12,000 | $17,200 | −43.3% |
| $20,000 | $22,000 | −10.0% |
| $25,000 | $25,000 | 0% |
| $40,000 | $34,000 | 15.0% |
| $80,000 | $58,000 | 27.5% |
| $160,000 | $106,000 | 33.8% |
| $320,000 | $202,000 | 36.9% |
| $1,000,000 | $610,000 | 39.0% |
A person earning $12,000 receives a net payment of $5,200—a negative 43% effective rate. A person earning $40,000 pays 15%. A millionaire pays 39%. People below $25,000 don't just pay less—they receive a refund. This is more progressive than most graduated bracket systems, and it uses a single flat rate with no brackets, no phase-outs, no cliffs.
The math is simple: 40% of $80,000 is $32,000 in tax, minus the $10,000 credit equals $22,000 net tax, which is 27.5% of gross income. The universal credit acts as a constant offset that matters enormously at low incomes and becomes negligible at high incomes. The effective rate curve rises steeply from negative territory and asymptotically approaches—but never reaches—the flat marginal rate.
The TUF is a flat fee (the marginal rate). The universal credit is the lump-sum offset. Together, they produce a progressive effective rate on every household in the city—without a single line of means-testing code, without income verification, without benefit cliffs, and without the administrative nightmare that killed the Arts Tax's exemption system.
The instinct to make the fee itself do the redistributive work—scaling it by lot size, density, or income—is understandable. But it leads to worse outcomes for the very people it's trying to help.
Every dollar spent determining who is "low income enough" to qualify for a TUF exemption is a dollar not spent filling potholes or helping that same person. Means testing creates bureaucratic overhead, stigma, enrollment barriers, and benefit cliffs. The Arts Tax's collection problems are a direct consequence of trying to means-test exemptions for a $35 charge. A universal credit eliminates all of this.
When parking is free, every single person—rich, poor, car-free, three-car household—experiences the same price for street space: zero. That means the price conveys no information and changes no behavior. Demand-responsive pricing creates a truthful signal about the scarcity of public space. Carving out exemptions from that price for certain groups destroys the signal for those groups, reintroducing the inefficiency you were trying to fix.
A low-income resident who occasionally drives and pays some parking fees receives the full credit. The credit more than covers their costs in most cases—they face the price signal, adjust behavior, and come out ahead financially. A high-income resident who drives daily absorbs the costs easily and the credit barely registers. Same policy for everyone, progressive outcome.
A density-scaled fee hides redistribution inside a formula that obscures who's subsidizing whom. The two-instrument approach is radically transparent: here is what you pay, here is what you receive back, here is the net. Every resident can see both numbers and judge for themselves whether the system is fair. For anyone who values democratic accountability, this is preferable.
In-kind subsidies—like free parking—are worth less to recipients than their cost to providers. That gap is pure waste. Pricing the resource and giving people cash lets them allocate according to their own needs. — The core insight of Donald Shoup (1938–2024)
This isn't just theory. The empirical evidence across developed nations powerfully confirms the framework we're proposing—and refutes the intuition that making tax brackets more graduated is how you achieve equity. The mechanism that actually matters is how generously and universally you redistribute.
Research from the UBI Center, drawing on OECD data, reveals a striking finding: the United States already has the most progressive tax code in the entire OECD. More progressive than France, Germany, Finland, or any of the Scandinavian countries Americans often hold up as models of equality.
And yet the US does far less to reduce inequality than any of those countries. How?
The answer is transfers. Countries that distribute a larger share of household income as cash transfers consistently achieve greater inequality reduction—regardless of how progressive or flat their tax systems are. When you control for transfer generosity, tax progressivity and overall tax levels have no statistically significant relationship with inequality reduction.
The progressivity of a country's tax brackets—how steeply marginal rates rise with income—does not significantly correlate with inequality reduction. What does correlate is the generosity of cash transfers. Countries that raise adequate revenue—even through relatively flat marginal rates—and distribute it broadly and generously achieve far more equality than countries with highly graduated brackets and stingy, means-tested benefits. In other words: progressive effective rates are what matter, and the way to achieve them is through the transfer side, not the bracket side.
A 2020 National Bureau of Economic Research paper goes further, finding that a uniform flat tax on capital and labor income combined with a lump-sum transfer is nearly optimal from a welfare-maximizing perspective. The flat tax minimizes labor supply distortions while the universal transfer handles all the redistributive work.
This is exactly what we are proposing for Portland, at the municipal scale. A flat TUF (simple, non-distortionary, legally tested) combined with a universal credit (generous, automatic, progressive in effect). The international evidence says this approach doesn't just match the inequality reduction of progressive fee structures—it exceeds it, because it avoids the bureaucratic waste, enrollment barriers, and benefit cliffs that plague means-tested systems.
To achieve the egalitarianism of other developed countries, the US should focus less on progressive tax brackets, and more on how to raise enough revenue to distribute it broadly, effectively, and generously. — Max Ghenis & Nate Golden, UBI Center (2020)Source: UBI Center — "Basic income can make switching to a flat income tax progressive"
This is the most important objection, and the answer is: that's what the universal credit is for. A resident in outer East Portland with limited transit options who must drive to work receives the full universal credit. For most moderate-income households, the credit more than offsets their parking costs. The framework doesn't assume everyone can stop driving. It just ensures that the price signal exists, while the redistribution cushions its impact on those with fewer choices. And unlike the TUF, people who don't drive pay nothing—and in fact come out ahead.
New York City's congestion pricing faced identical opposition—and the one-year data demolished it. Manhattan's office leasing surpassed pre-pandemic levels. Vacant storefronts decreased. Private sector employment grew at double the national rate. It turns out that reducing traffic and improving mobility is good for business. The same principle applies to parking: when prices ensure turnover, customers can actually find a spot. Shoup's research consistently shows that businesses near properly priced parking do better, not worse, than those surrounded by free parking that's always full.
Every congestion pricing program in history has been more popular after implementation than before. London, Stockholm, Singapore, and now New York—in every case, public opinion flipped once people experienced the benefits. Governor Hochul put it simply on the one-year anniversary: "All I knew is that the idea was smart. It would take time to get used to it." Portland already has the infrastructure—demand-responsive meters in five districts—and the political culture to lead on this. The question is whether council has the courage to do the smart thing instead of the easy thing.
Let's name them honestly: a proper land value tax replacing Oregon's broken property tax system, a VMT charge weighted by vehicle weight, and a statewide universal basic income. All of these require state-level action. Portland's council should publicly advocate for Measure 5/50 reform and state VMT pricing—and should design the parking pricing program to be supplemented by those better instruments when they arrive. In the meantime, parking pricing is the best available policy: it approximates congestion pricing, generates substantial revenue, provides a clean price signal, captures non-residents, and—paired with a universal credit—achieves progressive redistribution without a single means test.