Introduction
When Chinese tourists drive across America's Interstate highways, one of their most surprising discoveries is this: the vast majority of highways have no toll booths at all. This stands in stark contrast to China's highway system, which is dotted with 86,000 toll collection points. But are American highways truly "free"?
This article will take you on a journey through a century of history. We'll explore the 1916 toll ban that was "so obvious it passed without debate," the Pennsylvania Turnpike's dramatic overturning of government predictions in 1940, Eisenhower's revolutionary Highway Trust Fund in 1956, today's vast road network supported by 18.4 cents per gallon in gas taxes, Breezewood's maddening status as "America's purest tourist trap," and the innovative financing of 21st-century HOT Lanes.
You'll witness a hundred-year struggle between federal government and state sovereignty, watch the institutional evolution as toll bans compromised with reality, and see how the "user pays" principle moved from controversy to consensus. Most importantly, you'll understand a fundamental economic truth: roads have never been free. The only differences are who pays, when they pay, and how they pay.
This isn't just a history of American highway financing. It's a mirror reflecting China's own highway development path. Only when we understand the institutional logic behind America's 35-year construction of the Interstate System and China's building of the world's largest road network in less than 30 years can we truly contemplate this question: what financing model best suits a nation's development stage?
Part One: Introduction
For many Chinese tourists visiting America for the first time, a striking experience when driving across Interstate highways is this: most highways surprisingly charge no tolls. This forms a sharp contrast with China's dense network of toll stations. The data tells a remarkable story: 70% of the world's toll roads are located in China, while less than 10% of American highways collect tolls. What historical origins and institutional designs lie behind this difference?
The United States possesses one of the world's most extensive highway systems, totaling approximately 3.9 million miles (about 6.28 million kilometers). Within this network, the 46,730-mile Interstate Highway System forms the nation's transportation arteries, carrying more than 40% of the country's highway traffic, 75% of heavy truck transport, and 90% of tourist travel. Yet the vast majority of this massive system operates on a toll-free basis.
To understand America's free highway model, we need to trace back to the early 20th century and explore how this nation established a unique highway financing and management system through cooperation between federal and state governments.
Part Two: Historical Background - From Mail Routes to National System
The Local Character of Early Road Construction
In 19th-century America, road construction was primarily the responsibility of state and local governments, serving the needs of mail delivery and agricultural product transportation. However, during this period, highway development was overshadowed by railroad expansion. Not until the late 19th century did the bicycle craze reignite public interest in road improvement.
The League of American Wheelmen, founded in 1880, along with bicycle manufacturers, began urging state legislatures to provide better roads. By 1890, America was producing over one million bicycles annually, and this booming industry became an important force driving the road improvement movement. In 1892, the National League for Good Roads was established, holding the Good Roads Congress in Washington the following year.
The Starting Point of Federal Involvement
In 1893, Congress established the Office of Road Inquiry (ORI) within the Department of Agriculture, marking the federal government's initial entry into road affairs. However, the Secretary of Agriculture's instructions clearly reflected the political stance of the time: "The actual expense of building roads should be borne by the locality and state where situated." The ORI's responsibilities were limited to collecting information on highway laws, suitable road-building materials, and related transportation rates.
The advent of automobiles in the early 20th century added new momentum to road construction. In 1913, Congress passed the landmark Federal Aid Road Act, appropriating 75 million dollars over five years to improve rural mail routes. These funds were distributed through state highway departments using a 50:50 federal-state matching formula, not exceeding $10,000 per mile. The act required states without highway departments to establish them, with projects approved by the Bureau of Public Roads (BPR, later the Federal Highway Administration).
This legislation was profoundly significant: Congress formally recognized that better roads were crucial to national welfare, and that highway construction was not merely a local responsibility but a national one.
The Birth of User Taxes
Initially, both federal and state highway projects were funded through general tax revenues. States pioneered the use of highway user taxes. As early as 1916, user taxes contributed about 26 million dollars to the states' approximately 87 million dollars in highway expenditures. In 1932, the federal government followed the states' lead and began levying a gasoline tax. Although this revenue wasn't officially earmarked for highway projects until 1956, federal highway spending and gasoline tax revenues remained essentially aligned during this period.
On February 25, 1919, Oregon became the first state to levy America's first gasoline tax, at a rate of one cent per gallon. Because gasoline consumption correlates with road use, this equitable financing method quickly spread nationwide. Within the next decade, all 48 states at that time had adopted their own gasoline taxes.
In 1932, Congress established the first federal gasoline tax revenue source at one cent per gallon, initially intended to reduce the federal deficit. The federal gasoline tax rate increased by half a cent during World War II and another half cent during the Korean War to raise new defense revenue.
1927: The "Conditional Exception" for Bridges and Tunnels
In 1927, Congress passed special legislation creating an exception for toll bridges, the first significant modification to the 1916-1921 toll ban. However, this exception came with strict conditions: once the construction costs contributed by state or local governments were fully recovered from toll revenues, tolling must cease and the bridge must operate as a free facility.
This "conditional exception" model later extended to tunnels, becoming an important feature of federal highway toll policy. It embodied a compromise approach: allowing toll financing to solve construction funding problems, but with the ultimate goal remaining free passage. This model continued into the Interstate Highway Act period of 1956.
The 1921 Act: A True National System
America's mobilization experience during World War I highlighted the nation's need to develop a systematic network of trunk highways rather than piecemeal improvement of local roads. The Federal Highway Act of 1921 required concentrating federal highway aid on "projects that can expedite completion of an adequate and connected interstate highway system."
The act required each state to designate 7% of its road mileage as primary roads, with only this portion eligible for federal matching funds. This legislation marked the beginning of a true national highway system and established the basic framework for federal aid to state highway projects, with state and local governments owning and responsible for planning, designing, building, and maintaining highways.
The federal role was established as providing financial assistance to ensure states possessed a high-quality, uniform system, and offering technical assistance to promote innovation in the highway industry. The result of this arrangement is that although highways are state-owned, due to the high degree of system uniformity, these differences are virtually transparent to highway users.
Part Three: The 1956 Revolution - Interstate Highway System and Highway Trust Fund
Eisenhower's Vision
The Federal-Aid Highway Act of 1956 was a watershed in American highway history. The act created an entirely new highway network, now known as the Eisenhower System of Interstate and Defense Highways.
This 41,000-mile network was designed to connect America's major cities, reflecting proposals that had been made as early as the 1930s. The new system was designed for toll-free passage, although approximately 2,300 miles of toll roads were also incorporated into the system. More importantly, the act established a new financing mechanism: the Highway Trust Fund.
The Operating Mechanism of the Highway Trust Fund
The Highway Trust Fund was based on federal taxes levied on gasoline, tires and inner tubes, new passenger cars, trucks and trailers, as well as use taxes on heavy trucks. Through the Highway Trust Fund, the federal government contributed 90% of construction costs for the new Interstate System, an unprecedented level of federal investment at the time.
The Highway Revenue Act of 1956 authorized increasing the federal gasoline tax from two cents per gallon to three cents, for a 16-year period from July 1, 1956 to June 30, 1972. The act also authorized creation of the Highway Trust Fund, transferring a certain proportion of revenue from highway user taxes (gasoline, diesel and special motor fuels, tread rubber, tires and inner tubes, trucks, passenger cars, etc.) from the Treasury's general fund to this fund. One hundred percent of federal gasoline tax revenue was transferred to the Highway Trust Fund.
According to estimates at the time, during the 16-year period from fiscal year 1957 to fiscal year 1972, highway user taxes would bring approximately 38.5 billion dollars in revenue to the trust fund, sufficient to cover the estimated 37.3 billion dollars in expenditures for federal-aid highway projects.
The Evolution of the Gasoline Tax
The federal gasoline tax increased from three cents per gallon to four cents on October 1, 1959, a rate that persisted until 1982. The Surface Transportation Assistance Act of 1982 raised the rate to nine cents per gallon, but the legislation created two separate accounts within the Highway Trust Fund: the Highway Account would receive eight cents of revenue, while the new Mass Transit Account would receive one cent of the gasoline tax.
The Omnibus Budget Reconciliation Act of 1990 raised the federal gasoline tax by another five cents per gallon (to 14.1 cents per gallon), effective December 1, 1990. This was a "first" for the Highway Trust Fund: half of this five-cent increment went to the Treasury's general fund to reduce the deficit. Previously, virtually all revenue from federal motor fuels (and other highway-related federal excise taxes) had been credited entirely to the Highway Trust Fund.
Currently, the federal gasoline tax stands at 18.3 cents per gallon, diesel at 24.3 cents per gallon (plus 0.1 cent for the Leaking Underground Storage Tank Trust Fund), rates that have remained unchanged since 1993.
Part Four: The Economic Logic of "Free"
Advantages of the Tax Financing System
American highways aren't truly "free" but are paid for through an indirect, broadly distributed tax system. This system has several significant advantages.
First, it lowers transaction costs. If a direct toll model were adopted, it would require building and operating numerous toll stations, employing toll collectors, and maintaining toll equipment. These costs are quite substantial. It's estimated that construction and operation costs of toll stations could account for 15-30% of toll revenues. In contrast, gasoline tax collection costs are much lower, with taxes collected at the wholesale level without needing to establish toll infrastructure at every intersection.
Second, it improves traffic efficiency. Toll-free passage avoids vehicle queuing and deceleration at toll stations, substantially increasing the road's actual throughput capacity. This is especially important during peak traffic periods. The bottleneck effect created by toll stations not only reduces road usage efficiency but also increases fuel consumption and emissions.
Third, it promotes interstate commerce and population mobility. Without the barrier of toll stations, goods and people can flow freely and rapidly between states, reducing logistics costs and promoting the formation of a unified national market. This is particularly important for a federal nation.
The Fairness of User Pays
The gasoline tax embodies the "user pays" principle: the more you drive, the more fuel you consume, the more tax you pay. This method is relatively fair, distributing highway construction and maintenance costs among actual users.
Moreover, this tax method has a progressive aspect: heavy commercial vehicles consume more fuel and therefore pay more taxes, roughly proportionate to the wear they cause on roads. The United States also levies additional use taxes and tire taxes on heavy trucks, further reflecting the principle of payment according to usage intensity.
The Efficiency of the Federal-State Cooperation Model
American highway system financing uses a formula-based allocation mechanism. Although gasoline taxes paid by states enter the federal Highway Trust Fund, fund distribution is based on formulas established by Congress, considering factors like population, road mileage, and land area. This redistribution mechanism helps balance national and state needs, ensuring that even poor states with lower tax contributions receive necessary highway construction funding.
In recent years, Congress has also mandated that each state must receive back at least 90.5% of its contribution, further easing interstate tensions. This mechanism both preserves federal coordination capacity and ensures basic fairness to all states.
Economies of Scale
Large-scale, systematic highway construction can achieve economies of scale. Federal-aid projects adopt uniform design standards, material specifications, and quality requirements, giving the Interstate Highway System a high degree of consistency. This not only reduces design costs but also enables construction techniques and experience to be promoted nationwide, improving overall construction efficiency.
Contractors can use the same equipment and techniques across projects in multiple states, reducing learning costs and equipment investment risks. This standardization and scaling would be difficult to achieve under a decentralized toll road model.
Part Five: Exceptions - The Existence of Traditional Toll Roads
Although most American highways are toll-free, some historical toll roads do exist. Understanding these exceptions helps us more comprehensively recognize America's highway financing model.
History of the Toll Ban
The 1916 Federal Aid Act initially did not restrict using federal funds for toll roads. But during House consideration, Pennsylvania Republican Representative John Farr proposed an amendment stipulating that "no part of this appropriation shall be used for building, maintaining or repairing any toll road." The House passed this amendment without debate.
The Senate initially removed this restriction, but during Senate debate, New Hampshire Republican Senator Jacob Gallinger proposed an amendment stipulating that "all roads constructed under the provisions of this act shall be free from all tolls of every kind." The Senate passed the Gallinger amendment by voice vote.
The final act of July 11, 1916 stipulated: "All roads constructed under the provisions of this act shall be free from tolls of all kinds." This language was subsequently incorporated into Section 9 of the Federal Highway Act of 1921.
Incorporation of Toll Roads
In 1927, Congress passed separate legislation creating an exemption for toll bridges, on the condition that when the state's or its political subdivisions' contribution in constructing such bridges was recovered from tolls, tolling should cease and the bridge should thereafter be maintained and operated as a free bridge. This exemption later extended to tunnels.
The 1956 Interstate Highway Act added another exemption beyond the toll bridge exemption, allowing toll roads (like the Pennsylvania Turnpike) and existing toll bridges and tunnels to be incorporated into the Interstate System, or permitting new toll facilities to be built as part of the Interstate System. But it prohibited using federal-aid highway funds for construction, reconstruction, or improvement of these toll facilities. In other words, toll roads, bridges, and tunnels could become part of the Interstate System, as long as they were and would continue to be entirely financed by tolls.
Major Toll Roads
On August 21, 1957, the Bureau of Public Roads announced it had incorporated 2,100 miles of toll roads from 15 states into the Interstate System, of which 1,837 miles were already operational. These incorporations allowed Interstate construction funds that would have been used to build free Interstate highways in these corridors to be used elsewhere, building Interstate highways earlier than would otherwise have been possible.
Major toll facilities include:
Pennsylvania Turnpike: 359 miles, from the Ohio state line to Bristol New York Thruway: 506 miles, from Yonkers to the Pennsylvania state line near Erie New Jersey Turnpike: partial sections Ohio Turnpike: 173 miles Indiana Turnpike: 151 miles Kansas Turnpike: 184 miles
These toll roads are mostly located in the Northeast and Midwest regions. They existed before passage of the 1956 act and were entirely financed through private or state-level toll authorities.
Today, the 46,730-mile Interstate System includes approximately 2,900 miles of toll roads.
The Breezewood Dilemma: Unintended Consequences of Institutional Design
In Breezewood, Pennsylvania, there exists a phenomenon that confounds and frustrates countless drivers: there is no direct interchange connection, as one might imagine should exist, between the free I-70 highway and the Pennsylvania Turnpike, which forms part of I-70/76!
Drivers must exit one highway and travel along U.S. Route 30 through a dizzying commercial district filled with gas stations, motels, and fast-food restaurant neon signs before accessing the other highway. During peak periods like the Sunday after Thanksgiving, the traffic congestion here is maddening, with serious queuing at the Turnpike toll booths and on Route 30 and I-70.
This peculiar arrangement isn't an engineering design flaw but an unintended consequence of the institutional design in Section 113 of the 1956 Act.
According to Section 113(b) of the act, federal funds can be used to build approach roads to toll facilities, but they must extend to a location where "the project would have some utility whether or not used in connection with such toll facility." In other words, drivers can choose to use or not use the toll facility.
According to Section 113(c), if state highway departments and toll road authorities wish to use federal funds to build a direct interchange connecting a free Interstate highway and a toll Interstate highway (where drivers have no choice but to use the toll road), both parties must reach an agreement with the Bureau of Public Roads: when the state's or political subdivision's contribution to bridge construction is recovered from tolls, tolling will cease.
The Pennsylvania Turnpike Commission's Decision
In 1966, a special Congressional subcommittee held hearings on the relationship between toll facilities and federal-aid highway projects. Franklin V. Summers, Operations Director of the Pennsylvania Turnpike Commission (PTC), explained at the hearings why they were unwilling to build direct interchanges at places like Breezewood.
He pointed out that the PTC was concerned that when the free Keystone Shortway (I-80) was completed on a parallel northern route, it would significantly divert traffic and potential revenue from the Turnpike. Under these circumstances, the PTC was unwilling to relinquish its right to future tolling. Summers said: "Where legally permissible, we're willing to share anything we can legally share to build such direct connections, and we're doing so in some of these places. However, if new interchanges don't bring substantial revenue increases, we don't believe these matters should be imposed on the Turnpike Commission."
Therefore, the PTC refused to use federal funds to build the I-70 connection (because this would require a commitment to cease tolling in the future) and also refused to use its own revenues to build the interchange. Ultimately, the state highway department used federal funds to extend I-70 north to Route 30, consistent with Section 113(b)'s provisions, allowing drivers to choose the free road (Route 30) or the toll road (Pennsylvania Turnpike) to travel east or west.
Breezewood thus became what Business Week called in 1991 "perhaps the purest American tourist trap ever designed": a town of 180 people consisting of motels, a half-mile strip of asphalt and buildings sandwiched between two roads, the Las Vegas of roadside commercial strips, a sea of neon lights in the wilderness, a polyp on the national Interstate highway system.
This case vividly demonstrates how rigid legal provisions can produce unexpected practical consequences, and the complex negotiations that occur when federal free highway principles conflict with state toll road interests.
Why Are Toll Roads Mainly Concentrated in the Northeast?
One important reason is that these regions' highway construction needs emerged earlier, while the federal aid system didn't launch on a large scale until 1956.
The Pessimistic Prediction of 1939
In 1939, the Bureau of Public Roads submitted a report to Congress titled "Toll Roads and Free Roads," asserting that sufficient funds couldn't be raised through "user pays" methods to build highways. The report argued that toll road systems had a "traffic-repelling tendency." Even if certain corridors had sufficient traffic volume to support bond financing, drivers would largely choose parallel free roads to avoid paying tolls.
1940: The Disruptive Success of the Pennsylvania Turnpike
However, just one year later, this pessimistic conclusion was completely overturned. On October 1, 1940, the first section of the Pennsylvania Turnpike (from Carlisle to Irwin) officially opened, immediately achieving tremendous financial success. This toll road proved the viability of a new model: state governments establish toll road authorities to issue bonds, bond proceeds fund upfront construction, and toll revenues repay bond principal and interest while covering operating and maintenance expenses.
This model was entirely independent of federal funds or federal taxes. After World War II, the Pennsylvania Turnpike's continued success triggered a wave of state imitation. Connecticut, Florida, Illinois, Indiana, Kansas, Kentucky, Maine, New Hampshire, New Jersey, New York, Oklahoma, Virginia and other states built or planned toll roads, many located in corridors designated as part of the Interstate Highway System in 1947.
These states established toll authorities to issue bonds, using bond proceeds to pay construction costs upfront, then using toll revenues to repay bondholders and cover operating and maintenance costs. This model allowed these states to rapidly build high-quality highways without waiting for federal aid. All these roads were built entirely through state self-financing, without using any federal highway assistance funds.
Part Six: The Emergence of HOT Lanes / Express Lanes - Innovation in Financing Models
Entering the 21st century, America's highway system faced new challenges: traffic congestion was becoming increasingly severe while traditional gasoline tax revenue growth slowed. Against this backdrop, a new toll model emerged: High Occupancy Toll Lanes (HOT Lanes) and Express Lanes.
The Birth of HOT Lanes
The HOT Lanes concept originated from the High Occupancy Vehicle Lanes (HOV Lanes) system. Traditional HOV lanes required vehicles to carry at least two or three people to use them, aiming to encourage carpooling to reduce road congestion. However, research found that HOV lane utilization rates were often lower than general lanes, causing waste of road capacity.
America's first HOT Lane went into operation in 1995 on California's State Route 91 in Orange County, followed by a similar facility opening on Interstate 15 in north San Diego in 1996. This innovative model allowed single-occupancy vehicles to use HOV lanes after paying a toll, while multi-occupant carpool vehicles continued free use. Tolls adjusted dynamically based on real-time traffic conditions, with fees rising during congestion to regulate lane usage and guarantee minimum travel speeds.
Virginia's Large-Scale Implementation
Virginia became the most active practitioner of HOT Lanes. In the early 2000s, the Virginia Department of Transportation (VDOT) partnered with Transurban, one of the world's largest toll road operators, to create express travel options in Northern Virginia.
Interstate 495 Express Lanes: Opened in November 2012, 14-mile section costing 1.4 billion dollars. The project added two express lanes in each direction on the Capital Beltway, located to the left of general lanes. Buses, motorcycles, and vehicles with three or more occupants can use them free; other vehicles must pay tolls.
Interstate 95 Express Lanes: Converted and extended existing reversible HOV lanes into HOT lanes, connecting the Stafford to Alexandria area.
Interstate 66 Express Lanes: Opened in December 2017, converting all lanes on I-66 inside the Beltway into peak-direction HOT lanes.
These projects all adopted Public-Private Partnership (P3) models, with VDOT owning and overseeing the lanes while Transurban handled financing and operations. Concession periods extended 80-85 years.
Dynamic Pricing Mechanism
HOT Lanes' most distinctive feature is dynamic pricing. Tolls adjust based on real-time traffic density, increasing fees during peak periods to suppress congestion. For example, I-495 Express Lanes tolls can range from a few cents to over 40 dollars. This variable pricing strategy resembles demand management approaches used in aviation, hospitality, and other industries.
Vehicles use electronic toll collection systems (like E-ZPass Flex), with drivers manually setting the number of vehicle occupants, and the system charges accordingly. State police are equipped with in-vehicle devices displaying the occupancy a vehicle has declared; if they find a vehicle doesn't meet occupancy requirements, they conduct traffic stops and issue citations. The minimum fine for a first HOV violation in Northern Virginia is 125 dollars, with fines doubling for each subsequent violation.
Effectiveness Assessment
Research shows HOT Lanes significantly improved traffic dynamics and commuter satisfaction. Analysis of I-95 Express Lanes indicated:
Weekday traffic increased 9.5%, evening peak traffic increased 15.7% Express bus route usage increased 33.5% Travel speeds improved in both express and general lanes Each trip saved approximately 20 minutes on average
However, HOT Lanes also face criticism, accused of being "Lexus Lanes" benefiting only high-income groups. Critics argue this is actually an environmental tax, because regardless of socioeconomic status, toll rates are the same, with working-class people bearing greater economic burdens. Some states provide tax deductions or rebates for low-income groups to alleviate this issue.
National Expansion
As of 2012, the United States had 294 corridor-miles of HOT/Express Lanes operational, with another 163 corridor-miles under construction. Besides Virginia, other areas implementing HOT Lanes include:
Georgia: Northwest Corridor Express Lanes (I-75 and I-575), South Metro Express Lanes (I-75 and I-675). Unlike other regions, Georgia charges all vehicles (including HOV 3+).
Texas: North Tarrant Express (I-35W, I-820, etc.), I-10 Katy Tollway. During peak periods, HOV 2+ vehicles receive 50% discounts.
California: Los Angeles Metro ExpressLanes system requires vehicles equipped with manually switchable transponders, with drivers selecting occupancy numbers and the system charging accordingly.
North Carolina: I-77 Express Lanes allow drivers to choose between general and express lanes.
Innovation Significance
HOT Lanes represent important innovation in American highway financing models:
Introducing market mechanisms to regulate demand without changing the primarily free principle. General lanes remain free, with choice in drivers' hands.
Internalizing congestion externalities. Those willing to pay for time savings can use express lanes, and the fees they pay can improve the overall transportation system.
Flexibly responding to declining gasoline tax revenues. As vehicle fuel efficiency improves and electric vehicles proliferate, gasoline tax revenues face downward pressure; HOT Lanes provide supplementary financing channels.
Using public-private partnerships to accelerate infrastructure construction. The private sector provides upfront financing, government avoids massive debt, while providing new transportation options more quickly.
Part Seven: Current Problems
Although America's highway financing model has operated for decades, it now faces increasingly large challenges.
The Gasoline Tax Revenue Dilemma
Since 1993, the federal gasoline tax rate has remained at 18.4 cents per gallon, unadjusted for inflation. If adjusted for inflation, the current rate should be around 30 cents per gallon. This means the real purchasing power of the gasoline tax has declined by approximately 40%.
Meanwhile, vehicle fuel efficiency has improved dramatically. Modern automobiles' average fuel economy has nearly doubled compared to the 1980s, meaning vehicles traveling the same mileage pay less tax. Electric vehicle proliferation makes this problem more prominent: electric vehicles use highways but don't purchase gasoline, therefore don't pay gasoline taxes.
The Congressional Budget Office estimates that to maintain current highway and public transit spending levels, gasoline and diesel tax rates would need to increase 15 cents per gallon, with an indexing mechanism established based on inflation rates. This would generate 240 billion dollars in federal revenue over ten years. But raising gasoline taxes is extremely difficult politically, with Congress and the public lacking support for any tax increase proposals.
Aging Infrastructure
Most of the Interstate Highway System was built between the 1950s and 1970s, with many sections approaching or exceeding their design life. Bridge aging is particularly severe. Statistics show America has approximately 583,000 bridges, of which about 7.5% are rated "structurally deficient," requiring large-scale repair or replacement.
Road maintenance needs are also continuously increasing. Federal aid projects have shifted from primarily new highway construction to increasingly focusing on resurfacing, restoration, rehabilitation, and reconstruction (4R projects). Currently, federal spending on operations and maintenance accounts for over 40% of total federal highway aid.
Intensifying Traffic Congestion
Despite the massive highway system, urban traffic congestion continues to worsen. Pre-2020 research showed that in 68 major metropolitan areas, congestion caused 4.3 billion hours of annual travel delay, waste of 6.6 billion gallons of fuel, and 72 billion dollars in time and fuel costs.
However, from 1994 to 1997, these 68 metropolitan areas added only 4% of the lane-miles needed to prevent further congestion level increases. New road capacity fell far short of traffic demand growth.
Public-Private Partnership Controversies
While HOT Lanes and public-private partnership models provide new financing channels, they also generate controversies:
Equity issues: Critics argue this creates a "two-class" highway system where the wealthy can purchase fast passage while the poor must endure congestion.
Long-term costs: Concession periods extending 80-85 years far exceed any government's term. Will future generations pay for today's decisions?
Privatization of public assets: Although roads remain publicly owned, actual operating rights are controlled by private companies long-term; does this harm public interest?
Environmental Challenges
Highway traffic is America's largest transportation-related emission source, contributing over one-third of the nation's six major air pollutant emissions. As climate change issues become increasingly urgent, the highway system faces emission reduction pressure.
Simultaneously, highway construction and operation impact water quality, noise, and land use. Long-term risks of biodiversity loss and ecosystem function degradation are receiving growing attention.
Part Eight: Future Reform Directions
Facing these challenges, America is exploring multiple reform options:
Vehicle Miles Traveled Tax
Some states are beginning to pilot mileage-based taxation schemes to replace or supplement gasoline taxes. This method directly links to road use, more accurately reflecting actual highway usage than gasoline taxes. It can also adjust tax rates based on location and time, raising rates in specific areas and periods to reflect congestion costs.
However, mileage tax implementation faces technical and privacy challenges. How to monitor vehicle mileage? Through in-vehicle devices, annual inspections, or other methods? How to protect driver privacy from violation? These questions haven't been fully resolved.
Gradual Evolution of Toll Policy
Although the toll ban's basic framework continues today with Title 23 of the United States Code, Section 301 still stipulating "except as provided in section 129 regarding certain toll bridges and toll tunnels, all highways constructed under the provisions of this title shall be free from tolls of any kind," Congress has gradually loosened restrictions through continuously expanding exceptions in Section 129.
1958: Codification
In 1958, Congress codified all existing highway laws as Title 23 of the United States Code. The original 1916 toll ban on the Federal-aid system became Section 301, while the 1927 toll bridge exemption (expanded to tunnels) and the 1956 Interstate System exemption for preexisting toll facilities became Section 129.
1987-1991: Allowing Conversion to Toll Roads
In 1987, Congress established a pilot project; in 1991, it created a permanent exemption allowing conversion of non-Interstate federal-aid roads from free roads to toll roads under specific conditions. This is now Title 23 United States Code Section 129(a)(1)(F).
Gradually Expanding Exceptions
Subsequent highway acts (1998, 2005, etc.) all amended Section 129, adding more general exemptions, including:
Construction of new toll facilities Reconstruction of existing toll facilities Conversion of Interstate HOV lanes to HOT lanes Other circumstances
Maintaining the Bottom Line
However, Congress has always carefully avoided fully opening one provision: directly converting existing free Interstate highway lanes built with federal taxpayer funds to toll lanes. In 1998 and 2005, Congress twice attempted limited pilot projects to allow this practice, but both pilot projects struggled to realize their potential due to procedurally and politically difficult compliance with legal restrictions.
This caution reflects a basic political consensus: free roads already built with federal funds shouldn't charge users after the fact. This would be seen as a breach of faith with taxpayers who already paid for these roads through gasoline taxes.
Congress has gradually relaxed restrictions on tolling and public-private partnerships. The Transportation Equity Act for the 21st Century (TEA-21) and subsequent legislation allowed states to use federal funds for toll facility construction in more circumstances, and permitted conversion of existing free roads to toll roads (subject to specific conditions).
More innovative financing tools are being adopted, including:
Infrastructure banks: Some states have established infrastructure banks providing low-interest loans to support highway projects Tax-exempt bonds: Private Activity Bonds were first used for HOT Lanes projects Value capture: Obtaining funds from surrounding land development benefiting from highway improvements
Comprehensive Transportation Policy
Increasingly, voices call for incorporating highway policy into a broader transportation and land-use planning framework. Relying solely on highway expansion has proven unable to solve congestion problems, as new road capacity often induces new traffic demand.
Multimodal transportation planning emphasizes coordinated development of highways, public transit, pedestrian, and bicycle facilities. TEA-21 requires metropolitan areas with populations exceeding 50,000 to implement formal transportation planning processes that must be continuing, cooperative, and comprehensive.
The Role of Technological Innovation
Intelligent Transportation Systems (ITS) use information technology to improve highway system efficiency and safety. Dynamic traffic management, real-time information services, automated tolling and other technologies are already widely applied.
Autonomous vehicle technology development may fundamentally change highway usage patterns. Autonomous vehicles can more efficiently utilize existing road capacity, reduce accidents, and improve traffic flow. But this will also impact highway financing: if shared autonomous vehicles reduce vehicle ownership and mileage, how will related tax revenues change?
Part Nine: Conclusion - Value Trade-offs Behind Model Choice
The phenomenon of "mostly free" American highways essentially reflects this nation's unique choice in highway financing: establishing a Highway Trust Fund through federal gasoline taxes and state-level fuel taxes, adopting a federal-state cooperation indirect payment model rather than direct road tolling.
Insights from Historical Evolution
This model's formation has deep historical roots. From the federal government's first road aid involvement in 1913, to establishing a true national highway system in 1921, to creating the Interstate Highway System and Highway Trust Fund in 1956, America gradually built a highway financing system based on "user pays" principles, a federal-state cooperation framework, and gasoline taxes as the primary funding source.
The toll ban established in 1916 reflected the simple idea prevalent then that public roads should be free for public use, an idea "so obvious the House passed the Farr amendment without debate." However, the Pennsylvania Turnpike's 1940 success proved toll model viability, while the 1956 incorporation of 2,100 miles of toll roads embodied pragmatic compromise. The Breezewood case vividly demonstrated institutional design complexity and unintended consequences.
Roads' Economic Attributes: Private Goods or Public Goods?
Many mistakenly believe highways are "public goods" and therefore should be low-priced or even free. But from an economic perspective, this is a misconception.
Public goods and private goods describe whether goods "cause rivalry" as their natural attribute. Public goods refer to items where one person's use doesn't affect others' use (like melodies, knowledge, television signals); while private goods are items where one person's use prevents others' use (like eggs, bread, cars).
By this standard, roads are private goods. When one person occupies a road, others cannot occupy it—this is the essence of congestion. Roads can be provided by government or private entities, can charge fees or be free to use, can be called necessities or substitutes, but none of this changes their private good attribute.
Since roads are private goods, rivalry inevitably occurs; and once rivalry occurs, society must adopt some competitive rule to allocate usage rights. Throughout history, people have used various rules: violence, intelligence, official position, birth, gender, age, patience (queuing), etc.
"Highest Bidder Wins": The Most Economic Competitive Rule
Economic principles indicate that among all these rules, only "highest bidder wins" can guide people to provide valuable services to society and use earned money to participate in competition. Other rules guide people toward activities that help themselves win but provide no benefit to others, thereby causing deadweight losses—including excessively strong muscles, unnecessary test-taking abilities, flattery and intrigue costs, and queuing time.
When most of society's resources are allocated through "highest bidder wins" methods, competition costs across society decrease while benefits increase. This is why "highest bidder wins" is the most economic and also the fairest competitive rule.
During the 2010 Guangzhou Asian Games, the Guangzhou municipal government introduced a "benefit the people" measure of free subway service, resulting in overcrowding and direct metro system paralysis. When the municipal government rescinded the order and restored subway pricing, order immediately returned to the metro. This case vividly illustrates the price mechanism's regulatory function.
The Global Trend of "User Pays" Principles
Due to rising road construction and maintenance costs and increasing congestion severity, many countries including the United States and Germany, long famous for "free highways," are gradually moving toward "user pays" models. Specific practices include: approving more toll road construction, levying high parking fees, implementing charges for freight trucks, allowing some lanes to collect congestion fees, etc.
The renowned American think tank Cato Institute clearly states in its "Handbook for Policymakers": The Interstate Highway's key to success lies in its user-pays system—funding comes only from federal and state fuel taxes and road user fees. This not only ensures roads are built where truly needed but also prevents excessive cost inflation. However, in recent decades, Congress has increasingly deviated from this principle, using taxes paid by drivers to subsidize subway passengers and other purposes. "This practice is not only unjust but also causes urban congestion intensification and many cost-ineffective transportation projects to proceed."
China-US Comparison and Insights
The insight for China is this: highway financing models have no absolute superiority or inferiority; the key is whether they suit national conditions.
America's free model is built on a strong tax foundation, mature federal system, and relatively slow construction pace. China adopted a "decentralized decision-making, autonomous financing, user pays" (i.e., "loan to build roads, toll to repay loans") model, building the world's largest highway network in less than 30 years, a speed the American model could hardly match.
China took less than 30 years from building its first highway in 1988 to achieving the world's largest highway system total mileage; while America, counting from Congress's 1956 approval of the Interstate Highway Act, spent 35 years on the Interstate System's first-phase construction. This enormous difference's root lies precisely in financing models: America relies on centralized federal and state fuel tax revenues, with fund pool allocation involving complex political negotiations and formula calculations; while China's model allows localities to rapidly launch projects according to demand, with upfront financing issues resolved through bond markets.
Future Challenges
In the future, as electric vehicles proliferate, autonomous driving technology develops, and climate change pressure increases, highway financing models will inevitably continue evolving. America is also exploring vehicle mileage taxes, more flexible toll mechanisms (like HOT Lanes), and more comprehensive transportation policies.
Regardless of which model is adopted, balancing efficiency and equity, short-term needs and long-term sustainability, infrastructure investment and fiscal constraints will be common challenges all nations must face.
As basic economic principles reveal: people have the freedom to pursue free services but not the freedom to escape paying costs. Regardless of which financing model is chosen, road construction and maintenance costs must ultimately be borne by someone. The key lies in choosing a mechanism that can both meet construction needs, fairly distribute costs, and effectively regulate usage. American historical experience tells us this choice has never been achieved overnight but has gradually formed through continuous practice, debate, and adjustment.
References
Eno Center for Transportation. (2018). "History of the Tolling Ban on Federal-Aid Highways."
Federal Highway Administration. (Various). "Ask the Rambler: Why Does The Interstate System Include Toll Facilities?"
Federal Highway Administration. "Highway Trust Fund and Taxes."
Tax Policy Center. "What is the Highway Trust Fund, and how is it financed?"
National Academies Press. (2001). "The Federal Role in Highway Research and Technology." Special Report 261.
Wikipedia. "High-occupancy toll lane."
Wikipedia. "Highway Trust Fund."
Virginia Express Lanes. "About Express Lanes." https://www.expresslanes.com/about
U.S. Department of Transportation. "Capital Beltway Express/High Occupancy Toll (HOT) Lanes."
Reason Foundation. (2025). "How Much Gas Tax Money States Divert Away From Roads."
Xue Zhaofeng. Lectures on Economics. Quoted from Liaowang Think Tank and Huxiu.com articles.
ScienceDirect. (2024). "Assessing the impact of express lanes on traffic safety of freeways."
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