The Congestion Pricing Plan in New York is Dead; so reads the headline in the New York Times.

But the New York City plan was not truly congestion pricing in the first place, but rather a cordon tax.

The cordon model proposed in New York is similar to the version currently in place in London and the one proposed by King County Executive Ron Sims. It simply draws rings around a city center and charges a fee every time a driver crosses the imaginary ring. The closer to the center, the higher the fee.

But a cordon model, also known as "value pricing" is not true "congestion pricing" because the fees do not rise and fall with demand. Instead, they are fixed. The fees, paid by drivers, are then diverted to further subsidize transit improvements. These are the characteristics of a tax.

A true congestion pricing scheme would (1) price a road system, (2) fluctuate based on demand, and (3) divert the revenue to support only those who paid the fee: drivers.

There is a better explanation of the differences between true congestion pricing and value pricing or cordon taxing here.