A colorful take by The Economist:
It’s not as crazy as it sounds. Fares bring in a lot of money, but they cost money to collect — 6% of the MTA’s budget, according to a 2007 report in New York magazine. Fare boxes and turnstiles have to be maintained; buses idle while waiting for passengers to pay up, wasting fuel; and everyone loses time. Proof-of-payment systems don’t solve the problem of fare-collection costs as they require inspectors and other staff to handle enforcement, paperwork and payment processing. Making buses and subways free, on the other hand, would increase passenger numbers, opening up space on the streets for essential traffic and saving time by reducing road congestion.