[yummyfajitas]

You're a cab driver with rent and your kid's tuition to pay, are you the one staying home today?

If congestion charge + other expenses > expected revenues, yes. Actually, things should equilibrate roughly at expected revenues - congestion charge - other expenses = average low skill wage.

The real trick is to set the congestion charge somewhat higher for taxis than for regular vehicles, since taxis spend more time on the road. The proper ratio would be (taxi charge/regular charge) = (taxi time on road / regular time on road), presumably this could be estimated using sat photos.

[jfager]

People don't always make optimal, rational economic decisions. If driving a cab is what you've always done and is all you know, it's not as simple as plugging the numbers into the equation each morning before deciding to go to work. You know there are fares out there, and that if you don't take them, someone else will. What motivates any individual cabbie to acknowledge that they should be the one to give that fare up rather than someone else? And what job do they take in its place? You're certainly correct that the decision would get made one way or the other, but there's a human cost that cold, superficial economic reasoning has a hard time accounting for.

The real trick is to set the congestion charge somewhat higher for taxis than for regular vehicles, since taxis spend more time on the road.

Commuter vehicles deliver less value to the city, though. They spike congestion in the morning and the evening, waste time looking for parking, and take up valuable real estate just sitting around during the day. That's the traffic you want to discourage, not cabs, delivery trucks, and other actual economic contributors.