There is an annual political struggle in Washington, D.C. to keep the tax deduction for employer transit benefits at the same level as the deduction for parking benefits. Before 2008 it was (perversely) about half the size, and for most of the time since it’s been at the same level thanks to series of temporary Congressional acts. Most recently, the January “fiscal cliff” deal equalized transit and parking maximum benefits at $230 per month through the end of this year.
Fortunately, Congress may act to make the equalization permanent (now at $245/month) through the “Commuter Parity Act”:
The Commuter Parity Act would help make the transit benefit on par with what drivers receive in pre-tax parking benefits for the long term, according to transit advocates…
The bill was introduced in the House by Reps. Michael G. Grimm (R-N.Y), James P. McGovern (D-Mass.), Peter T. King (R-N.Y.), and Earl Blumenauer (D-Ore.). Sen. Charles Schumer (D-N.Y.) introduced it in the Senate.
It’s not surprising that New York congressmen would lead this, as their commuter rail riders can easily pay this in a month. Here in Washington, it’s ferry commuters and a few ST long-haulers that would benefit. I think there’s a strong public policy case to equalize them by bringing the parking benefit down rather than the transit one up, but the important thing is that we not explicitly encourage people driving to work any more than we already do.
The bill is H.R. 2288. In the Senate it is known as the “Commuter Benefits Equity Act” (S. 1116). The bills are in the Ways and Means and Finance Committees, respectively.
Links are bad. Link to HR 2288: http://www.gpo.gov/fdsys/pkg/BILLS-113hr2288ih/pdf/BILLS-113hr2288ih.pdf
H. R. 2288 which contains a $35/month allowance for bike commuters to use for purchase, repair or storage of a bike “regularly” used for commuting.
Thanks, fixed.
Wouldn’t the most straightforward and carbon-negative way to be fair to all modes (including walking and biking to work) be to eliminate the commuter tax break altogether?
I think this would also be more fair to the unemployed.
Yes. This subsidy needs to be eliminated. Both subsidies encourage sprawl.
In a sense, yes, this is true. However, it’s also not that straightforward, at least not for transit. (The parking bit is – you’re right, sprawl is indirectly encouraged.)
Keeping the transit part of this intact encourages transit use in places where it is not necessarily the easiest or the fastest mode available. Encouraging transit usage in this way has a few generally positive side effects: you might see people locating their homes or offices closer to transit, into denser urban cores. You could see a drop in vehicle miles traveled. Greater transit ridership usually begets greater transit capacity – if you come, they will build it.
It is true, however, that for some modes of regional transit, that even a transit subsidy encourages sprawl. This only works to a degree though, as the marginal effect remains: one more transit rider is one fewer car on the freeway not driving the extra miles. While bedroom communities are certainly liable to be built in such a way that they are traditionally considered ‘sprawl’ (and many indeed are), those with robust transit ridership are not contributing to the negative (developmental, social, environmental) effects we associate with sprawl in quite the same way.
“even a transit subsidy encourages sprawl”
The effect is practically zero compared to the number of car commuters. Transit commutes are 10% or less outside the Northgate – Lake City – Rainier Valley core, and fall down to like 3% in places like Covington and Issaquah and Puyallup. Otherwise there would have been no reason to widen the 18, 167, and Kent-Kangley Road from two lanes. There are two reasons for this. One, the American Dream of a detached house and car. Two, most of them do not work in downtown Seattle but in places that are difficult to get to by bus. Transit in sprawlsville is a way to cope with existing sprawl, not an enabler of sprawl. Almost zero people buy a house far out because it has a peak express or nearby P&R. If the transit didn’t exist, they’d buy the house anyway, and drive to their job or to another P&R. But the transit does allow people who can’t/don’t want to drive to get around. Some of them didn’t choose to live in sprawl: their parents did, or they’re living with relatives because they can’t afford to live on their own. That’s the tragedy of sprawl: that not everybody who wants to get out of it can. Thus, the importance of transit in sprawl-lands.
I’m not understanding why eliminating this benefit would “be more fair to the unemployed”. The unemployed, by virtue of not having a job, don’t have to travel everyday to get to one, and thus don’t have expenses to be employed. Would it be more fair to the unemployed to eliminate the earned income credit?
Unless we shift to a true flat tax, like Russia – 10%, then the earned income credit is important in adjusting the progressive rate of the tax and discourage people from not working because any money earned would virtual all be offset by taxes and lost benefits.
Bernie,
The flat tax rate in the US would have to be about 22% to avoid a deficit, and it would have to be levied on every form of income from all sources and without exemption. No home interest deduction; no charitable deduction; no self-employed health care exemption; no investment tax credits.
Nada.
When sus scrofa domestica fly that bill will pass.
Well yes, point of a flat tax is there is no NO.. You just pay it… Ah, sort of like the 1.8% we all pay for transit.
“It’s not surprising that New York congressmen would lead this, as their commuter rail riders can easily pay this in a month.”
And, so we have the tension between Republican opposition to transit in general, and the need for congressmen, in general, to pass bills that directly benefit a lot of their constituents (which looks really good for re-election). In this case, accountability to constituents won. However, except for those whose districts fall directly on commuter lines to New York, Washington D.C., Boston, or, perhaps, San Francisco, I don’t think this is going to get a lot of Republican votes. So, the question becomes, will there be enough Democrat votes to make up for it?