A tax benefit for public transit commuters is set to expire at the end of this year. If Congress doesn’t extend it, the tax code will reward people who drive and park their cars at work over those who take trains and buses.
This isn’t about some abstract policy change. It’s about whether or not your commute is going to get more expensive and more clogged with traffic.
I ride the subway to work, and I love the fact that I can zoom underneath all the cars and trucks that choke New York streets. But if the tax system starts offering an incentive for driving, those streets could become even more congested.
Right now commuters receive $230 per month in pre-tax transit benefits from their employers. This is a new measure, included as part of 2009’s American Reinvestment and Recovery Act. The addition was only fair, because it boosted the previous benefit of $120 per month so that it is now equal to what commuters receive for parking. But this parity with car commuters will be lost when the provision expires at the end of the year, slashing the benefit to the previous level.
This wrongheaded policy reversal would have several harmful effects. Most directly, people spending more than the $120 on transit will pay an additional $28 monthly for their commuting expenses.
According to the transit agency for the Washington, D.C. area, more than 250,000 employees in the nation’s capital are enrolled in transit benefits, with an estimated 90,000 receiving over $120.
At NRDC, we’ve shown that fuel costs can be a burden for households, some more than others . Loss of the transit benefit will hit low- and middle-class consumers who make up the majority of public transportation riders hardest at a time when finances are really tight for most families during the economic recession.
But the consequences go beyond consumer losses; reduced ridership comes at a cost to strained transit operating budgets. In fact, a report by TransitCenter estimates benefit cuts would reduce ridership by an additional 3 percent to 5 percent.
If we’re interested in saving money, cutting back on oil use, and reducing dangerous pollution, we could be having a very different debate about commuting.
For example, Donald Shoup, a parking expert and professor at UCLA, doesn’t support employee-paid parking because it provides an incentive for driving alone to work. Shoup advocates something NRDC has endorsed in the past, namely “parking cashouts,” in which employees receive their benefit in cash so they can choose how best to get to work. Shoup showed that cashouts result in energy savings since many will choose to ride public transit, carpool, bike or walk instead of drive.
Another, more radical idea would be to eliminate the parking benefit while keeping the current transit benefit, a move which could save more than $100 billion a year (by contrast the transit benefit cost a modest $127 million in the 2011 fiscal year), while saving oil and reducing pollution.
That would be smart policy, but at the very least Congress needs to pass legislation in the next month to keep the transit benefit equal to the parking benefit. By keeping transit a viable commuting option on par with driving we can protect consumer benefits while also reducing emissions, traffic congestion and oil consumption.
And who doesn’t want a faster, smoother, cleaner commute?