Inside the Bush Tax Cut Compromise is a Gift for Transit Riders

No matter how you feel about extending the Bush tax cuts for the wealthy, there’s one reason to hope it passes: it includes an extension of the transit benefit.

Transit riders' tax benefits hinge on Congress ironing out an agreement on tax cuts for the rich. Image: ##http://woldcnews.com/DCnews/woldcnews/expanded-cell-phone-coverage-coming-to-metrorail/##WOL##
Transit riders' tax benefits hinge on Congress ironing out an agreement on tax cuts for the rich. Image: ##http://woldcnews.com/DCnews/woldcnews/expanded-cell-phone-coverage-coming-to-metrorail/##WOL##

The tax-free benefit for transit used to be capped at $120 a month, but the stimulus raised it to $230, on par with driving benefits.

Ya-Ting Liu has been leading the Tri-State Transportation Campaign’s push to extend the benefit. “In addition to this very political debate over tax cuts for the wealthy, there are all these other things are wrapped up in it,” said Liu, “including unemployment benefits, and the tax credit for the working poor, all these other things. It’s become this hodge-podge packet of provisions, some of which we really like.”

If you’ve been following the political tug-of-war over the tax cut provisions, you know it’s been contentious, but the transit benefit could pass quietly as part of the package. Liu says, as far as she’s heard, there are no efforts to strip it out of the larger bill.

The Senate voted overwhelming last night to invoke cloture, ending debate on the bill. We’re still waiting for a final vote.

The real test will come in the House, where Democrats have publicly revolted against President’s compromise on tax cuts with the GOP. The House could vote on the bill as early as Thursday.

  • Mark Walker

    Raising the transit benefit cap will make it easier for riders to withstand fare hikes. But continuing to hand suitcases full of cash to the rich will make it harder to stave off service cuts.

  • Kaja

    Plenty of folks generally in the liveable streets camp also think that taxing the “rich” is a giant mistake, especially when “rich” is euphemism for “individual filers claiming more than $250K” – a number that can only mean ‘rich’ to poor people, and certainly not to anyone who’s worked with small businesses.

    I appreciate that the GOP tends to disdain bicyclists and trains, and the Dems much less so, but we’re not a single-issue interest group. I care more about not raising taxes than I do about bike infrastructure. (I care more about cutting spending than either, which is part of why I no longer vote.)

    Minor kvetch all things considered. But I’d prefer we kept our eyes on the ball, and avoided alienating allies both potential and real.

  • Michael Smith

    The “transit benefit” is really just another subsidy for the middle class and upper class. Many of the poor people who need to take transit cannot make use of it. Plus having a benefit with a dollar amount that high simply supports long distant commutes since it is for far more than a monthly inner city transit pass. By supporting long distance commuting we are further supporting sprawl and even higher transit subsidies since the transit systems never pay for themselves.

    So instead of fighting for this alleged “transit benefit” it would be far better to even the playing field by also removing the “parking benefit” which is completely indefensible. And the resulting savings should go directly into transit and serve all users, especially the poor, instead of the people who don’t really need the help.

    PS In case you are wondering, I currently make use of the “transit benefit”. But that doesn’t mean it is good policy.

  • tom

    Hooray for Senator Chuck Schumer and the commuter tax-break. A single subsidy to a single commuter is one car off the road!

    Haven’t you figured out Congestion Pricing is meant to be an extension of this, a subsidy to the drivers who won’t drive to the Central Business District? Those who do drive-and-pay into the CBD will pay for greater transit options into the CBD. This is an incentive to all who won’t drive-and-pay, especially the commuters from the edge of the city who will be offered an affordable option.

  • Thoughts

    One argument for taxing the wealthy more: Income taxes on the wealthy are the ultimate sin tax-you’re only taxed on what you keep, not what you give. Jesus said it’s hard to get into heaven if you’re rich. He said to be His disciple we should renounce all our processions. The wealthy are free to earn all they can of course. What they earn is only taxed more if they choose to keep it instead of give it.

    If they choose to keep more than $250,000 for themselves, then they get taxed more. If they make $10 million and give all but $200,000 to charity, what they give isn’t counted as income anyway. They can deduct what they give.

    Just wanted to introduce the thought of taxing excessive income that is kept could be a sin tax….

  • John Murphy

    What Michael Smith said – sort of. A month’s use of BART from Oakland to San Francisco would easily outstrip $120 in pre-tax benefits and that’s hardly a commute described as “sprawling”. In some sense, Caltrain on the peninsula is “anti-sprawl” – one of the largest populations using Caltrain are people who live in dense San Francisco and commute to Stanford, allowing Stanford to refrain from developing more of their land for housing (and much of the Caltrain corridor is reasonably dense by American standards).

    I’m acutely aware when I ride the train that the people who need the benefit the least are the ones getting it – tech workers and lawyers get WageWorks, but if you are working at Safeway you don’t – UNLESS you happen to work in San Francisco, all SF employers with 20 employees are mandated to make the program available or give you a MUNI pass. However, the tax benefit easily tips the financial scales towards transit use for choice riders, who pump their money into the system in terms of fares, which helps make the case for the system for the non-choice riders.

    Additonally, the tax-benefit ridership tends to be more highly educated and politically active – this is the population on Caltrain that shows up to the Board Meetings with wonky graphs and research in order to fight for service.

  • Businesses pay taxes on profits, not revenue. Corporations get to write off their operating costs (including depreciation on investment), and individuals who itemize their taxes can write off business expenses.

    If you’re a business owner and your profits are higher than $250,000 a year, you’re wealthy.

  • Driver

    “If you’re a business owner and your profits are higher than $250,000 a year, you’re wealthy.”
    More than half of that money is going to taxes in one form or another. If you have a family and take home 110-125k in NYC you are not struggling, but you are not exactly wealthy either. Don’t forget these business owners are entirely responsible for paying for their own health insurance coverage, and funding their own retirement savings. The 250k businessperson does well for themselves, but the term wealthy is subjective and doesn’t necessarily apply.

  • Lola

    So upper-income people (who still have jobs) can relax on commuter trains while the rest of the country goes to pot. Wow. If Streetsblog’s pro-transit policies are compatible with social injustice of this magnitude, I just became a nonbeliever. Talk about tunnel vision – pun intended.

  • The $250,000 earner does well, period. The majority of his income is exempt from payroll taxes, so his effective tax rate is the same as that of someone making $100,000. He may not be a billionaire, but he’s still rich.

  • Alex

    And what of the self-employed folks who don’t get to claim any transit benefit in their ‘home area’? If you do 1099 work you get boned by these asinine regulations. Money spent on public transit fares to and from work shouldn’t be taxed, period. One should be able to get a tax credit or deduct the cost of said transportation. Save the proper receipts, fill out the proper forms, and be done with it. On the other hand, the way ‘benefit’ is currently structured helps prop up yet another needless bureaucracy thus creating jobs. Awesome.

    To label the extension of this half-baked ‘benefit’ as a gift is nothing more than a poor joke. As SFGate pointed out, this compromise will already raise taxes on low income folks (making well less than $250k/yr), but hey who cares about them, right? The transit benefit is a bit of a farce, but hey as long as we can spend $900 *B*illion on tax cuts for the upper tax brackets, why not?

    As for people sucking down over a quarter mil a year, yes they are wealthy. Wikipedia has an interesting graph that shows the mean net worth over the years by percentile. A net worth of a quarter mill puts you in the 75th percentile quite easily. That’s poor? Puhleeze.