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Posts from the "Tax Policy" Category

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UPDATE: Boehner’s Cryptic Message on Taxes

UPDATE 1:47 p.m.: Speaker Boehner just sent out an email to reporters, highlighting media reports of his comments that assert that he doesn’t intend to raise tax rates. It clarifies his position that the election doesn’t equal a “mandate for raising tax rates” on the American people. 

In a move likely calculated to distract attention away from the post-election chatter about the Republican party’s state of crisis, Majority Leader John Boehner made a surprise announcement yesterday. “Because the American people expect us to find common ground,” he said, “we are willing to accept some additional revenues, via tax reform.” The reform would be part of a deal to avoid the impending “fiscal cliff.”

Is John Boehner talking sense on taxes, or is he just talking? Photo: Twitter/SpeakerJohnBoehner

The fiscal cliff is a murky cocktail made up of the expirations of tax cuts and unemployment benefits, combined with the “sequestration” cuts that are harmful enough that the mere thought of them was supposed to be incentive enough for Congress to find some other way to tame the deficit last August. Unfortunately, Congress being Congress, they didn’t, and the sequestered cuts could kick in at the end of the year if nothing is done.

What this means for surface transportation isn’t completely clear. The aviation sector faces the loss of 2,200 air traffic controllers and support staff and the Coast Guard — still reeling from some heroic missions after Hurricane Sandy — could get a $439 million chunk taken out of its hide. But surface transportation is somewhat sheltered from these cuts because of its dedicated funding source, the Highway Trust Fund.

However, given that nearly $14 billion of the current bill’s $105 billion outlay comes from sources other than the Highway Trust Fund, experts speculate that even standard transportation expenditures could fall victim to the cuts — not to mention non-trust-fund programs like Amtrak, New Starts and TIGER.

So it’s refreshing to hear the leader of the House Republicans say they’re willing to back off their hard-line Grover Norquist kow-towing on taxes and explore all the options on the table. That could reduce the severity of the cuts required and, who knows, if we’re opening up a conversation about some targeted tax hikes, maybe someone will notice that there’s a gas tax that’s been begging for some adjustment for almost 20 years now.

But what did Boehner really say?

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UPDATE: Where Did the Senate Get the Extra Money to Pay For Its Bill?

UPDATE: The final bill contained a $2.4 billion transfer from Leaking Underground Storage Tank Trust Fund to the Highway Trust Fund in June 2012 and three transfers from the General Fund to the Highway Trust Fund, totaling $18.8 billion. They were: $6.2 billion to the Highway Account of HTF in October 2012; $10.4 billion transfer to Highway Account of HTF in October 2013; and $2.2 billion transfer to Mass Transit Account of HTF in October 2013. They dropped the car tariffs change and the gas guzzler transfer. They replaced those smaller transfers and offsets with the pension provisions and a tiny bit from the roll-your-own-cigarettes change.

Congressional leaders announced opaquely last week that they’d “moved forward” on a deal on the highway section of the transportation bill. That means transit, rail, and safety programs are still being negotiated. And it means the financing of the bill hasn’t yet gotten the seal of approval from the House.

What do roll-your-own cigarette machines have to do with surface transportation? Photo: News Herald

Still, both houses of Congress have agreed to spend more on the transportation bill than the Highway Trust Fund itself can bear. (The House gave its green light a couple weeks ago when it nixed the Broun motion to keep transportation spending to HTF receipt levels.) To overspend the HTF but still plausibly deny that they’re deficit-spending, the Senate Finance Committee has done some pretty fancy footwork to offset the expenditures with other savings.

Chair Max Baucus (D-MT) squeezed blood from the stone of the U.S. budget, and many of his colleagues have lauded him as a miracle worker. But Taxpayers for Common Sense – and lots of other people with common sense – say the numbers don’t really add up. The information below comes from TCS’s report, released last week, on the Senate pay-fors.

Stick with me here – this is all a little convoluted, but understanding the funding is a key part of the process. While the Senate transportation bill may be a good stop-gap compared to the option of even shorter extensions, a look at the funding shows why it provides no long-term answers to the question of how to pay for transportation.

The sources of new Highway Trust Fund revenue Baucus et al came up with are:

A transfer from the general fund: $4.97 billion. This is the most obvious example of deficit spending – just taking money from the Treasury to pay for transportation. That’s on top of $34.5 billion the Treasury has already coughed up in the last four years to bail out the Highway Trust Fund – something no one wanted to repeat.

Dedication of imported car tariffs to the Highway Trust Fund: $4.52 billion. This revenue would no longer go to the general fund.

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Commuter Transit Tax Break Could Reclaim Parity With Parking in 2012

As Congress prepares to reconvene and take up the payroll tax cut extension yet again, a movement is forming to restore the transit commuter tax benefit to 2011 levels.

Commuters in New York's Hudson Valley could lose out on $1400 in annual pre-tax benefits if the transit tax break stays at its current level. Photo: railpictures.net

Transit advocates across America were disheartened when Congress failed to maintain parity between the transit and parking pre-tax commuting benefits last month. On New Year’s Day, the maximum monthly pretax benefit fell from $230 to $125 for transit commuters, while motorists actually saw a slight increase in their parking benefits, from $230 to $240. (As The Sierra Club pointed out today, things used to be even more lopsided.) But members of the House and Senate have now indicated that a restoration is more than just possible, it could even be probable.

Rep. Richard Neal told Politico on Tuesday that a retroactive extension of 2011 tax policies is “likely,” and a staffer said today that “Nearly as often as extenders have been taken up in a calendar year, they have also been taken up retroactively.”

They won’t have to wait long for their first opportunity to prove it. In 54 days, the payroll tax cut extension expires, and Senator Charles Schumer and others intend to reinsert the commuter tax break at its 2011 level once it is reopened for debate. Speaking today in Staten Island, Sen. Schumer said he hoped to make the tax break permanent, and defended its inclusion in a tax cut extender bill, saying “it fits in the theme of a middle-class tax break.”

Schumer also said he hoped to make the tax break retroactive to January 1, but that could be difficult. It is true that precedents exist for retroactive tax cuts — there were plenty of retroactive cuts passed in 2010, including extensions of the Bush cuts to biofuel, payroll, and estate taxes – but it’s hard to un-buy a transit pass you’ve already purchased for January and started using.

“You can’t make it retroactive, but you can make it proactive,” explains Cathy Connor, Manager of Government Relations at Parsons Brinckerhoff. “January’s gone, and unless Congress passes the extender the day they come back, they can’t do February either. But it could still be good for March through December,” if not longer.

As for the benefit’s odds of being pro-rated for 2012 at all, Connor told Streetsblog, that depends on whether or not it becomes a “victim of the vehicle,” as it was in December. “There seems to be a lot of support in congress for it. If they decide to do a tax extender bill with just the payroll tax and unemployment, then that’s that. But if they open it up and start making it a more robust bill, this is a very meritorious provision that there’s a lot of support for.”

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Senate Fails to Extend Transit Commuter Tax Benefit

The Senate has voted to extend the payroll tax cuts – for two months – but didn’t act on a measure to maintain parity between the commuter parking and transit benefits. This means transit riders will get their pre-tax benefits cut in half come January 1st, while those who drive to work will see a small jump in how much the government subsidizes their parking expenses. As Steve Davis of Transportation For America puts it (emphasis his):

The transit benefits train has left the station. Photo: i35south

With this inaction in both chambers of Congress, the federal government is sending a message loud and clear to commuters: they’d like you to start driving to work.

This is disappointing news to many of us, no doubt.

Many in Congress don’t seem to understand what it’s like to be a daily commuter trying to get from A to B each day without breaking the bank. Transportation is the second largest household expense for many households, eating up an even larger proportional share of income for the poorest Americans. The millions who depend on transit to get to work each day shouldn’t have to pay more, and certainly not for something that also saves us energy, reduces congestion and emissions, and uses less oil.

T4America does remind us that there is still hope that the benefits will be increased within the first few months of 2012. But, for now, it’s a disheartening moment for transit users. And those who need transit the most are sure to be the ones who suffer the most as a result.

The Senate bill also requires President Obama’s decision on the Keystone XL Pipeline within 60 days. The House will vote very soon on whether they’ll go along with the Senate’s version or drag this political theater out a little longer. (Our bets are on political theater.)

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Congress Puts Off Key Decisions on Transpo Bill and Transit Tax Benefit

The website didn’t lie: Apparently there really are no markups scheduled on the Senate Banking Committee’s calendar.

Wanted a transit title and a commuter benefit for Christmas? All you get is a lump of coal.

Committee Chair Tim Johnson had told Politico that the committee would vote out the transit portion of the MAP-21 transportation bill on Friday, but yesterday, he recanted, telling the same reporters that “something came up.”

Johnson said they’ll try for next week, but there’s no guarantee Congress will still be in session next week. The target adjournment date for the holiday recess had been last Thursday, with that date pushed back to this Friday so Congress could deal with a tangle of issues including the 2012 budget, the payroll tax holiday, and unemployment benefits. The Keystone oil pipeline and tax hikes for millionaires have been thrown into the mix for good measure, too. The McCaskill-Collins attempt to turn the conversation toward infrastructure hasn’t gained much traction.

So, it’s possible Congress will have to stay in session a bit longer to deal with the mess they’ve made, but does that mean they’ll take that opportunity to blaze forward on transportation? That would be impressive, but don’t expect Congress to impress.

Banking’s top Republican, Richard Shelby, told Politico the holdup wasn’t all about money — there are “a lot of issues.” And a staffer reportedly said the committee would like to pass a bipartisan bill, like EPW, instead of a party-line vote that can be easily toppled.

Meanwhile — speaking of important legislation being sidelined till next year — Politico also quoted Rep. Richard Neal (D-MA) as saying that extension of the current transit tax benefit could also be off the table for the remainder of this session. Neal said he hasn’t gotten a response from key committee leaders about when the measure will be taken up, leading him to think January may be the best bet. An inside source tells Streetsblog the benefit’s extension is still a topic of much discussion in the Senate.

Without action, at the end of this year, transit riders will get only a $125 monthly pre-tax deduction for their daily commute, while drivers will get a fat $240 to park their cars. (As a reminder, you bicyclists get to deduct $20 if your employer can even figure out how to apply for that benefit.)

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Senators to Committee: Protect Transit Benefits Before It’s Too Late

Around this time last year, Congress had a decision to make: Extend the transit tax benefit for commuters at its post-stimulus rate of $230 — the same as the parking benefit for drivers — or relegate transit riders to second class citizenship once again. Last year, Congress made the right choice and maintained parity between the two. Despite an urgent call this week from 22 senators, it’s looking like we might not be so lucky this year.

The cards are about to be stacked against this transit rider. Photo: Metro Magazine

Unless some action is taken before Congress adjourns, the maximum federal transit commuter tax benefit — pre-tax income which employees can spend on transit fares — would be slashed to $125 per month effective January 1st, while the commuter parking tax benefit would actually increase from $230 to $240.

Neither of the two committees responsible for extending the benefit — House Ways and Means and Senate Banking — has shown a willingness to take up the provision. Several weeks ago, Rep. Richard Neal (D-MA) wrote to his colleagues in the House, warning of the impending end to several popular programs, including transit benefits. Many other groups and individuals have echoed that call. Yesterday, they were joined by no fewer than 22 senators, from both sides of the aisle, in sending a letter to the Banking Committee leadership, urging them to take up the issue. Only two Republicans joined 20 Democrats in signing on to the letter: Mark Kirk of Illinois and Scott Brown of Massachusetts, the only two Republicans representing significantly urban states in the Senate. The letter read in part:

Commuter benefits are one of the core benefits offered by employers, after health, retirement, and disability benefits. Nationally, more than 2.5 million people now use the transit benefit, with over 250,000 of those users spending more than $125 per month. For these commuters with high monthly costs, the imminent drop in the benefit cap will result in an increase in the cost of commuting of up to 22 percent.

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McCaskill-Collins: Tax Cuts With a Side of Infrastructure, but Hold the Transit

Congress has already delayed their holiday recess by a week, and members are hoping another delay won’t be necessary. Among the yet-unfinished business: an extension of the payroll tax cut. House Speaker John Boehner plans to hold a vote today on his bill, which marries an extension of the payroll tax cut to the controversial Keystone XL pipeline. While expected to sail through the House, such a partisan bill is unlikely to pass the Senate. Enter Senators Claire McCaskill (D-MO) and Susan Collins (R-ME).

Senators Collins, left, and McCaskill at their press conference. Image: STLtoday

Last week, McCaskill and Collins introduced the ambitiously-named Bipartisan Jobs Creation Act. The bill begins with the payroll tax cut and wraps it in additional tax cuts, deregulation measures, and a $35.8 billion infrastructure investment program. The whole thing would be paid for by eliminating some subsidies for oil companies and by instituting a surtax on millionaires’ income—though exceptions will be made for small business owner-operator “job creators.”

The two senators are generally touting this bill as a tax relief bill first, and a pay-your-fair-share bill second—infrastructure gets third-stringed at best, but the provisions are still worth looking into.

The McCaskill-Collins infrastructure plan [PDF] includes $10 billion to capitalize state infrastructure banks and $25 billion for highways and bridges—just highways and bridges. Out of $25 billion—about half an average year’s transportation spending by the federal government—not a dime goes to transit.

By promoting state infrastructure banks, McCaskill and Collins are throwing their weight behind the Republican vision for infrastructure spending and against the President’s. The President and a number of other prominent figures have advocated to no avail for the creation of a National Infrastructure Bank, and Politico reports that they’ll try again next year—to the familiar tune of $10 billion. Meanwhile, House Transportation Committee Chair John Mica has included support for state infrastructure banks—not a national one—in his reauthorization bill. The senators opted for state I-banks in this case because they are an existing program that could be expanded, while “there is no consensus yet on how to address a National Infrastructure Bank,” according to Senator McCaskill’s press secretary, John LaBombard.

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Today Is Decision Time For Local Transit Contests

If you live in Durham County, North Carolina, Montcalm County, Michigan, Cincinnati, Ohio, or anywhere in Washington state, today is Election Day – and you’ve got decisions to make about transit.

Rally for Proposition 1 in Clark County, WA to prevent deep transit cuts. Photo: Preserve Our Buses

There are six ballot initiatives up for a popular vote today that will determine the future of transit service in these areas. They follow two referenda last week in Colorado on sales taxes to pay for transit service. One, to implement a new 0.35 percent sales tax increase in Avon, CO to pay for bus replacements, bus stop improvements, and other expenses, was voted down 38 percent to 62 percent. But another measure, in Sterling, CO, that merely sought to extend indefinitely a 0.1 percent sales tax increase to fund the transit system, was approved 70 percent to 30 percent.

So how will transit-related measures fare today? Here’s a rundown of what’s on tap (thanks to the Center for Transportation Excellence for collecting this important information):

A “Candy Store” for Buses and Bikes in Seattle, WA: Seattle’s going right to the source in proposing a $60 increase on the vehicle license fee. The allocation of the $204 million in expected revenues (over a decade) is supremely civilized: 49 percent to transit, 29 percent to road maintenance and safety, and 22 percent to bike/ped infrastructure. Opponents say it’s a “candy store” for special interests. The campaign chairman of “Citizens Against Raising Car Tabs” takes a page out of the Tom Coburn/Rand Paul playbook by blaming bike/ped spending for crumbling bridges, too. Proponents of the measure say it corrects mistakes of the past, when the city declined to make necessary investments and got “four decades of political paralysis and gridlock” as a result. They say revenues from the “car-tab” fee would improve transit, double the annual investment in sidewalks and repaving projects, and expand “family-friendly bicycle infrastructure.” More on other Washington state measures below.

Cincinnatians for Progress logo for fight against streetcar ban.

Streetcar Bans for Cincinnati, OH: Cincinnati is voting on a different kind of measure. This is a city charter amendment to deny funding for transit, not provide it. The amendment would prohibit the city from spending or borrowing money to move forward the streetcar project planned for downtown. The ban would last until 2020. It’s the second time in two years Cincinnati voters have gone to the ballot to decide whether the city should continue with its plans for a streetcar. Transit advocates call the measure “disastrous” because it would keep the city from taking advantage of new technologies and potential funding sources to build commuter and light rail, in addition to the streetcar, and it could “undermine the city charter… by usurping the lawful functions of elected officials.” As of about a week ago, streetcar advocates had raised about 800 times more money than Citizens Against Streetcar Swindle, which had raised a total of $116. CASS is trying to tie streetcar money to layoffs for police officers and firefighters.

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Will New Infrastructure Funding Survive the Demise of Obama’s Jobs Bill?

Tuesday night, the Senate blocked a vote on the president’s jobs plan. As had been forecast, Republicans voted unanimously against the plan, and they weren’t alone: Two Democrats joined them – Sens. Jon Tester of Montana and Ben Nelson of Nebraska. Now it’s on to Plan B, which involves breaking up the bill into pieces to be voted on separately.

Sen. Schumer's plan to salvage the jobs bill wouldn't resuscitate plans for $50 billion in transportation spending. Photo: AP

New York Sen. Chuck Schumer has proposed narrowing the bill down to two parts – one favored by Democrats, the other by Republicans. Under the plan, an infrastructure bank would be created in the model endorsed by the president and the Kerry-Hutchison BUILD Act. In exchange, there would be a tax holiday for corporations to bring back to the U.S. profits they made overseas.

Obama’s bill had also called for a $50 billion investment in transportation infrastructure, and that appears to be dead as the Senate pursues Schumer’s plan. The House had dismissed the transportation component long ago, with Republican leadership saying they might hold a vote on the pieces of the bill that appeal to them (surprise — stimulus spending isn’t one of them). Meanwhile, some insiders say that Republicans in the House are getting serious about passing a transportation reauthorization before March 31 so that they can show that they, too, are serious about job creation.

Of course, the path they seem to be setting out on involves paying for a higher level of transportation spending with oil drilling, a proposal that’s sure to run up against massive Democratic opposition and possibly even a presidential veto.

And many think that not much is going to happen on any of this until the super committee comes back with its proposals for deficit reduction before Thanksgiving.

Back to the Schumer jobs plan: We’ve written a lot, and will be writing more, about the pros and cons of an infrastructure bank. But what about this idea of repatriating overseas profits?

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Republicans Have Their Own Plan to Pay for Infrastructure Jobs: Oil Drilling

President Obama has proposed a plan to pay for the American Jobs Act, the $447 billion bill to create 1.9 million jobs, including $50 billion for infrastructure. His “pay-for” plan includes limitations on itemized deductions for the wealthy and the elimination of some tax loopholes for oil and gas companies.

Republicans have never met a problem that couldn't be solved with a little more of this.

Republicans have a different idea, though: oil drilling. Several GOP representatives have introduced bills to expand fossil fuel extraction and use the proceeds to fund transportation infrastructure.

Somehow, whatever the problem is in Washington, Democrats want to solve it by raising taxes on the wealthy, and Republicans want to solve it with oil drilling.

When it comes to funding a quick jolt to the economy, it’s pretty clear that oil drilling won’t really cut it. “Any royalties from any new energy development wouldn’t start flowing to the Treasury for years,” said Erich Zimmermann of Taxpayers for Common Sense. “Essentially this would be like spending money now to be paid for with revenues that may or may not be realized at some future time. Sounds like a recipe for a doubling down on our current deficit mess.”

Some speculate that a GOP oil drilling plan would explain the recent news that House transportation leader John Mica, with permission from his party’s leadership, is looking to raise transportation funding levels by an extra $15 billion a year in his proposed six-year reauthorization bill. After all, they’ve said that raising the gas tax is off the table.

A plan to pay for transportation and infrastructure through oil drilling would erode the entire basis of the transportation funding system, which historically rests with the Highway Trust Fund, paid for with fuel taxes and a smattering of other fees on driving and vehicles. In fact, Congress requires that at least 90 percent of what the Highway Trust Fund spends must be generated from taxes “related to the purposes for which such outlays are or will be made.”

“Generating additional revenues from an increase in energy production, therefore, would likely violate this requirement and at the very least result in an override of the Budget Act,” Zimmermann said, “but would also call into some question the importance of the ‘user pays’ principle itself as it relates to paying for the transportation system.”

Whether or not Mica is planning on paying for his transportation bill with oil drilling is a matter of speculation at this point. But several other Republicans have already introduced bills to that effect.

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