Lawmakers Could Finally Equalize Benefits for Transit and Parking This Year

It’s time to rev up the annual fight over parity between federal transit and parking benefits for commuters. Members of Congress hope this might finally be the year to get it done.

This could be the year to equalize benefits for transit riders and make it permanent. Photo: ##
This could be the year to equalize benefits for transit riders and make it permanent. Photo: Wikipedia

This morning, Reps. Earl Blumenauer (D-OR) and Jim McGovern (D-MA) announced that they will, again, push to equalize the tax benefits available to transit commuters and car commuters.

Right now, people who drive to work can get up to $250 a month in tax-free earnings to pay for parking. The monthly tax-free income available to the 3 million Americans who use the transit benefit, meanwhile, is capped at $130.

With the passage of the 2009 stimulus law, parity was implemented between the parking benefit and transit benefit for a brief while. After extending the higher transit benefit a few times, however, in recent years Congress has failed to take the necessary action to do so.

At today’s press conference, Washington Metro Board Chair Tom Downs noted that Metro ridership had stagnated since transit benefits dropped. “If you’re providing a $1,500-a-year incentive to drive your car over taking transit, you’re probably going to have an impact on mode choice,” Downs said.

Increasing the transit benefit makes the law more fair, but it probably won’t make a big impact on how people get to work. Studies show that providing parking benefits always increases solo driving rates, whether or not the workplace also offers transit perks. Better to do away with all commuter benefits than to provide both [PDF]. Besides, most transit commutes cost far less than $235 a month. A monthly New York subway pass costs $112. In DC, you’d have to travel from one end of the system to the other every day during peak hours to make use of the full $235 transit benefit Blumenauer proposes.

Though Blumenauer’s plan only cuts the parking benefit by $15, it’s deficit neutral (at worst), since so many more people drive than use transit.

“We’ve watched the system on automatic pilot start to tilt further in favor of people who drive while it cuts the benefit in half for people who take transit,” Blumenauer said. “And frankly, we’re in a situation where the auto user actually is seeing dramatic reductions in their costs because gas prices have dropped 73 cents since their peak earlier this year. But transit is taking the hit.”

In previous years, Blumenauer has included a bicycle benefit as part of similar bills, but this year he’s trying to keep it simple. “It should be [part of this],” he said, “but we don’t want to complicate things unduly.” Then he added that “it’s so much fun to bike anyway,” implying that people don’t need financial incentives to ride.

The hope is that parity for transit commuters will muster bipartisan agreement if it can be made deficit-neutral, as this bill is.

“If there ever was a no-brainer, this is it,” Rep. McGovern said. “This is something I think everybody agrees on. I haven’t heard anybody say it’s a bad idea. So if we all agree on it, let’s just do it.”

No Republicans appeared at the press event, but Rep. Michael Grimm of Staten Island has championed the idea in the past.

Recent attempts to revert to parity and make it permanent were thwarted by the effort to pass a broader tax reform package, rather than pick off items to address individually. That package didn’t pass, however, so now lawmakers plan to address some “tax extenders” during the lame duck period. This, Blumenauer says, should be one of them.

14 thoughts on Lawmakers Could Finally Equalize Benefits for Transit and Parking This Year

  1. I think you are misinterpreting the Hamre/Buehler study. Use of transit was about the same between people who had both free parking and transit subsidies, and people who had neither.

    However, they estimate people who have free parking but no transit subsidy (a more extreme version of the situation the current law puts long-distance federal employee commuters) are 5 times less likely to use transit than people who have both benefits. For a group of “average” commuters, they predict the following rates of transit use: With free parking only, 3%. With both free parking and transit benefit, 16%. With transit benefit only, 76%.

  2. “Though Blumenauer’s plan only cuts the
    parking benefit by $15, it’s deficit neutral (at worst), since so many
    more people drive than use transit”

    Perhaps true nationwide, but is this true in areas where the parking benefit is actually used? I’ve never had reason to use the parking benefit because my suburban office buildings always had free parking.

  3. Well, one can hope. But the party dominating Congress now and for the foreseeable future has more than earned the name Party of No Transit, and I’ve seen no evidence that that is about to change.

  4. don’t forget it cost $5.10 a day to park in a parking lot, so round trip it’s about $15/day to commute from about 10 miles out in DC area. So the current benefit only covers a little less then 50%.

  5. “Besides, most transit commutes cost far less than $235 a month.”

    I’d be interested in seeing the breakdown. It’s pretty easy to hit $200+ when we’re talking about some commuter rail services (even across relatively short distances) as well as transit-balkanized areas like the Bay Area:

    Where riders are strongly financially penalized for:

    1) transferring between different transit agencies even if the overall travel distance is not that great (the common CaltrainBART transfer at Millbrae is an egregious example)

    2) subject to widely different fare-per-mile systems depending on which transit fiefdom(s) govern(s) the area(s) you live and work in.

    Due to a history of provincial transit fiefdoms, county lines and more than a dozen separate transit agencies, these things can really add up. My own Bay Area commute involves only 9 miles, one transit agency and two fare zones but crosses a county line so it approaches $200 every month (monthly passes on this agency are only available to trips fully within its county line irrespective of total distance). It’d be even worse if I had a transfer that involved different transit agencies.

    Another thing–my bus commute actually doesn’t take me the full way to my office so I bike the rest…yet also by the current rules I can’t get the $20 bike subsidy as I can only pick either that or the $130 transit one. With increasing numbers of people using bike + transit in order to make transit viable *in the very first place* this is silly.

  6. “most transit commutes cost far less than $235 a month”

    In D.C., it’s fairly easy to spend $235/month, and many do. A commute from a terminal station to downtown D.C. costs $5.90 one-way, plus parking at $4.85/day, and you’re looking at a daily cost of $15-16/day, or over $300/month.

  7. A VRE Monthly Ticket from Fredersickburg to DC is $305. So, VRE riders need the $235 subsidy and VRE may raise fares next year. I wish it would be permanent like parking is so that it doesn’t expire every few years and go back down to $130.

  8. What about people who commute to work by bicycle? Or walk? Shouldn’t they get some benefit to encourage this activity?

  9. The other factor is that many businesses in urbanized areas which own or otherwise control their own parking assets simply give them to their employees without any accounting for it. Frequently, the value of that gift exceeds the federal limit, and it represents millions of un-collected taxable compensation. The loss in tax revenue from this aspect alone is tough to estimate, but conservatively, it exceeds $40 million annually. Not a huge amount, but not peanuts either. To find areas where this is the case, just find adjacent garages that charge more than $250/month for monthly parking, anyone (employee or employer) in the area who has free parking is likely not doing any paperwork to pay taxes on the amount of parking benefit they receive in excess of the federal limit.

    The amazing thing is when you think of how this compares to other things we could do with the same money. If your employer gave you free gasoline for all your driving per month, you’d be amazed, but likely that is less valuable than a free or subsidized parking space in an urban area. Similarly, if your employer gave you $250/month to use for bicycling expenses, we could all finance amazing dutch cargo bikes with electric assist motors that would move us around easily (with kids and cargo) within a 12 mile radius, enough to make a real difference in most urban areas.

    On paper, it’s all dollars that are exempt from taxation for both employer/employee, so it comes down to what we want to buy as a society with those dollars. So far, we’ve chosen to purchase more auto-orientation, with a tiny bit more transit-orientation, and miniscule support for bicycling (up to $20/month – enough for some new lights, tubes/tires/fenders, or a helmet every few months).

    What everyone in congress should understand is that we could choose to support a different system. I wish more elected officials had Blumenauer’s courage to imagine a different system and take a small step in that direction.

  10. Once you do that, it becomes close to just a $250 credit for anyone who is employed, and at that point you might as well just increase the cutoff for the first tax bracket, and just make all transportation benefits taxable.

  11. I think the point is that if your building has free parking, then you’re using the parking benefit, because your employer probably isn’t counting the value of that parking as part of your compensation the way they should.

  12. I’m disappointed to read Ms. Snyder write that comment. As she is a D.C. resident, it’s easy to understand how much many local commuters pay in transit costs. My transit costs on the Silver Line are $236 a month, without parking. I have the option to start driving at the start of the new year and plan to exercise that option given the lesser costs involved (I get free parking at work).

  13. taking the SouthShore line between Michigan City to Chicago is $244.25 a month. They do go to South Bend, but I doubt that many people commute to Chicago from South Bend($331 a month). Michigan City to Chicago(1hr45m) is about the farthest most would go.

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