Federal Mass Transit Tax Break Right Now Only Covers $120 Worth of Commuting Costs Per Month, Less than Half As Much as the Benefit Given to Drivers

Disparity Shows Absolutely Backwards Priorities In Modern Age Of Conservation And With Nation's Crippling Dependence On Foreign Oil

Bipartisan Plan Equalizes the Two Benefits and Takes Away the Incentive to Drive - Takes Cars Off the Road and Puts Money Back in Commuters' Pockets

 

With record numbers of commuters nationwide turning to mass transit, Senator Chris Dodd (D-CT) joined Senators Charles E. Schumer and Arlen Specter (R-PA), along with 10 additional co-sponsors, in announcing that their mass transit tax break has been included in the Senate version of the economic recovery package.

With record numbers of commuters nationwide turning to mass transit, Senator Chris Dodd (D-CT) joined Senators Charles E. Schumer and Arlen Specter (R-PA), along with 10 additional co-sponsors, in announcing that their mass transit tax break has been included in the Senate version of the economic recovery package.

 

The mass transit tax break would double the federal mass transit benefit for people who ride buses, subways, commuter rails or other forms of mass transit to work, potentially saving them hundreds of dollars per year in transportation costs. The incentive shift towards mass transit would also increase energy conservation while reducing traffic, congestion and smog. Under current law, employers are able to offer employees a monthly tax-free transit benefit of only $120 to cover mass transit commuting costs, but they are able to offer up to $230 to help cover parking costs for people to drive to work. The new measure’s proponents said that, in today’s economy, it makes absolutely no sense to provide drivers a far greater benefit, and thereby a significant financial incentive, to drive to work rather than take mass transit. Their plan equalizes the mass transit and parking benefits at $230 per month and indexes both benefits to increase with inflation.

 

The bill is co-sponsored by Senators Edward Kennedy (D-MA), Jeff Bingaman (D-NM), John Kerry (D-MA), Joe Lieberman (I/D-CT), Barbara Boxer (D-CA), Ron Wyden (D-OR), Tom Carper (D-DE), Frank Lautenberg (D-NJ), Robert Menendez (D-NJ), and Benjamin Cardin (D-MD). It has been adopted by Senate Finance Chairman Max Baucus (D-MT) into the recovery package, which is being considered by the full panel today.

 

“Millions of Americans, including thousands of commuters in my home state of Connecticut who regularly take public transit into work, will potentially benefit from this legislation by finally being treated the same as those who receive tax-free parking at work. By creating parity, the amendment will improve transportation options for working families, stimulate the economy, reduce greenhouse gas emissions and reduce traffic during rush-hour. I strongly support its inclusion in the economic recovery package and thank my colleagues who have worked so hard to make this a reality,” Senator Dodd said.

 

"Boosting the mass transit benefit is a win-win because it puts money in commuters' pockets and takes more cars off the road," said Senator Schumer. “The mass transit subsidy program is a great idea, but it is undermined by the fact that we provide a parking benefit that is much more generous. My proposal makes mass transit financially attractive, so commuters will be more than happy to leave their car keys at home—saving them hundreds of dollars, conserving energy and clearing up congestion and traffic along our busiest expressways."

 

“This amendment serves to equalize employee benefits between transit and parking,” Senator Specter said. “This parity will encourage the public to take advantage of mass transportation, which both supports the focus of the economic recovery package and will ultimately ease the burden on our nation's roads and reduce congestion and pollution.”

 

“This proposal will put New Mexicans who commute by mass transit on equal footing with those who receive parking from their employers," said Senator Bingaman. "This is a win for New Mexicans, including the thousands who ride Rail Runner each week. And by promoting mass transit, we decrease traffic congestion and reduce pollution."

 

“As families in Massachusetts and across the country adjust to these challenging economic times, we need to do all we can to help those using mass transit. Increasing assistance for commuters will help reduce our use of foreign oil while also reducing greenhouse gas emissions,” Senator Kerry said.

 

“It doesn’t make sense for the federal government to be giving commuters more of an incentive to drive to work alone than take mass transit,” said Senator Wyden. “This change will not only get more cars off of the road, it will provide economic relief for millions of Americans and businesses at a time when they need it most.”

 

“This is a fine example of using our nation’s tax code to reduce our reliance on cars, trucks and vans, increase use of mass transit and reduce harmful air pollution,” Sen. Carper said. “I have worked on this issue for eight years, and I pleased that today the Senate Finance Committee agreed to encourage greater use of mass transit by giving employers the same tax advantage for subsidizing employee transit costs as for providing parking subsidies for their workers.”

 

“Our tax break is an important incentive for commuters to choose the convenience, affordability and efficiency of mass transit,” Senator Lautenberg said. “We will continue to do all we can to ensure trains and buses are a safe, affordable and reliable option in New Jersey and across our region and our measure is an important step in the right direction.”

 

“Making it easier for commuters to use mass transit cuts energy costs for families struggling in this economy, can help spur green jobs and reduces traffic congestion and the emissions that come with it. New Jerseyans rely heavily on mass transit to get to work and to get around the region, and this would be welcome relief. This is a smart investment in our workers and our transportation system,” Senator Menendez said.

 

“Encouraging greater use of public transit should be a national priority during good economic times and bad,” said Senator Cardin. “By equalizing transit and parking benefits for employees, we are ensuring that public transit will continue to be a cost-effective option for millions of Americans, moving people efficiently and rapidly through our most important commercial centers. It also takes thousands of cars off of our congested highways and takes tons of pollutants out of the air we breathe.”

 

The transit and parking benefits, originally conceived by the late Senator Daniel Patrick Moynihan, allow employers to offer their employees up to $120 per month in transit benefits tax free and up to $230 tax-free for parking costs. While the transit benefit typically reduces a commuter’s transportation costs by a third or more, the significant disparity between the two benefits creates an inefficient incentive for people to drive to work rather than take mass transit.

 

Nationally, Accor Services, a company specializing in employee benefits program, estimates that nearly 2 million Americans take advantage of the transit benefit nationwide, saving American $440 million in FY 2009. The added subsidy will not only benefit employees, but will also provide additional tax-relief for businesses who contribute to their employees’ deductions and will encourage employers to become involved in the transit choices of their worker.

 

“The action that the Senate Finance Committee will take today to include in the American Recovery and Reinvestment Act an increase in the monthly transit tax benefit to $230 will provide much needed financial relief to millions of commuters around the country,” said Larry Filler, CEO of TransitCenter, a New York-based nonprofit dedicated to promoting the use of mass transit services. “At TransitCenter, Inc., a nonprofit which serves hundreds of thousands of employees and thousands of businesses in providing transit benefits, we estimate that if this measure is enacted commuters will be able to save up to $1000 or more a year from their commuting expenses, a savings that commuters will realize on a daily basis. This measure will also encourage more commuters to switch from driving alone to work to using transit and vanpooling, which will benefit the country by decreasing traffic congestion, improving air quality and reducing energy use. We congratulate Sen. Schumer and the Senate Finance Committee for their efforts today to help working Americans.”

 

The bi-partisan plan, originally called the Commuter Benefits Equity Act, would not only provide hundreds of dollars in savings to commuters, but also encourage more drivers to choose mass transit. The bill brings the mass transit subsidy equal to the $230 set aside for employee parking expenses, increasing the incentive to take mass transit. The benefit increase would go a long way in reducing traffic delays in and around urban areas such as New York City, which has seen congestion increase by 158% since 1982.

 

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