If You Ride the Subway to Work You're About to Get Screwed
The federal commuter tax benefit is an obscure subsidy most Americans have likely never even heard of. But it's a simple illustration of the many subtle ways that official policy in the U.S. incentivizes private car travel over mass transit.
The benefit allows employees to devote a pre-tax chunk of their income to commuting costs, like parking garage fees or mass transit passes. Traditionally, though, the benefit has been nearly twice as generous for drivers as transit riders. In 2008, for example, transit riders were allowed to set aside $115 a month; car drivers (and their employers) could forgo paying taxes on up to $220 in income each month.
The 2009 federal stimulus package finally equalized the two benefits at the higher rate. But transit advocates have continued to fight over the benefit precisely because the higher transit subsidy keeps expiring – as it is set to do again on January 1. Come Wednesday, if you ride the subway or bus to work every day, your benefit will drop from $245 to $130 a month. If you drive to work, your benefit will actually inch up from $245 to $250.
The difference has practical implications beyond the principle involved here: Local agencies like the Washington Metropolitan Transportation Authority have suggested that ridership (and revenue) drops when this subsidy does. And commuters will be particularly affected in cities like New York, Chicago, Boston, and Miami, where a large share of workers get to work every day by transit.
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