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Transit Tax Disparity Rises Again Transit Tax Disparity Rises Again

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Transportation Insiders

Transit Tax Disparity Rises Again

Schumer has vowed to reinstate transit tax parity.(Spencer Platt/Getty Images)

photo of Fawn Johnson
January 6, 2014

The failure of Congress to continue a package of "tax extenders" at the end of the year means that people who commute to work using buses and trains will see their tax shelter for commuter benefits shrink by about half, while those who drive to work will be able to shelter slightly more money per month than last year.

It's a quirk of the law that we've seen before. And it's been fixed before, although it took almost a year to correct the disparity the last time around. The uncertainty and delays are annoying and costly. Without the transit tax extension, people who use employer-paid transit benefits can only shield $130 per month from taxes this year. Last year, they could set aside $245 pre-tax money for transit commuting. By contrast, people who pay to park their own cars at work will see their tax benefit automatically adjusted upward to $250 per month this year.

The American Public Transit Association argues, as it has in the past, that treating different modes of transportation differently is unfair and runs counter to a balanced tax policy. Oh, and this disparity could cost transit riders $1,380 a year.

 

Lawmakers don't necessarily disagree with APTA, but the trouble with the transit benefit is that it is rolled in with a series of tax provisions that routinely must be extended by Congress. And Congress is routinely behind on them. Heck, they barely managed to get out of last year without another shutdown crisis.

So we begin another round of lobbying on the issue. Sen. Chuck Schumer, D-N.Y. has vowed to include a transit tax extension in the next round of tax extenders that he says "must pass" this year. He is a powerful advocate for transit tax parity, having negotiated its extension in the "fiscal cliff" deal last yeaar that allowed the government to function throughout most of 2013.

But it still takes time. Sigh.

For our insiders: What can transit advocates do to get out of this cycle of dependence on Congress to keep this tax benefit? How important is it to retain the benefit? Would the reduced tax break for transit really encourage more people to drive? Or is that an empty threat? How can employers encourage their workers to use transit, even though the tax benefit is reduced?

(Note: This blog is a moderated discussion on transportation issues. Comments are approved on a case-by-case basis. Contact me if you want to become a regular commenter.)

From the Transportation Insiders

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