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.
So what's Congress' problem this time around? It never got around to extending the transit benefit in 2013. Congress may still do so in the coming year, but that could take months. And, in the meantime, the federal government will go back to disproportionately subsidizing people who drive to work.
There's a valid argument to be made that the government – and taxpayers at large – shouldn't subsidize any commutes, whether people get to work by car, by bus, by train, or by boat. But while the government continues to specifically subsidize parking (even as it battles traffic congestion on other fronts), it's illogical not to offer an equal benefit to commuters who take cars off the road. If anything, we should be talking about how to bring bike commuters into this equation, not how to keep mass transit riders there.