UPDATE: On January 1, 2013, legislation was passed averting the so-called ‘fiscal cliff’ (HR 8). Included was a provision that will once again re-establish parity between the parking and transit benefits at $240/month. This increase is effective immediately and is set to expire at the end of 2013. Read more here.
A great perk for people with jobs is that they usually have options for a break on the cost of getting to work.
Thanks to Congress, employees who ride mass transit or drive and park get a monthly pre-tax benefit. And from 2009 to the end of 2011, that benefit was $230 no matter whether you took the bus, train, carpooled, or took your own car.
But that temporary act of Congress has ended. While the parking benefit has risen this year to $240 per month, the transit incentive has unexplainably gone backwards, to $125 per month.
Luckily, Jason Pavluchuk of Pavluchuk & Associates and lobbyist for the Association of Commuter Transportation, is on the case. Here he answers some of my questions and, incidentally, does a nice job of explaining the unexplainable.
PM: In a nutshell, Jason, what is ACT’s message to Congress and the Internal Revenue Service?
JP: It’s pretty simple really, having a cap for transit being lower than for those who drive and park creates an unfair playing field and a financial incentive for people to get in their cars and drive to work rather than utilize transit or vanpools. This especially impacts those who travel longer distances.
How important do you think it is for Congress to make sure these benefits are restored to at least an equal level?
Those who live along the I-66 and I-95 corridors may have noticed a few more of their neighbors clogging up the roads after January 1 when the benefit level dipped back down to $125 per month. For a long time we have been focused on how the transit benefit makes sense for employers by providing them a tax break, or the environmental and energy aspects of greater transit usage.
But what I have been focusing on this year is talking to Congress about how more people on the roadways means an increased need for maintenance and expansion, which, in the long run, is far more expensive than the cost of increasing the transit benefit.
We were very close to seeing the transit benefit increased in the recent transportation bill. The efforts of Virginia Democratic Congressmen Jim Moran and Gerry Connolly should not go unnoticed. However, House Republican leadership refused to allow the provision to be included, despite a large handful of Republican members personally asking the leadership to include it. This band of Republicans were led by Congressmen Michael Grimm (R-N.Y.) Jim Gerlach (R-Pa.), Randy Hultgren (R-Ill.) and included Congresswoman Shelley Moore Capito (R-W. Va.), who saw many of her constituents’ transit benefits reduced.
We are hopeful to increase parity as a part of a larger end-of-year tax package. Our provision has been initially included in a piece of legislation passed by the Senate Finance Committee.
Is there any chance that the benefits will be done away with altogether – even though that would seemingly be a wildly unpopular measure with nearly all the public?
Did you know that like a school of fish or flock of geese, a group of baboons is called a congress (tongue in cheek)? [Ed. – it’s true, a group of baboons really is called a “congress.”]
I digress. Yes, I feel there is a very real danger that not only the transit benefit, but the whole transportation benefit could be eliminated. We’re all for parity, but not at $0 a month.
Congress is looking to simplify the tax code and eliminate many of the tax breaks that exist, while simultaneously reducing the tax rates. The question will be: Do they eliminate all of the so called “tax expenditures,” or just a few? It will be a lengthy battle, but one we are all getting prepared for.
What can be done about the inconsequential commuter bicycle benefit of $20, which is hardly worth the effort of signing up for as a bicyclist or administering as an employer?
Well, we are trying to include some of the fixes needed in a variety of bills, most specifically we are hoping to make sure people can use both transit and bike benefits and that bike benefits can be provided pre-tax. While we aren’t going to give up, I am dim on the prospects of achieving these fixes in the near future.
With all the bikesharing programs popping up around the country, is there any hope this will become part of the commuter tax benefit program?
Yes, we have a request into the IRS to rule whether or not bikesharing is eligible under the transit benefit and have made a pretty compelling case. We hope to have an answer by year’s end.
What can people do to make their voices heard and assure they continue to get benefits for taking transit to work?
Go to commuterbenefitsworkforus.com and tell your member to help increase the transit benefit.