Today, Rep. Michael G. Grimm (R-NY) was joined by Reps. James P. McGovern (D-MA), Peter T. King (R-NY), and Earl Blumenauer (D-OR) in introducing the Transit Parity Act. The bipartisan bill will maintain tax credit parity for drivers and public transportation commuters. Without the fix, commuters taking public transportation will see their tax benefit cut almost in half to $125, while those who drive and park will maintain the current $245 tax benefit.
"With rising gas prices and highly congested streets, we should be encouraging New Yorkers to use more public transportation, not push them back into their cars. Without parity, we create an incentive to drive and put an unfair financial burden on New York City's hard-working families and residents who rely daily on public transportation. It is only fair that the pre-tax benefit be made permanently equal, no matter how one commutes to work, and that is why I have introduced the Transit Parity Act," said Rep. Grimm.
"I have long been a proponent of making tax benefit parity for transit commuters a permanent part of the tax code. I am pleased to join with my colleagues in this new, bipartisan legislative effort. It's good for workers and for their employers. Mass transit benefits our environment, reduces wear and tear on our roads and bridges, eases traffic congestion and saves energy. We must continue to look for ways to make commuting by transit as affordable and attractive as commuting by car," said Rep. McGovern.
"Transit parity provides an incentive for millions of working Americans to use mass transportation, which reduces our dependence on foreign oil and eases traffic congestion on our roads. I commend Representative Grimm for introducing this critical legislation and look forward to continue working with my colleagues on this matter," said Rep. King.
"A system where workers have access to myriad transportation options creates more livable, healthy, and productive communities. By helping protect commuters' choices, and preserving equity between those who drive and those who take transit or vanpool, we can avoid a tax increase on millions of families, and continue to give workers the option to use a transportation mode that increases economic productivity, reduces congestion, and is friendlier to the environment," said Rep. Blumenauer.
On January 1, 2014, almost 3 million of America's commuters will face a tax increase unless Congress acts. Transportation is the second largest household expense for American families, and currently Congress provides a tax credit to commuters to help account for parking and transit costs. However, without congressional action, on January 2th, the cost for those who use the transit benefit will practically double. While the parking benefit will remain at $245 a year, the transit benefit will drop to $125, leaving families and commuters with up to $1,440 a year in additional tax burden.
Under existing federal law, employers can offer their employees an option of up to $245/month in pre-tax parking or transit benefits. This tax credit directly benefits American commuters and their families. Businesses have also enjoyed a tax break from this commuter benefit. In 2010, participating transit riders across the country saved their bosses about $300 million in payroll taxes.
In addition to increasing commuters taxes, if the transit benefit reverts to $125 while the parking benefits stays at $245, the federal tax code will distort individual's choices in a way that increases congestion, time spent in traffic, and wear and tear on the roads.
The Transit Parity Act equalizes the transit and parking benefits by capping both at $220. This makes the change deficit neutral, and ensures that our tax code is fair and applies equally to all consumers.