Today, Reps. Earl Blumenauer (D-OR), Michael G. Grimm (R-NY), McGovern (D-MA), and Peter T. King (R-NY)were joined by the Commuter Benefits Work for Us Coalition in calling for passage of the Commuter Parity Act of 2013 (H.R 2288). This revenue-neutral bipartisan legislation will establish permanent tax credit parity between the parking and transit/vanpool portions of the transportation fringe benefit.
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. 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.
"Providing commuters more tax relief for their parking costs than their transit costs distorts consumer choices, and encourages commuters to spend more time in traffic. The Commuter Parity Act fixes this inequity, in a cost-neutral way, by setting parking and transit benefits at $220. This saves consumers and businesses money and reduces congestion, while giving Americans real choices that aren't influenced by congressional policy," said Rep. Blumenauer.
"With outrageous tolls, high gas prices, and over-crowded streets, Congress must focus on common sense policies that encourage Americans to use public transportation, instead of pushing them back into their cars. Without transit parity, we continue to 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, which is why my colleagues and I are working hand in hand with the Commuter Benefits Work for Us Coalition to push for the Transit Parity Act to be passed here in Congress," said Rep. Grimm.
"For most working families, transportation is the second largest household expense," Rep. McGovern said. "The transit benefit is one small, but significant, piece to making commuting more affordable for millions of Americans. It allows American families to have a little more money in their pockets. The transit benefit makes sense for employers too, especially small businesses. I'm proud to once again join in this bipartisan effort," 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 look forward to working with my colleagues on this critical matter," said Rep. King.
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 2nd, 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.
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.
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.
The Commuter Benefits Work for Us Coalition is composed of employers, public transportation agencies, national associations, benefits providers, vanpool providers, and others who share a common interest in using the transit benefit as a tool to provide commuters with options.