Letter to Senator Max Baucus, Chairman of the Committee on Finance, and Senator Orrin Hatch, Ranking Member of the Committee

Letter

Senator Robert Menendez (D-NJ) and twenty one other senators sent a bipartisan letter to the Senate Finance Committee last week, urging the committee to extend benefits that will allow thousands of bus and train riders to continue saving hundreds on their commute. The benefit would revert back to a less generous level of $125 a month as of Jan. 1, if the higher $230 a month figure is not reauthorized.

The Senators wrote:

"As you know, in 2009 Congress raised the tax-free benefit that workers could apply toward monthly commuting costs, from $120 per month up to $230 per month, putting transit benefits on par with parking benefits. This important benefit eases the burden of commuting costs on families, relieves congestion, reduces the stress on our highway system and decreases our reliance on foreign oil."

"The increase in the transit benefit cap to $230 per month is set to expire at the end of 2011 and return to $125 per month with the recent IRS cost of living adjustment. That would represent a significant tax increase for middle-class commuters and their employers, who currently do not have to pay federal payroll taxes on the amount of the benefit."

It is estimated that thousands of commuters in New Jersey alone could be affected. For example, train fare from New Brunswick to New York Penn Station costs $361 a month. For that commute extending the higher benefit would mean a tax savings of over $1,500 a year.

Senators Kerry, Mikulski, Lieberman, Cardin, Merkley, Lautenberg, Carper, Wyden, Durbin, Schumer, Murray, Boxer, Coons, Udall, Akaka, Blumenthal, Brown (MA), Gillibrand, Kirk, Warner, and Whitehouse also signed the letter.

Full letter sent to Senator Max Baucus, Chairman of the Committee on Finance, and Senator Orrin Hatch, Ranking Member of the committee, is below.

December 8, 2011

Senator Max Baucus, Chairman Senator Orrin Hatch, Ranking Member

Senate Committee on Finance Senate Committee on Finance

219 Dirksen Office Building 219 Dirksen Office Building

Washington, DC 20510 Washington, DC 20510

Dear Chairman Baucus and Ranking Member Hatch,

We are writing to you today to urge the Senate to include an extension of the tax-free benefit for mass-transit users in any tax legislation that may pass the Senate this year. Unlike other tax cuts, the higher mass transit benefit is one that impacts employers and employees immediately and cannot be extended retroactively.

As you know, in 2009 Congress raised the tax-free benefit that workers could apply toward monthly commuting costs, from $120 per month up to $230 per month, putting transit benefits on par with parking benefits. This important benefit eases the burden of commuting costs on families, relieves congestion, reduces the stress on our highway system and decreases our reliance on foreign oil.

The increase in the transit benefit cap to $230 per month is set to expire at the end of 2011 and return to $125 per month with the recent IRS cost of living adjustment. That would represent a significant tax increase for middle-class commuters and their employers, who currently do not have to pay federal payroll taxes on the amount of the benefit.

Commuter benefits are one of the core benefits offered by employers, after health, retirement, and disability benefits. Nationally, more than 2.5 million people now use the transit benefit, with over 250,000 of those users spending more than $125 per month. For these commuters with high monthly costs, the imminent drop in the benefit cap will result in an increase in the cost of commuting of up to 22 percent.

Given the context of the underlying tax debate, we stress the importance of extending this benefit in the most fiscally responsible way possible. There are a number of different permutations by which this policy could be extended. It is possible to extend this benefit in a way that carries little to no net cost to the taxpayer. Ultimately, we believe very strongly that parity with the parking benefit should be retained.

Thank you for your consideration of this matter. We are ready to work with you to formulate an affordable long-term policy on the transit benefit that will prevent tax increases for hundreds of thousands of our constituents and their employers.

Sincerely,

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