U.S. sticks it to transit users while gifting drivers a tax cut

WASHINGTON – Just when you thought the United States was beginning to lose its obsession with the automobile – what with climate change and 24-hour traffic jams – it comes up with something totally counter-intuitive: It increases the tax benefit for people who drive to work while reducing it for people who take public transit.

For decades, commuters who take their cars have been able to write off a portion of their monthly parking expenses on their income tax forms. Millions of Americans avail themselves of this tax benefit to help offset the cost of their daily commute to work.

In 2009, the government decided to grant an equal tax break to commuters who take public transit, allowing them to write off part of the cost of their bus or train tickets. In Washington, D.C., the transit authority noticed a slight increase in ridership. In New York, more than 700,000 people were eligible for the benefit.

But the lawmakers slapped a sunset clause onto the subsidy. So on Jan. 1, the tax benefit for transit takers will be automatically reduced to $130 a month, from $245.

At the same time, the tax benefit for drivers will increase $5 to $250 a month.

“All along we have always asserted it’s a backwards policy thrust that we have right now,” said Billy Terry, senior legislative representative of the American Public Transportation Association.  “To have parking more incentivized than transit absolutely makes no sense.”

He notes that the tax benefit reduction will cost commuters about $1,300 a year during a time when transit fares are increasing.

“Allowing the parity to elapse is really tantamount to a tax increase for transit riders,” Terry said.  “You cut your benefit nearly in half and then the system implements a fare increase. So it becomes a double whammy.”

While many Americans protest the Keystone XL pipeline because of the resultant increased carbon emissions from the oilsands, barely a whimper is heard over the tax breaks that encourage car commutes.

Only 22 senators and a handful of representatives recently called on their finance committee to extend the 2013 tax incentives for public transit, but nothing has been done.

“The tax incentives have a demonstrated history of providing strong economic and environmental benefits,” the senators wrote in a letter to the finance chairman.

Still, many of those same senators, such as California Democrat Barbara Boxer, who chairs the Environment and Public Works Committee, support the tax breaks that go to car commuters.

This is because the vast majority of people in Los Angeles and San Francisco take their cars to work and benefit from the tax break on their parking.

The number of cars on U.S. highways has increased steadily since 1960. With little or no incentive to leave their cars at home, 76 per cent of the commuting public favor solo driving.

In New York, more than 700,000 transit takers are eligible for the transit benefit and now will see their costs rise considerably.

One positive sign, albeit a faint one, is that more Americans are taking their bikes to work, according to census figures. About 865,000 reported regularly taking their bikes to work, a nine per cent jump from 2011, but still a mere 0.61 per cent of commuters.

Original Article
Source: canada.com/
Author: William Marsden