To consolidate, disseminate, and gather information concerning the 710 expansion into our San Rafael neighborhood and into our surrounding neighborhoods. If you have an item that you would like posted on this blog, please e-mail the item to Peggy Drouet at pdrouet@earthlink.net

Friday, December 20, 2013

Editorial: Tax policy shouldn't favor cars over transit

Why should tax policy favor drivers over transit riders?


 December 20, 2013

 Chicago has too many cars on the roads and a fine mass transit system. It would be bad public policy to let the mass transit tax break go down again.

Good news for people who drive to work: The tax break you can claim for parking costs will go up in January. Bad news for people who ride the buses and trains: Your tax break will go down. A lot.

Yes, that's bass-ackward. And yes, you've been through this drill before.

Right now, drivers and transit riders alike are allowed to set aside up to $245 a month in pretax income to pay for parking or fares on public transportation. That means they don't pay taxes on the earnings they spend commuting to work, assuming their employer participates in the program.

The parking benefit, including regular cost-of-living increases, is cooked into the federal tax code. But the benefit for transit riders is not. It goes up or down depending on the whims of Congress.
Because lawmakers haven't acted to extend the current benefit provisions, the maximum set-aside for transit is scheduled to drop to $130 a month Jan. 1. The maximum for drivers, meanwhile, will automatically rise to $250.

In 2008, when gas prices were through the roof, the cap for drivers was $230 per month while the transit cap was $120. Lawmakers brought them to parity as part of the 2009 stimulus package. The idea was to give transit riders a little more spending money with which to boost the economy, but it was also a matter of fairness. Why should drivers get a bigger break?

But the increase for transit riders is subject to renewal. That didn't happen in 2011, so the transit cap dropped to $125 a month in January 2012, just as the parking cap increased to $240. Congress brought them into line again as part of the deal struck in January to avoid the so-called fiscal cliff.

The change was retroactive, creating a headache for human resources departments everywhere. And here we go again.

Around Chicago, the lower benefit limit would mostly affect Metra riders. (A monthly CTA/Pace pass is $100.) But the benefit also applies to Amtrak, vanpool rides and water taxi shuttles. There's also a move afoot in Congress to apply it to bike-share programs, such as Chicago's Divvy.

Some New York commuters would end up paying an extra $1,000 each year, depending on which transit options they use. Employers also would have to pay higher payroll taxes. In 2010, they saved about $300 million thanks to the transit benefit.

Hello, Congress! On what planet does it make sense for the government to offer incentives for people to drive more? Certainly not here on earth, where we have too much pollution and not enough fuel. In Chicago, we have too many cars on the roads and a perfectly good mass transit system, if you forget for a moment about the endless aggravations of the Ventra fare card rollout. Allowing the mass transit break to drop is bad public policy.

But renewing it was a low priority for Congress in its end-of-year rush. The lamest excuse: There's no point in extending this and other expiring tax breaks because lawmakers are going to reform the whole tax system next year. We'll believe it when we see it. (Wasn't 2013 supposed to be the year they finally reformed the immigration system?) At any rate, a tax overhaul likely would eliminate many such breaks.

Until that happens, lawmakers should restore transit parity. Either of two pending bills — one in the House, one in the Senate — would tie the transit benefit level to that of the parking benefit. No more on-again, off-again tax break.

Leave it to Congress to impose a penalty on those who take public transportation. Through their inaction, lawmakers are doing just that. Again.