Tax Break For Mass-Transit Commutes May Soon Be Slashed

Unless Congress acts quickly, taking mass transit to work is about to get more expensive for some people.

For the past four years, public transportation users and people who drive their cars to work and pay for parking have been able set aside up to $245 a month in wages tax free if they're used for commuting costs or workplace parking.

The transit tax break expires at the end of the year. So starting Jan. 1, the benefit for riders will be cut nearly in half — to $130 a month. Drivers, on the other hand, will get a slightly bigger break as their parking benefit rises to $250.

"It doesn't make sense at all, the fact that you get a bigger tax break for driving your car than riding a train," says Dan Smith, who lobbies Congress on tax issues for the U.S. Public Interest Research Group. He says many commuters don't realize that the parity for transit and parking tax breaks vanishes in the new year. But they soon will.

Oregon Rep. Earl Blumenauer, who rides his bike to work, is sounding the alarm.

"We've heard lots of talk about fiscal cliffs, a dairy cliff, but at the end of the year, we are facing a transit commuter cliff," he says.

Blumenauer has rounded up five House Republicans and 44 fellow Democrats to co-sponsor legislation that would keep the parking subsidy, which by law is automatically renewed, equal to the transit subsidy, which requires congressional approval every year:

"You might tilt it the other way and provide greater benefit for people who are having less impact on the planet," he says. "But the fact is, this is embedded, ingrained and accepted, so we want to at least just have transit parity for the full range of commuter options."

Indeed, eliminating or even reducing the parking subsidy is a bipartisan non-starter in Congress.

"My own view is there are some people — many people — who don't have the luxury of being able to take transit," says Sen. Barbara Boxer, chairwoman of the Environment and Public Works Committee.

The California Democrat defends the tax break for people who drive to work:

"I don't agree that you should put one group against the other," she says. "I think we should encourage fuel-efficient cars, and if someone really needs their car for work, I don't have a problem with saying, you know what, there's enough expense here, we can make sure that this isn't exorbitant for you."

That's unfortunate, says Elyse Lowe. She's one of Boxer's constituents as well as the executive director of Move San Diego, a group advocating smart growth in that city. For Lowe, it makes sense to subsidize public transit users, not drivers:

"This is at the heart of getting people to change their travel behaviors through economic incentives," she says, "and typically people don't actually look at their own personal behavior until there's some sort of economic reason to do so."

Rhode Island Democratic Sen. Sheldon Whitehouse agrees. He's skeptical, though, that Congress can act in time to keep the transit break on par with the parking subsidy.

"What certainly doesn't make sense is to favor that over using public transportation. But given the general level of blockade of anything and everything by our Republican friends around here, I can't promise that we'll get to that."

Making parity between transit and parking subsidies — one more casualty of congressional gridlock.