Tax break slashed for transit riders
Published 12:44 pm, Saturday, December 14, 2013
Metro-North commuters who are already smarting over a 5-percent spike in fares starting Jan. 1 have another reason to gripe: the federal tax breaks for riding public transit to work are about to get halved.
Public transit commuters, many of whom are now eligible to set aside up to $245 a month before taxes for traveling costs, will see their maximum allotment drop to $130. Meanwhile, people who drive to work and have to pay for parking will see their eligible tax-free payments increase to $250 from $245.
"I've complained before about the need for parity between the two types of transportation for all kinds of reasons, including fairness, environmental preservation and the effect on Connecticut transit riders," said U.S. Senator Richard Blumenthal in a phone interview Thursday evening.
"My hope and expectation is that this tax break will be extended, although it may not be by the end of the year," he said.
Pushing for parity
There are several bills in the House and Senate that would extend the parity, either permanently or just for the coming year. Blumenthal said he supported all of them, but is pushing to enshrine the equality provision forever. He expects no new legislation before January and said that riders should continue to run their transit riding expenses through employers' commuting plan.
That way, if lawmakers extend the current tax-break schedule sometime in 2014, and retroactively enact it as of Jan. 1, riders will have a record of everything and can get reimbursed.
That's exactly what happened last year. In fact, the parking and public transportation pre-tax benefits only became equal in 2009, said Mantill Williams, director of advocacy communications for the American Public Transportation Association, which is based in Washington, D.C. Before that, the provision was chiefly designed to benefit drivers.
Growing transit ridership
In part, that reflects the growing numbers of Americans who are turning to public transportation at a time when national driving figures have evened out or begun to retreat, Williams said. He cited studies that show that members of the "millennial" generation are less inclined to get driver's licenses at 16 and hit the roads.
That's certainly been the case in southwest Connecticut, where the New Haven line of Metro-North has experienced successive years of record ridership. In 2012, the line had 38.8 million total customer trips, up from 38.2 million in 2011, according to Metro-North.
APTA is pushing for parity so that commuters aren't given incentives to drive to work instead of taking public transit, Williams said. To that end, one bill in Washington calls for increasing the tax break for public transit until it equals the one for cars. Another calls for a combination of raising the former and lowering the latter to achieve parity at levels that would be, overall, revenue-neutral for the government when it comes to level of tax break.
"We're pushing for parity for all commuters," Williams said. "If Congress does nothing, there will be more incentive to drive and park than to take public transit."
U.S. Rep. Jim Himes, D-4, criticized any tax policy that would favor drivers over commuters and thereby penalize businesses for offering employees a reason to get off the roads.
"This is a perfect example of how targeted and effective federal policy can provide employers with an opportunity to help their employees save money on their commute, while saving employers money that can be reinvested into their businesses to create new jobs," Himes wrote in an email Thursday evening.
Loss in savings
At least for the near future, riders will have to reckon with that. For public transit commuters here, that could add up to hundreds of dollars of lost savings over the course of a full year.
For example, if you're in the 40-percent combined federal and state tax bracket, you could save about $624 over the coming year if you maximize the new tax-break situation ($130 per month, over 12 months, times the 40 percent rate).
That is down from a possible savings of $1,176 a year under the current framework -- or a total lost savings, year over year, of $552.
Considering other price jumps, that can be a rather large burden for commuters shuttling between Connecticut and New York, said Jim Cameron, a Darien resident and former chairman of the Connecticut Rail Commuter Council.
"You're looking at a monthly parking fee at the train station, a monthly train ticket, plus a subway MetroCard," he said. "Before you even hit the desk at work, you're out $300 to $450 dollars a month."