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|ECFC Issue: Commuting Benefits|
Tax Treatment important for commuter benefits
As efforts to reform the tax code move forward, Congress should preserve the tax treatment of commuter benefits. The Protecting Americans from Tax Hikes (PATH) Act of 2015 permanently established parity between employer-provided parking and mass transit benefits. For more than 25 years, Congress has provided employers the opportunity to offer their employees, either tax-free subsidies or on salary reduction basis, commuting expenses, including mass transit, van pools, and commuter parking. This allows employers to help their workforce get to the workplace by the most efficient manner possible, enhancing productivity and helping relieve one of the major costs associated with working.
This middle-class benefit helps working Americans cover what is often their second largest household expense – transportation, particularly transportation related to work. Eliminating or decreasing the tax advantages of commuter benefits effectively raises taxes on millions of middle class working families who are accustomed to budgeting for this important benefit that helps them meet the rising costs of commuting. Suburban families who commute into cities have the highest commuting costs.
Energy and Environmentally Friendly
When considering the cost to government of continuing the current commuter benefit, the Committee should consider other savings to the government outside of the tax code by incentivizing employees to use public transit. A study conducted by the non-profit Transit Center found that when commuter benefits are offered in the workplace, 18 percent of employees alter their commuting from single occupancy vehicles to public transit – a significant modal shift. The transit benefit saves the government money by reducing the need for federal spending on roads, bridges, and the accompanying infrastructure – increasing transit ridership means that less people will be driving and less federal funding is needed to repair, replace, and expand our nation’s vital roadways. Increased utilization of mass transit also reduces road congestion, vehicle emissions, and dependence on foreign sources of energy. When commuters use the nation’s mass transit system it helps support self-reliance on the part of mass transit systems which otherwise must rely on government subsidies.