Senator Charles Schumer, a New York Democrat, will seek to attach commuter tax benefits to legislation that would extend the U.S. payroll tax cut.
Last year, workers were able to set aside $230 each month before taxes to cover the cost of their commutes. Since that measure expired Dec. 31, the benefit has been capped at $125 a month. Schumer would permanently set the benefit at $230 and apply it retroactively to Jan. 1.
The commuter benefit was part of a broader package of tax breaks that expired at the end of 2011. Congress has a history of renewing the breaks retroactively, and the payroll package may be one of the few pieces of legislation this year to which such a measure could be attached.
“The last thing we should be doing in this economy is making it more expensive to get to work,” Schumer said in a statement. “This mass transit tax benefit fits the theme of a middle-class tax break and should be extended as part of the payroll tax cut. It’s simply not fair to squeeze the middle class with a more expensive commute.”
Companies benefit from the transit break because they don’t have to pay their share of payroll taxes on the amounts set aside. It may be difficult for Congress to single out the commuter benefit after dozens of other tax breaks also expired at year’s end, including credits for renewable energy, manufacturers and companies that hire welfare recipients.
Public transportation agencies have fought the decrease in benefits. The Washington Metropolitan Area Transit Authority put signs last month in its subway stations near the U.S. Capitol reminding commuters that the benefit was expiring. The signs were still in place today.
Workers can currently set aside $240 before taxes to pay for certain parking expenses. Rob Healy, the vice president for the American Public Transportation Association, a Washington trade group, said reviving the benefit would restore “parity between the transit and parking benefits.”
“APTA strongly believes that the federal tax code should not favor one mode of transportation and is advocating that parity be restored in the payroll tax bill,” he said in a statement.