Why Again Are We Subsidizing People to Commute by Car?

Photograph by Jon Hicks/Corbis

OK, let’s go over this. Your morning commute is hellish, and your trip home is worse. And the federal government is making matters worse by subsidizing people to drive to work? Is this maybe a little crazy?

A new report says so. “Subsidizing Congestion: The Multibillion-Dollar Subsidy That’s Making Your Commute Worse” says that the federal tax benefit for commuter parking puts “roughly 820,000 more cars on America’s most congested roads in its most congested cities at the most congested times of day.” The report is sponsored by TransitCenter, a philanthropy that supports public transportation, and Frontier Group, a think tank on the environment and other issues.

The parking tax break, the report says, “delivers the greatest benefits to those who need them least, typically upper-income Americans, and costs $7.3 billion in reduced tax revenue that must be made up through cuts in government programs, a higher deficit, or increases in taxes on other Americans.” If you live in a part of the country with open roads and free employee parking, the tax benefit does you no good. It’s valuable to commuters precisely where it causes the most harm: cities such as New York and Los Angeles with lots of congestion and expensive parking.

This isn’t a new problem. In 1984, Congress exempted employer-paid and employer-provided parking from taxable income, even though other fringe benefits are taxed. There’s also a tax benefit for people who take public transportation, but it’s smaller: up to $130 a month vs. up to $250 a month for the parking benefit. The transit benefit makes more sense because it gets cars off the road, while the parking benefit puts more cars on the road.

You’d think a law with such negative consequences would have gotten more attention from Congress. One reason it hasn’t, the report notes, is that it doesn’t show up on the spending side of the budget. “Like many tax expenditures, commuter tax benefits are not subject to regular and detailed evaluation, as they do not require annual authorization by Congress.”

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