Friday, 09 December 2011 00:00
Congressional inaction extends these days to small matters, as well as major ones.
Those who use mass transit, and take advantage of a lesser-known provision of 2009’s American Recovery and Reinvestment Act, could lose a benefit effective Dec, 31, 2011, that allows commuter rail and subway users, along with bus and vanpool riders, to allocate up to $230 a month for their mass transit expenses using pretax dollars. Drivers can also access the Internal Revenue Service (IRS)-approved benefit, using $230 in pretax dollars toward their parking costs.
Until 2009, commuters who drove to work received a greater tax break than those who took mass transit because rail and bus users could set aside no more than $120 in pretax dollars for commuting expenses (e.g., a MetroCard) whereas drivers were eligible to use up to $230 a month in tax-free income for parking. Was that good public policy in parts of the U.S. where traffic jams are commonplace and mass transit is readily available?
In a strange turn of events, the monthly tax-free maximum limit for drivers who want to pay for their parking expenses via pre-tax dollars is rising to $240 from $230, effective Jan. 1, 2012. Meanwhile, mass transit users will see their tax-free maximum benefit drop next month to $125 from $230 a month, if Congress does not extend the 2009 law’s parity provision.
The $230 in tax-free dollars is withheld by a commuter’s employer from their gross income, and is subject to neither federal nor New York state tax. These monies are then converted into vouchers, which can be used to pay for either mass transit or parking. Many of New York City’s participating employers have the nonprofit TransitCenter administer their commuter benefits program. They disburse TransitCheks to a company’s mass transit users and TransitChek Parking Cards to employees who drive to work and pay for parking using tax-free dollars.
U.S. Senator Charles Schumer’s Commuter Benefits Equity Act of 2011 (Senate Bill 1034) would, if enacted, link the mass transit benefit to the maximum rate being offered to drivers, increasing it to $240 monthly, tax-free dollars in 2012. There is a companion piece of legislation in the U.S. House of Representatives (House Resolution 2412).
“Increasing fares and decreasing incomes mean we need to help stretch every dollar earned by New Yorkers and that includes keeping programs that reduce commuting costs in place. We cannot afford to let this expire,” Senator Schumer stated, at a recent press conference on this issue.
Yes, let’s talk about higher mass transit fares. A Long Island Rail Road commuter in western Nassau (zone 4) paid $135 for a monthly ticket into the city in early 2003. That same ticket costs $223 in late 2011, an astonishing 65 percent increase over an eight-year period. New York City subway riders were slammed with a 50 percent rate hike within this same timeframe. In early 2003, a round-trip subway trip was $3, a dollar amount equal to $60 a month. Those numbers stand in 2011 at $4.50, and $90, respectively.
To top it all off, the higher fares were accompanied by service reductions and the imposition of a new mass transit payroll tax.
Mike Barry, a corporate communications consultant, has worked in government and journalism. Email: MFBARRY@optonline.net