Restore transit-tax credit
A straphanger swipes his Metrocard at the 34th Street subway station in Manhattan (July 23, 2007) Credit: AP
In a perfect world the transit-tax benefit, which allows those who commute to work to pay their travel expenses with pretax money, wouldn't exist at all. It's a great example of a tax credit for one group of people that basically forces all other American taxpayers to subsidize them. But rather than seeing the benefit eliminated, what we've been given as of Jan. 1 is about the worst scenario possible: A tax code that rewards people for commuting in their cars and punishes them for making the same trip via mass transit.
Since 2009, as part of the federal stimulus package, employers have been authorized to let commuters set aside up to $230 per month tax-free for mass transit expenses. That's the same amount allotted to those who commute by car for parking, a tax credit that predates the stimulus.
But in late December, as Congress focused first on the payroll tax cut and unemployment extensions, then on scurrying out of town, it failed to extend the transit-tax credit at its current level. If members don't take action when they return, the tax-free set-aside for parking will rise to $240 per month, while the maximum for mass transit will sink to $125.
Our tax code is riddled with these little loopholes, and every one of them functions as a tax increase on anyone who isn't eligible for them. Getting our tax code right means getting rid of all of them.
But until that time, structuring a law so that it encourages clogged highways, polluted skies and empty trains is foolish. As long as the tax code rewards any behavior, we'd rather see it reward prudent behavior.
