Do Tax Breaks Encourage Driving Over Transit?
Winter 2015. Commuter A nips out of her garage in the suburbs, turns onto I-88 and then crawls along the tollway and the Eisenhower Expressway, eventually arriving at work in the Loop where parking costs about $290 a month.
Commuter B drives to her local Metra station, parks, then hops on the UP West Line into Chicago. Her monthly pass and local parking is about $245.
Conventional wisdom holds that Commuter B is doing the right thing taking public transit, reducing pollution and traffic.
But while Commuter B gets a $130 tax credit toward her fare, Commuter A, who drives to work, receives a $250 credit for parking costs.
Given that gas prices are low and Metra fares will rise in 2015, that's a recipe for increased cars and gridlock, some local congressmen think.
"You don't want different incentives for driving versus taking mass transit," said Congressman Bill Foster, a Naperville Democrat.
"It clearly is a problem if you're discouraging people to take public transportation and encouraging them to drive," Democratic congressman Dan Lipinski of Western Springs said.
And, if you thought this was just an issue for Democrats, Republican congressman Randy Hultgren of Winfield, whose district includes thousands of Metra and Pace commuters, said, "it doesn't make sense (giving) half the benefit to people taking the train."
In 2013, tax credits for the two modes of travel were at par but congressional dysfunction cut the transit credit in half, lawmakers said.
Last week, the House of Representatives voted to extend a package of tax breaks. In an only-those-inside-the-Beltway-can-understand maneuver, lawmakers retroactively increased the transit benefit to $245.
But for 2015, amounts still remain at $130 and $250.
"It's a mess," Lipinski said.
Next year, Foster plans to reintroduce a bill seeking to make the transit tax benefit permanent, indexed to inflation and equal to the parking credit.
Hultgren intends to "do a better job of explaining this," he said. "It may not sound like a lot of money, but it impacts families."
I asked congressman Peter Roskam, who sits on the powerful Ways and Means Committee that authors the tax extender bill, for a comment, but he's been elusive on this one. The Senate is expected to vote on the tax extension package this week. Sen. Dick Durbin said he backs making the tax credit permanent and equal with parking.
Meanwhile, Pace CEO T.J. Ross offers a different perspective.
"Illinois is a 'donor state' that sends more money to Washington in taxes than we receive in federal spending," he said. "The pretax transit benefits program helps to level that playing field, reduces the taxable income for workers and businesses, and encourages the use of transit."
"The parking subsidy actually creates congestion," Metra Director John Plante of Wilmette said. "If you did it the other way, you'd have a lot more people on public transportation and have less congestion."
For more on transit tax relief, check out the RTA's website, mytransitbenefit.com/index.php/employees/benefits.html.
You should know
How did I come up with the comparisons? Commuter A's monthly rate is based on Colliers' annual study of parking fees. Commuter B's costs were calculated using a trip from Geneva to downtown paying Metra's new rates in 2015 plus an average of $30 a month for parking in the 'burbs.
Taxes and transit
Although about one-third of American workers get government tax credits for parking, just 2 percent receive tax benefits for taking public transit, a November study by TransitCenter and the Frontier Group states. The benefit also adds about 820,000 cars a year to highways and roads.
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