Peeling back the stinky onion of the tax code: Enough to make you cry.
A portion of the federal commuter tax benefit will expire January 1, which upsets a number of people on the grounds that the change hoses transit riders and benefits drivers. As someone who qualifies for no benefit at all because I work at home, my reaction to the partial wind-down of this special-interest benefit is, “Stop your blubbering. Get over it.” But there are multiple layers of stupidity at work here, which goes a long way to explaining in microcosm why country is such a mess, so the story warrants some elaboration.
The first layer of stupidity is the existence of a commuter tax benefit of any kind. With the federal government still running an annual budget deficit of “only” half a trillion dollars, Congress needs to stop handing out tax incentives like trick-or-treat candy. The tax break allows employees to devote up to $245 per month of their pre-tax income to commuting costs, including transit passes, van pool expenses and parking, and up to $20 per month for bicycles. The tax expenditure, by my back-of-the-envelope calculation, could cost a couple billion dollars a year in tax revenue.
Peeling back the onion of stupidity, another issue arises. If Congress’ intent is to help the working stiff by reducing the tax burden, there is an obvious alternative — lower overall tax rates. Why the compunction to subsidize commuting? The measure does not benefit all Americans, just those who rack up big commuting expenses. Conversely, it discriminates against workers who engage in the socially beneficial alternatives of walking to work or working at home.
Delving deeper into the stinky onion of tax policy, we encounter the matter that has inflamed the environmentalists. A quirk in the latest iteration of the benefit, courtesy of that legislative train wreck known as the 2009 federal stimulus package, expires the tax benefit for transit riders at the end of every year. This year, it seems that Congress never got around to renewing the subsidy, so the benefit for transit rider drops to a mere $130 a month. Meanwhile, the tax break for parking inches up $5 to to $250 per month.
Why should drivers get a $250 parking subsidy while transit riders eke by with a break only half as large? The discrepancy encourages people to drive to work rather than ride the bus or train, hardly the way to advance the goals of reducing congestion, gasoline consumption, pollution and CO2 emissions. I don’t always agree with the environmentalists, but this time they’ve got a point.
The obvious solution is to eliminate the tax break entirely. Congress has no business privileging cars over buses, or vice versa. In one stroke, the nation could take a step toward both fiscal and environmental sustainability.
— JAB
