Whenever the MTA raises fares — a biennial occurrence for the foreseeable future these days — the price increases if often called a regressive tax. While the fare hikes are generally applied across the board, these increases have a larger negative impact on those from lower economic classes as it takes out a larger percentage of their incomes. If public transit is supposed to equalize the way we New Yorkers get around the city and access job centers, schools and everything else the city has to offer, constant fare hikes should, at a certain level, be a policy concern.
Lately, as the MTA has been forced to balance its budget on the backs of its riders (rather than, say, through some sort of congestion pricing or tolling plan), anti-poverty advocates have focused on transit fares as a point of concern. A few weeks ago, the Community Service Society of New York in conjunction with the Riders Alliance released a report [pdf] with some sobering numbers. Approximately 1 in 4 New Yorkers simply cannot afford to pay transit fares and thus are very limited in their potential job searches. Meanwhile, low-income New Yorkers who are more heavily reliant on transit than their richer neighbors spend a disproportionately higher percentage of their incomes on transit.
The study traces how certain transit benefits programs aren’t set up properly. While the MTA’s fare structure is set up to reward frequent travelers, only 18 percent of low-income riders are buying 30-day Metrocards, mostly because they cannot afford the initial outlay of $116.50. So they end up paying more over the course of the month — either through weekly purchases of the 7-day card (which adds up to a pro-rated $132.86 over 30 days) or through pay-per-ride cards. Additionally, tax breaks for transit usage often do not reach low-income riders. Here’s how the report puts it:
While the tax deduction for monthly MetroCard passes can save higher-income New York City families over $600 per year, the deduction is worth less to lower-income families who face lower tax rates. In fact, some families with lower earnings who are eligible for the Earned Income Tax Credit (EITC) would actually be worse off if they were to enroll in commuter benefits.
The pre-tax commuter parking benefit also yields higher tax savings to relatively more affluent suburban commuters who claim both the transit and parking allowance (e.g., those who drive to a commuter rail station). Most of the neediest commuters, however, do not own cars and benefit from the parking deduction; they are also more likely to live in New York City and rely on the MTA, allowing them to claim less than half of the $255 transit allowance for monthly MetroCard expenses. The pre-tax commuter benefits program offers considerable savings to many middle- and upper-income commuters. The cost to the state of New York of a tax subsidy such as this is the forgone state and city income tax revenues. Between the commuter benefit tax subsidy, half-price MetroCards for the disabled and elderly, and discounted monthly passes that are not affordable to low-income families, substantial public resources are being used to subsidize transit fares without reaching the majority of low-income families.
An estimated 800,000 riders would be eligible for a half-price fare for poor New Yorkers, saving those who opt to participate up to $700 per year.
The solution, the group argues, is a half-fare discount plan, such as those currently available for seniors or students, targeted at poor New Yorkers. The CSS argues that those eligible number around 800,000, and they would save approximately $700 a year in transit costs. The CSS estimates similar eligibility and participation rates as food stamps and believes the program would cost approximately $194 million in lost farebox revenue. It is worth noting as well that other cities, including Seattle, San Francisco and London, have already embraced some form of discount fares for low-income riders.
“Economic mobility and transit affordability go hand in hand. To get to work, pick up your kids from school, go to the doctor, to do almost everything you need to do in New York City to survive requires riding the subway or bus, “ David R. Jones, President and CEO of the Community Service Society, said in a statement. “Yet one-quarter of the city’s working poor often cannot afford bus and subway fare. The MTA should be available to everyone in our city, not just those with credit cards in their pocket who can afford a monthly pass, but to those with a few bucks in their pockets who are struggling to take care of their families and get ahead.”
The supporters of the plan haven’t pitched this is an idea the MTA should drive; it is, after all, something that will have to be made available to transit riders with a corresponding increase in MTA funding to offset the potential lost revenue. But so far, over two-thirds of New Yorkers surveyed have expressed some level of support for low-income fare subsidies. How the city and state could pay for this program is up for debate. The CSS argues for a share of some fare tolling/congestion pricing revenue, but everyone will have their hands in the pot. A surcharge on taxis, including Uber and Lyft rides, is mentioned in the report as are gas tax hikes, a so-called “millionaires” tax or direct budgetary contributions. It certainly warrants a robust public discussion. In our current climate, with lackluster support from transit from both Albany and City Hall, can this become an argument over economic fairness and livability in New York City in 2016? It should be.