Home Asides For 2013, fiscal cliff measure ups federal transit benefits

For 2013, fiscal cliff measure ups federal transit benefits

by Benjamin Kabak

It garnered little coverage in the press during 2012, but for all of last year, the nation’s transit riders had been left stranded by Congress. A federal provision allowing for $230 a month in tax subsidies for transit riders had expired at the end of 2011, and when Congress failed to act early last year, the eligible amount slipped to $125. It was enough — barely — for New Yorkers to cover their monthly MetroCards, but those using the regional rail networks were left high and dry.

In passing the measure to avoid the fiscal cliff last night, Congress has upped the federal transit subsidy to $240 a month, Greater Greater Washington noted this morning. The measure is, unfortunately, temporary and will expire at the end of 2013 without further action. Still, it’s a welcome move.

“Even if House Republicans just went along somewhat reluctantly with a Senate deal yesterday,” David Alpert wrote at Greater Greater Washington, “in approving this extension, they were now able to give many American workers a tax cut along with helping our cities function more effectively and ending one small example of the many ways government ‘picks winners and losers’ among transportation modes.”

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Eric F January 2, 2013 - 3:49 pm

That’s a nice benefit for NY area commuters. There are many people paying $300 (and more!) each month for commuter train passes around here, with commuter parking fees and a metrocard on top. I’d expect that this will now be extended in perpetuity each December 31st at 11:59 pm like the rest of the tax code.

From a policy perspective, this is yet another silly complication in the tax code, and it further insulates riders from transit costs, reducing pressure to moor operations to reality-based practices. Now all taxpayers all over America get to pony up for the LIRR’s crazily inflated cost structure!

Quinn Raymond January 2, 2013 - 4:29 pm

Compared to how much more drivers are insulated from their costs?

Eric F January 2, 2013 - 4:55 pm

If people could buy their cars, car insurance, gasoline, maintenance, etc. on a pre-tax basis, the providers of those things would be similarly insulated from cost control, but that’s not how the tax code works, with electric cars and hybrids being partial exceptions due to applicable tax credits.

Bolwerk January 2, 2013 - 5:45 pm

IIRC, as of a few years ago anyway, they could deduct parking expenses the same as transit users could deduct transit usage. I presume the theory is that parking at work is a fairly normative workplace behavior, whereas using your personal vehicle isn’t itself a business expense because the vehicle likely (most probably, even) will be used for non-business activities (e.g., picking up kids at daycare or going shopping after work).

Likewise, you (or your employer?) could deduct mileage for business travel in your personal vehicle. Consequently, there is supposedly a slight gray area with home office use, where driving between home and work might become a business activity in the case of workers who telecommute.

Nathanael January 4, 2013 - 2:08 am

Back in the day, you could deduct all kinds of things, including credit card interest.

There was a big shift during the Reagan administration away from taxing NET income and towards taxing GROSS income. This was only for individuals, of course; corporations are still taxed on net income. I think this was one of the reasons individuals have suffered in the last 40 years.

Eric F January 4, 2013 - 9:11 am

If you really think that American individuals have been suffering for 40 years, you are probably way younger than 40.

Bolwerk January 4, 2013 - 2:38 pm

He’s right that Reagan’s more or less radically rejiggered the tax code. In fact, he more or less introduced a backdoor tax increase. Economists sometimes joke that he was an accidental Keynesian.

And, the last 30 years have hardly been great for “individuals” in the lower/working/lower-middle/middle-middle classes. Wages adjusted for inflation are down, jobs are harder to get, what jobs are available increasingly require onerous credentials (e.g., college) to attain, tuition is up, transportation is getting more expensive, and so on. Oh, and now we’re cutting the social safety net too.

The upper middle class and (especially) the wealthy have done quite well, however. If the only metrics that concern you are how well the 1‰, 1%, and 10% are doing, the answer is: pretty fabulous.

alen January 2, 2013 - 5:01 pm

they let the transit part expire but left the parking benefit in there so they were subsidizing parking

Chris January 2, 2013 - 5:05 pm

Sadly this bill just equalizes the transit tax benefit with the one available for drivers to pay for parking. i.e., it’s basically a mode-insensitive subsidy for people to move around more. And of course, it’s regressive as a matter of social policy.

Eric F January 2, 2013 - 5:30 pm

Transit commuters in the suburban hinterland often use both of these benefits because they often have to park in pay lots. If your premise is that it’s screwy policy to have the parking benny at $240 but the transit benny at $125, I agree, they may as well equalize the insanity.

I’m not quite sure how this is regressive. It’s a cupcake aimed straight at the sweet tooth of the middle class commuter. A lot of people use “regressive” to mean “not handing over money to the poorest of the poor”. It fits that definition, but it’s not “regressive” by any standard meaning. This is yet another that fulfills the goals of people who love the current tax system. The air is darkened by streams of dollars flying around from taxpayer to taxpayer, and everyone smirks to themselves that as high as rates are, they are getting a special deal, so it’s all good.

Bolwerk January 2, 2013 - 5:31 pm

You’re being silly. LIRR riders are already ponying up for taxpayers all over America‘s already less efficient/more expensive infrastructure. If taxpayers all over America deserve to deduct the expense of using an automobile, LIRR riders should definitely be allowed to deduct a less impactful train trip.

Commuting is something almost every single person has to do. I won’t go so far as to say I think people should get deductions for it, because I personally think it encourages irresponsible behavior. But, if we as a society chose to allow such deductions, it’s hardly a “silly complication.” Unless a little subtraction is too hard for you?

Eric F January 3, 2013 - 8:30 am

There is no deduction for “the expense of using an automobile”. There is an above the line deduction for parking. That’s all. If you actually thought about it, this would be something the density-lovers would like. Parking in a pay lot is a very urban thing to have to do. Guys parking at the Caterpillar plant lot in Peoria aren’t paying to do so, but people parking in a pey per use lot in downtown Hartford are.

Bolwerk January 3, 2013 - 12:46 pm

The parking deduction is the same as the transit deduction, right? Just going by the sheer magnitude of drivers over transit users, drivers are probably reaping most of the benefit here. It doesn’t even cover the full cost of something like LIRR, a probable multimodal trip including expensive parking and then training it in.

Also, when parking is “free,” you’re paying for it. At least if you’re not part of the 47%.

VLM January 3, 2013 - 12:48 pm

Parking in a pay lot is a very urban thing to have to do. Guys parking at the Caterpillar plant lot in Peoria aren’t paying to do so, but people parking in a pey per use lot in downtown Hartford are.

In an ideal wold, a “very urban thing to do” does not involve driving into a central business district. Period.

Eric F January 3, 2013 - 1:26 pm

So you’d disperse jobs among far flung office parks and away from city centers?

VLM January 3, 2013 - 1:30 pm

Clearly not. You provide enough transit coverage and frequent service to obviate the need for cars. It seems to work in New York and Chicago fairly well but not well enough. A Hartford or Peoria would benefit greatly from even a marginal increase in transit services. A garage in a CBD is a complete dead space that simply contributes to congestion and pollution.

Of course, I’m talking ideals, and that’s not reality right now.

Eric F January 3, 2013 - 2:05 pm

Your description of Chicago is way off. Most people who work in Chicago drive to work. Manhattan is a special case not easily replicable anywhere else.

The congestion of a CBD is addressable, and some places address it just fine. Most places are in thrall to your co-idealists and impose congestion by design, but it doesn’t have to be that way.

I like trains, but i like cars too. The amount of activities a car has enables me to do would make a person born 100 years ago fall over with envy. You should get one.

Nathanael January 4, 2013 - 2:07 am

The sheer importance of the CTA and Metra to Chicago’s economy means that even if by some weird definition “most people who work in Chicago drive to work”, the Loop depends on rail travel to survive.

Bolwerk January 3, 2013 - 2:21 pm

I don’t see jobs being in city centers as a useful end in itself. Jobs should be near where people live, which is easier in city centers and towns than exurbs. And with modern technology, people often don’t leave their homes to work – which at some level seems to be freeing up traditional downtown office/industrial spaces for residential use.

Eric F January 3, 2013 - 3:05 pm

Jobs change. People cohabitate with each cohabitator working in a different place. Life doesn’t always lend itself to structuring everything around an eight block commute.

Those millions of people commuting every day are well aware that they can live closer to work. It’s not a secret known only to people reading this blog.

alen January 3, 2013 - 3:08 pm

except a lot of people aren’t dumb enough to sell a house they OWN with equity in it and dump $3000 or so in rent down the toilet just to live in manhattan

VLM January 3, 2013 - 3:09 pm

How does a blog with a clear agenda/bent/viewpoint attract so many anti-transit/anti-sustainability/anti-urbanist trolls?

Eric F January 3, 2013 - 3:12 pm

Shhhh! On this blog the world is generally divided between (A) happy, well-adjusted people who live in large ant colony style boxes in Manhattan, pay $8 for a head of wilted lettuce and hear a honking horn when they open their window and (B) those who live lives of quiet desperation in detached single family houses with a bird feeder perched on the back lawn.

Eric F January 3, 2013 - 3:14 pm

VLM, you can be pro trains and pro lanes. Some people are inherently interested in matters of transport and mobility without trying to use transport as sub silentio social engineering.

Bolwerk January 3, 2013 - 3:30 pm

There is no reason to rigidly enforce an 8-block commute limit. But that misses the point, because the problem of “social engineering” you mention is in the opposite direction: we’ve engineered people into into roadway-dependent commutes over needlessly absurd distances. Someone who constantly complains about transit users getting a free lunch over small tax breaks and operational subsidies can’t ignore that without being a bit disingenuous.

Eric F January 3, 2013 - 3:38 pm

Ah, that “truthy” car subsidy fallacy. Keep trying that one.

“Someone who constantly complains about transit users getting a free lunch over small tax breaks and operational subsidies…”

Seriously? My bias is that everyone should pay full freight. But come on, the MTA gets enormous subsidies. They get a piece of every transaction in New York, tax revenue sluices in from myriad sources and . . . they are a “non-profit”! They pay no taxes of any kind including no property taxes on the most valuable real estate on the planet while every tin pot used car dealership on Queen Boulevard pays more in taxes in a year than the MTA has in its entire existence. Truthy.

Bolwerk January 3, 2013 - 4:50 pm

Truthy? Are you saying the U.S. government is lying when it publishes figures explicitly demonstrating that drivers don’t pay much more than half the costs of their usage? You seem to run away when that question is posed.

I know the MTA gets massive subsidies. I don’t pretend it doesn’t. But, if you’re so offended by the MTA’s “enormous” subsidies, why do you bend over backward to deny the massive subsidies roadways get? That’s a pretty glaring double standard.

And, really, since when do roadways pay property taxes? You aren’t going to win a dick measuring contest on that one either. A lane of highway capable of carrying literally an order of magnitude fewer people requires significantly more land to be taken off the property tax rolls than a track.

Nathanael January 4, 2013 - 2:05 am

Eric F. ran away again. Can’t face facts I guess.

I’d be OK with a system where everyone pays full freight — where all the roads are tolled — but it would lead to a lot less travel and much more expensive goods (trucks cause most road damage)

In the alternative, I’d be OK with equitable subsidies for roads and rail.

Eric F January 4, 2013 - 9:15 am

I wish I could face facts, but they scare me! True that the gov’t run road network also doesn’t pay taxes to itself. One of the reasons that many private rail carriers faced bankruptcy in the 60s and 70s was the cost of every municipality’s property tax bill on their RoWs during a time when traffic was falling. True fact.

Bolwerk January 4, 2013 - 2:53 pm

@Nathanael: ironically, Eric doesn’t realize how much I agree with some of his principles. I just take them to their logical conclusion. Let’s see a world where we’re even allowed to share, say, a municipal light rail network with freight railroads. Or where passenger cars are expected to perform as well financially as MNRR, much less NYCTA. Or even where Eric’s suburban electric bill is higher than mine because he lives in a more remote location that is more expensive to serve.

And, Eric is right: freight railroads were taxed heavily to pay for the highways he extolls. It’s partly why we have a third world freight network today. (Now duck!)

11th hour Fiscal Deal restores transit tax benefit for suburban riders | Sic Transit Philadelphia January 2, 2013 - 6:00 pm

[…] noted already by David Alpert and Ben Kabak, the agreement passed yesterday to avert the so-called “fiscal cliff” restores a tax […]

Janice January 2, 2013 - 6:28 pm

I heard through our transit benefit provider that it was passed retroactively to Jan 1, 2012. Not sure how that is going to work out yet.
Also, it is a regressive policy int he sense that you receive the benefit through your provider, therefore you need a good employer to receive the benefit. Someone working at a low-end, low-wage job probably won’t get the benefit.

Nathanael January 2, 2013 - 8:38 pm

Transit commuter benefit: temporary.
Earned Income Tax Credit: temporary.
Unemployment Insurance Extension: temporary.

Estate tax breaks for billionaires, worth billions to their kids: PERMANENT.

This deal was a shit sandwich. It handed the Koch Brothers and the other crooked 0.1%ers the one thing they actually care about: a 15% cut in the estate tax from 55% to 40%.

In exchange, we got practically nothing permanent. (The AMT fix was permanent, so there’s that, but that affects only the richest 10%, roughly.)

Does anyone in Congress give a damn about the 99%? Well, I guess Tom Harkin (IA) and Michael Bennet (CO).

Bolwerk January 2, 2013 - 10:02 pm

Yeah. Even when these infantile cons lose, they win. Well, goonish cons are now crowing that 1‰ may never have to pay high taxes on unearned income.

Eric F January 3, 2013 - 8:28 am

Who are the “Koch Brothers” and how did they get Obama to lower the estate tax?

Bolwerk January 3, 2013 - 12:47 pm

Obama didn’t lower the estate tax, and has no power to unilaterally do so. Congress did.

And do you really not know who the Koch Brothers are?

Eric F January 3, 2013 - 1:28 pm

Obama signed a deal he negotiated with the Senate. The tax changes are certainly Obama’s in exactly the same way that the (formerly awful, now mostly very good) “Bush” tax cuts were Bush’s.

I’ve heard the name, but I don’t have a strong understanding of who they are or how they got Obama to make them do something with the estate tax. I’m guessing from context that you don’t like them. Are they friends of Obama?

Bolwerk January 3, 2013 - 2:38 pm

I think the way everyone blames the President for the budget soooooo misses the point. Boehner and Reid have more power over the icky details, and the president can (officially, anyway) only sign off on it. And despite all the posturing, we all knew whatever passed the House and Senate was going to get signed.

The Koch Brothers are heirs to a conglomeration of what I guess could be best described as petrochemical interests, though you’re probably more familiar with brands like DixieCup. Charles and David Koch are (in?)famous for sprinkling money on the Tea Party, though they also finance thinktanks and Super PACs, which in turn do influence congresscritters.

Eric F January 3, 2013 - 3:08 pm

My understanding is that the House was irrelevant. The Big O negotiated with the Senate, and that was that.

Ok, so they’re like Soros or Gefen, only they actually produce products people use rather than run hedge funds and manipulate currencies or make movies. But they are on the right side of things so they are bad. Seems like a weird thing to focus on as the source of policy enacted by O.

Bolwerk January 3, 2013 - 7:47 pm

You think the House just rubber stamped whatever the Senate wanted? That’d be weird, given our present political state. The House can’t be irrelevant when revenue bills are being proposed. A revenue bill has to originate in the House, per the U.S. constitution (Article 1, Section 7). Also, the Dems don’t have a filibuster-proof majority in the Senate, so they pretty well must please at least a handful of the opposition.

No idea about (loopier?) Geffen, but I really have trouble seeing where people like Soros or Buffet aren’t rather rightist – conservative, even, in the most classic sense. And, no, none of those people make anything. They’re pretty much all professional capitalists.

Nathanael January 4, 2013 - 2:02 am

The Senate is a multimillionaires club. But what’s worse, it seems to be really easier for billionaires to buy Senators.

Soros is known for using his unearned wealth to fund all of the universities, museums, science and art institutions in Eastern Europe after the USSR collapsed.

The Koch Brothers are known for using their wealth to promote cruel political policies which make poor people suffer.

Either way, people shouldn’t be inheriting huge amounts of money. Andrew Carnegie agreed.

Nathanael January 4, 2013 - 2:03 am

Incidentally, Soros made his money by betting against currencies.

The Koch Brothers INHERITED their money. Their dad was the one who actually developed all the petrochemical companies.

Eric F January 4, 2013 - 9:18 am

“cruel political policies which make poor people suffer”

Good gracious. The world has two sets of people, those who agree with every idiosyncratic view that Nathaniel holds at any given time, and those who are cruel to the poor. What other possible motivation could there be for disagreeing with Nathaniel?

Bolwerk January 4, 2013 - 3:01 pm

The Koches fund a lot of NYC-area cultural stuff, actually. I get the impression it’s more for the pleasure of the carriage-through-the-park crowd than out of any particular concern for the poor, however. Soros, on the other hand, prefers to keep the rabble quiet. Throw them enough table scraps and they won’t lead a violent plebeian revolution to overthrow capitalism. Bismarck, one of the founders of conservative ideology, understood this well (it’s why Germany had one of the earlier examples of an effective healthcare system).

Honestly, their motivations probably aren’t that different. Like many people, Soros prefers Democrats to Republikans because Democrats are simply more practical and realistic – and probably easier to cow into dong what you want.

Someone January 2, 2013 - 8:56 pm

And why is this temporary, again?

Nathanael January 4, 2013 - 2:00 am

So that it can be held hostage for further cuts in the estate tax. Paris Hilton needs a larger inheritance, y’know.


Eric F January 4, 2013 - 9:19 am

Paris Hilton’s parents are alive, her riches were attained inter vivos.

Andrew January 2, 2013 - 9:22 pm

This is of great benefit to commuter rail and express bus riders but of no benefit to most city-dwelling subway or bus riders.

If the idea is to promote transit use, it should also be valid toward rent payments in transit-rich urban settings, where the cost of riding transit is typically low but housing costs tend to be high.

Bolwerk January 2, 2013 - 9:45 pm

Shh. Someone will pipe up that American taxpayers will be paying the costs of rent then. (Even though homeowners get a mortgage interest deduction.)

Matthias January 4, 2013 - 11:21 am

Hear, hear. We should at least be able to deduct the part of our rent that goes toward property taxes.


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