People who rely on transit to get to work could be paying hundreds of dollars more in taxes every year unless Congress takes action during the current “lame duck” session, stepping in before a key commuter benefit provision expires on January 1, 2011.
Currently, commuters can receive a payroll tax deduction of up to $230/month to cover the cost of bus and train passes, with a similar deduction available for parking. But on January 1 the transit deduction will be cut to $120/month — even though the driving benefit will remain $230. This was the status quo until last year, when Congress corrected this disparity as part of the economic stimulus package. The fix, however, was temporary.
There are two ways federal lawmakers could shield transit riders. The most likely path, Washington observers suggest, is that an extension of the benefit could be inserted into related legislation, such as a rumored compromise on the Bush-era income tax cuts. Longer-term, the Commuter Benefits Equity Act (S. 322/H.R. 891) would permanently equalize the transit and driving benefits. The bill is sponsored by Sen. Schumer with 15 co-sponsors including Sens. Dodd, Lieberman, Menendez, Lautenberg, and Gillibrand.
The “transit tax hike” would affect anyone who receives the transit benefit and pays more than $120/month in commuting costs, including (prices reflect the MTA’s January 2011 fare increase):
- Commuter rail riders from the NY suburbs, New Jersey, and Connecticut. A monthly LIRR pass between Hempstead and NYC costs $223 per month; an NJ Transit pass between Montclair and NYC, $208; a Metro-North pass between New Haven and NYC, $394.
- Express bus riders in NYC and commuter bus riders elsewhere. A 7-Day Express Bus MetroCard costs $50, meaning outer-borough residents who take express buses to work pay over $200 a month. Most NJ Transit buses traveling into NYC cost at least $136/month.
- Those riding on multiple transit services, such as a Jersey City resident who buys a 40-trip PATH SmartCard for $52 and a $104 monthly MetroCard.
Research by TransitCenter, a nonprofit which administers the transit benefit in our region, suggests transit ridership could fall by 9% among benefit users. Writing in the Connecticut Post last week, TSTC federal advocate Ya-Ting Liu warned against going back to a status quo where workers get a bigger tax break for driving. “The disparity between the two benefits pushes people away from transit, squeezes the pocketbooks of those who keep taking transit and encourages people to drive to work even if they have viable transit options,” she wrote.
Today, the NY Daily News editorial board called on Congress to help “working stiffs… about to get whacked with a tax hike.” Time is short. You can ask federal lawmakers to act at www.tstc.org/notransittax.