Thursday, October 25, 2007

Parking, commuting and tax incentives

I was going through the Blogburst leaderboard and saw Don't Mess with Taxes and they had an interesting little explanation of a program that my employer offers and I take advantage of to pay for my monthly bus pass:

Transportation Reimbursement Incentive Programs (TRIP) can help you save tax dollars based on the cost of your daily commute. This essentially is an FSA for some commuting costs. Your pretax payroll deductions go into a TRIP account from which you are reimbursed to pay for transit passes or, in some cases, qualified parking expenses.

The monthly maximum you can contribute for mass transit (buses, trains, els, subways, etc.) is $105. The monthly maximum for parking-related expenses is $200. [emphasis mine]


This tax benefit buys me an extra lunch or two a month. For me it is a stupid benefit as it is not changing my behavior. I would still be taking the bus into work every morning even if I was not gaining a tax advantage as the bus stops within 50 meters of my house, drops me off three blocks from the office, and is reliably faster than sitting in traffic.

However the mixture seems a bit off to me on the disparity between the public transit versus the parking deduction limits. If one has a goal of reducing congestion, making it cheaper to drive into town does not do a whole lot towards that goal. If the goal is to reduce gas usage and carbon dioxide emissions, it is a bit trickier as the subsidy could be argued as a conservation measure if it means more people are willing to work in a dense central business district instead of in free parking suburbia where more driving is needed by most employees to get to the office.

On first glance, if I was a Congress critter, my idea would be to equalize the two benefits by dollar amount with the objective of being revenue neutral, so a slight bump up in the transit limit and a significant decrease in the parking limit with the idea of making the marginal incentive to drive alone into the central city slightly less attractive.

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