The Federal Commuter Tax Benefit puts private car travelers over those who take public transit as the subsidy favors drivers over transit riders.
While the benefit allows for employees to devote the majority of their income toward commuting costs, the subsidy has been much more beneficial to drivers rather than those who take public transit. As Emily Badger points out:
“In 2008, for example, transit riders were allowed to set aside $115 a month; car drivers (and their employers) could forgo paying taxes on up to $220 in income each month.”
The issue changed in 2009 when the federal stimulus package equalized the benefits for both public and private commuters. However, after January 1, the benefit will drop back to inequality as public commuters will see their benefits decrease while drivers will see theirs increase.
Although this issue may not affect those residing in rural communities, this will heavily influence commuters in heavily populated cities like San Francisco, New York City, and Chicago.
Congress did not extend the transit benefit in 2013 and has left this issue in the dust. While Congress may revisit the Federal Commuter Tax Benefit in 2014, the lengthy process of legislation could mean that it may be months before transit users see their benefits equal to those of commuters with their own personal vehicle.
Federal Commuter Tax Benefit Puts Drivers Over Public Commuters.