Accessibility

Public transit riders to see hefty tax boost this year

Posted on January 5, 2012

Due to Congressional inaction during last month’s tax deliberations, the new year ushered in a tax increase to public transit riders. Currently, commuters who use public transit, commuter buses and van pools may see their annual commuting costs increase by more than $550 based on a bias in the tax code that benefits driving over taking public transit. In addition, the failure to extend the benefit has resulted in a tax liability increase for companies offering the benefit.

Congress failed to pass the extension of the $230 level for the monthly transit commuter benefit before the Dec. 31, 2011 deadline. The transit benefit has now dropped to $125 per month per person while the parking benefit has increased to $240 per month.

“This drop in benefits will cause a dramatic increase in commuting costs for public transit riders,” said APTA President Michael Melaniphy. “At a time when Congress and the Administration have resisted revisiting gasoline taxes (user fees) to support much needed investments in our nation's transportation infrastructure, it is ironic that they are willing to effectively raise taxes on public transit users.

“Reducing the benefits for public transit riders at the same time that tax benefits are increased for auto usage is a significant divergence from this country's balanced approach to transportation,” added Melaniphy.

APTA officials say public transit riders should tell Congress to support the commuter transit benefit as they resume negotiations to finalize the middle class payroll tax cut before it expires at the end of February. In addition, for the long-term, riders should encourage Congress to support Rep. Jim McGovern’s (D-MA) legislation in the U.S. House of Representatives and U.S. Sen. Charles E. Schumer’s (D-NY) legislation on the Senate side to permanently extend parity for this benefit. To contact your representative http://capwiz.com/napta/home/

The following is an example of how this drop in benefits actually serves as a tax increase to public transit riders. A company with employees in the 28% tax bracket, with a state tax rate at 5% and FICA and Medicare at 7.65%, a $115 reduction taxed at 40.65% amounts to a $561 annual income tax increase for the individual commuter.

The other side of the equation is how it affects an employer’s tax liabilities. Employers will also see their tax liability increase if they are offering this program in their pre-tax benefits plan. Under the same scenario, a company that offers the benefit to 100 employeess will see its tax liability increase by $10,098. This is based on $1,320 per employee in reduced pre-tax withholdings annually taxed for FICA and Medicare at 7.65%.

“We will continue to seek to maintain parity between transit tax benefits and parking tax benefits to ensure that there is not a disincentive for taking public transit. It is sound policy to maintain both the transit and parking benefits at equal levels,” concluded Melaniphy. 

View comments or post a comment on this story. (0 Comments)

More News

Valley Metro, regional paratransit providers do away with transfers

Peoria's acting public works and utility director said for residents a trip that now take two hours to get into Phoenix will drop to about a half hour.

Translink CEO addresses fare gate accessibility concerns

Attendants are meant to be present at accessible transit stations at all times to help any passengers who are unable to physically tap their Compass cards at the gate themselves.

Md. MTA to purchase 147 new paratransit vehicles

The new vehicles will be distributed to the MTA’s three mobility vendors — First Transit, MV Transportation and TransDev — with all vehicles in service within the next three to four months.

Mass.'s PVTA finds remedy to save dial-a-ride services

Officials say using separate van fleets will improve the on-time performance for the paratransit trips with no changes in dial-a-ride service.

Md. County officials oppose D.C. Metro partnership with Uber, Lyft

In a letter to Metro GM Paul J.Wiedefeld, the council members said the app-based transportation companies have a history of not providing accessible service and Metro shouldn’t reward them with a contract.

See More News

Post a Comment

Post Comment

Comments (0)



More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment

TruckingInfo.com

THE COMMERCIAL TRUCK INDUSTRY’S MOST IN-DEPTH INFORMATION SOURCE

Work Truck Magazine

The number 1 resource for vocational truck fleets

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

LCT Magazine

Global Resource For Limousine and Bus Transportation

Please sign in or register to .    Close