Without the fix, commuters taking public transportation would see their tax benefit cut almost in half to $125, while those who drive and park will maintain the current $245 tax benefit.
"With rising gas prices and highly congested streets, we should be encouraging New Yorkers to use more public transportation, not push them back into their cars. Without parity, we create an incentive to drive and put an unfair financial burden on New York City's hard-working families and residents who rely daily on public transportation. It is only fair that the pre-tax benefit be made permanently equal, no matter how one commutes to work and that is why I have introduced the Transit Parity Act," said Rep. Grimm.
On Jan. 1, 2014, almost three million of America's commuters will face a tax increase unless something changes. Transportation is the second largest household expense for American families and currently Congress provides a tax credit to commuters to help account for parking and transit costs. However, without congressional action, on January 2, the cost for those who use the transit benefit will practically double. While the parking benefit will remain at $245 a year, the transit benefit will drop to $125, leaving families and commuters with up to $1,440 a year in additional tax burden.
Under existing federal law, employers can offer their employees an option of up to $245/month in pre-tax parking or transit benefits. This tax credit directly benefits American commuters and their families. Businesses have also enjoyed a tax break from this commuter benefit. In 2010, participating transit riders across the country saved their bosses about $300 million in payroll taxes.
In addition to increasing commuters taxes, if the transit benefit reverts to $125 while the parking benefits stays at $245, the federal tax code will distort individual's choices in a way that increases congestion, time spent in traffic and wear and tear on the roads, noted a release from Rep. Grimm.
The Transit Parity Act is said to equalize the transit and parking benefits by capping both at $220. This makes the change deficit neutral and ensures that the tax code is fair and applies equally to all consumers, the release stated.