As you may be aware, Congress announced plans last Wednesday to “cut taxes” and “simplify the tax code”. Through this process to simplify the tax code, Congress is considering eliminating many tax provisions, putting commuter benefits at risk. On the surface, commuter benefit plans may appear to be an easy grab to offset other tax cuts. However, there are 5 losses if commuter benefits are eliminated.
Individuals are set to lose $1,000 or more, if commuter benefits are eliminated.
1) Lost income, lost economic spend
The elimination of commuter benefits would directly increase the taxes of individual employees. On an annual basis, this could translate to over $1,000* per employee. This would have a significant impact on employees’ budgets and reduce available discretionary spending, which impacts overall economic growth.
2) Increased taxes for employers, loss of investment in business growth
Cutting commuter benefits would be a direct tax increase for businesses. Employers with just 50 participants in a commuter benefit plan could see an increase of over $11,500** in payroll taxes. That is $11,500 less to invest in the growth of the company or its people. According to the 2015 US Census Bureau: American Community Survey, an estimated 7.76 million workers use mass transit to commute to work. At an estimated monthly spend of just $100 per commuter, there could be a potential economic opportunity cost of up to $710 million*** annually which employers would not be able to invest in economic growth.
3) Increased congestion
Commuter benefits improve workplace commuting for both transit riders and drivers alike. A 3% reduction in vehicle miles traveled equates to a 30% reduction in congestion. Moving even 1 in 5 people out of their cars plays a significant role in reducing congestion for all commuters.
4) Infrastructure and subsidy costs expected to rise
Commuter benefits encourage employees to ride mass transit which reduces the need to expand, repair or replace our nation’s roadways. They also aid in making transit systems more self-reliant. Without ridership, the government would likely need to provide additional funding to subsidize the transit systems.
5) Lost productivity
Commuter benefits help employees spend less time driving, less money on commuting, and reduce anxiety. All of these lead to a more productive and happier work environment.
Show your support for commuter benefits.
1) Contact your representatives
Everyone is encouraged to contact their local representatives and make their voices heard. A sample letter is provided through the link below, but you are encouraged to personalize it with your experience. Simply follow the link, enter your zip code and take action.
2) “Sign” support letter
In partnership with the Association for Commuter Transportation (ACT), we are looking for employers willing to be listed on a support letter to the House Speaker and Ways and Means Committee. View draft of the support letter.
*Assumes a 32% tax rate and monthly pre-tax election of $255.
**Assumes a 7.65% employer payroll tax rate on a monthly election of $255
*** Based on a 7.65% employer payroll tax rate, on a monthly election of $100 for 7.76 million employees commuting to work.
2015 Public Transportation Fact Book -American Public Transportation Association
US Census Bureau – American Community Survey (Workplace commute data)
Association for Commuter Transportation
Economic Impact of Public Transportation Investment