Thursday, July 5, 2007

Pre-Tax Commuting

For my 100th post, I've decided to cover something near and dear to my heart: Commuting Costs. After dropping the cash for my various monthly commuting passes today; I find myself once again wondering why the two-plus hours a day I spend on mass transit are not completely pre-tax cost. Currently, the limit on pre-tax transit benefits is set by Congress at $105 dollars. Here's the bit of the tax code that makes it possible:
Qualified Transportation Fringe. For taxable years beginning in 2005, the monthly limitation under § 132(f)(2)(A) (regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass) is $105.

For those that don't receive TransitChecks, or one of their cousins, the $105 is deducted in a pre-tax manner the same as contributions to a 401(k), flex account or health insurance premiums. For the hundreds of people that use the exact same methods of travel I do, our commute from our NJ Transit rail zone into lower Manhattan costs $426 dollars a month ($5,112 per year) including the mass transit and parking. Those that live further away from New York City pay even more. I know several people paying a few hundred dollars more.

That's no small chunk of change to be shelling out every month. It appears that the House is looking to expand the credit to $175, via HR 1300 (Title V, Sec. 501). On behalf of the tens of thousands of my fellow commuters, I'd like to say we appreciate that greatly. However, at the same time why not let us cover the whole thing pre-tax?

There are so many benefits to commuters, employers and taxpayers.

For commuters, it's more money in their pocket and a lower tax liability.

For employers, it's happy employees and a lower tax burden.

For taxpayers, assuming the benefit attracts more riders, it's less spent for highway repairs from heavy road usage and would push the mass transit systems closer to the black; thus reducing federal subsidies.

Those are just a few of the benefits, and there are so many more. It wouldn't be that hard to implement, because many transit benefit providers already send passes directly to employers for distribution. My co-workers receive their Metro-Cards directly from TransitChecks, who delivers them to our company, and I'm sure those who provide the service would have no problem tracking down my passes if they were completely covered.

Currently, New Jersey Representatives Steve Rothman, Donald Payne, Rush Holt and Albio Sires are co-sponsoring the entire Bill. At a bare minimum, I would hope the entire New Jersey Delegation could figure out how to word and co-sponsor an amendment to increase the ceiling. There is not a District in our state where some portion of the population doesn't use some form of mass transit. Pull in those Representatives from New York, Connecticut and the eastern part of Pennsylvania and you've got a powerful block of votes.

I realize that some of the Republican delegation will not vote for this particular bill regardless of how many voters they'll make happy. It's ok. They can vote for a full pre-tax amendment but vote against enacting the amended Bill; as Representative Scott Garrett did with his SOX compliance deadline extension amendment. They'll still get to send out the press release saying they supported bringing relief to commuters who are doing the right thing by using mass transit.

Contact your Rep and let them know you'd like the full amount pre-tax.

Contacting our Delegation:
01 Robert E. Andrews D
02 Frank A. LoBiondo R
03 Jim Saxton R
04 Christopher H. Smith R
05 Scott Garrett R
06 Frank Pallone Jr. D
07 Mike Ferguson R
08 Bill Pascrell Jr. D
09 Steven R. Rothman D
10 Donald M. Payne D
11 Rodney P. Frelinghuysen R
12 Rush D. Holt D
13 Albio Sires D

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