Bicycle Bailout
I got an email from a reader noting that there’s word “making its way around bike lists” that the financial rescue package included “transportation fringe benefit to bicycle commuters” and asking if it’s true. It is indeed true. For both procedural reasons and for crass political reasons, the $700 billion package wound up attached to a mental health parity bill that also included a lot of minor tax provisions. What you need to do is get the capitalization right. There’s a provision of existing tax law called the “Transportation Fringe Benefit.” Employers can offer the Transportation Fringe Benefit to their employees. It allows employees to receive a tax-exempt benefit of up to $215 per month for drivers participating in qualified parking plans or $110 per month for those who use transit or vanpooling.
Rep. Earl Blumenauer represents Portland — the bike commuting capital of the United States — and was formerly Portland’s Transportation Commissioner. He introduced the Bike Commuter Act last year that would amend section 132(f) of the IRS code of 1986 to include “bicylces” in the definition of transportation covered by the qualified transportation fringe benefit.
His Act was incorporated into the bailout package and signed into law. Since the mechanism of the subsidy here runs through your employer, it’s possible (like, I would say) that many employers won’t realize this change has been implemented starting next year so people may need to show some initiative to actually get their new bike Fringe Benefit. I’ll try to stay abreast of this issue and let folks know what they need to do.
Meanwhile, though I certainly support doling out commuting subsidies in an equitable manner, this is one of those situations where really I think we’d be better off just eliminating the whole loophole. After all, should the commuter tax benefit really discriminate against pedestrians? Against self-employed people? Against people staying home to take care of their kids? It’s hard to draw principled lines with this kind of thing and it would be better to just eliminate tax breaks and lower overall rates.
27 Responses to “Bicycle Bailout”
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October 8th, 2008 at 3:21 pm
the parking one should definitely be eliminated.
October 8th, 2008 at 3:30 pm
Yes, please tell us what we need to do! This is definitely News I Can Use.
October 8th, 2008 at 3:35 pm
One of the nice things about the current setup is that it effectively (and inadvertently) subsidizes public transportation costs generally. If I get free parking from my employer, that parking is good only at work. If, however, I get a free bus pass from my employer, that bus pass will be good whether I use it to take the bus to work, to the store, to the beach, etc.
October 8th, 2008 at 3:37 pm
“Portland — the bike commuting capital of the United States —”
Them’s fightin’ words. I live in Boulder, and we have a kick-ass bike path system. And people really use it. Portland has done a fantastic job on this issue, but so have we. We should get some credit for it, too. And, yeah that sounds pretty whiney, but we spend a lot of money on this issue and we do a great job.
October 8th, 2008 at 3:38 pm
Just another case of politicians pandering to Big Bicycle
October 8th, 2008 at 3:42 pm
John McCain is the kindest, bravest, warmest, most wonderful human being I’ve ever known in my life.
.
October 8th, 2008 at 3:42 pm
Ahh, I knew there was a great reason to keep voting for Blumenauer! I’ve never been so proud to have him as my rep. Could this be the one decent side effect of the incredibly ill-advised bailout?
And yes, a step-by-step description of how to present this to one’s employer to best sell them on this benefit would be immensely helpful. Thanks for bringing this to our attention, Matt, you’re a blessing.
October 8th, 2008 at 3:47 pm
So if you commute to work on a bike and use wooden arrows, you are really in luck.
October 8th, 2008 at 3:49 pm
i appreciate the insight of all of your posts, but especially the ones about mass transit and bicycling as they are, in my mind, the most crucial parts on the energy crisis that no one is talking about. as an aside, this is primarily because, in my opinion, everyone’s either two inconvenienced to ride a train or too lazy to ride a bike. but that’s neither here nor there. they deserve exposure and i thank you for that.
October 8th, 2008 at 3:53 pm
I think any potential benefit will be more than offset by the numerous bicyclists who will be seriously injured when they are shot by children’s wooden arrows.
October 8th, 2008 at 4:26 pm
Yeah, but cut whose tax rates? This is one of the many measures that works to provide a small tax reduction to the middle class, pretty much by design.
October 8th, 2008 at 4:56 pm
Has anyone noticed how tiny the bike benefit is compared to parking and transit? The maximum bike benefit is $20 multiplied by the number of “qualified bicycle commuting months.” A “qualified bicycle commuting month” is one where the commuter “regularly uses the bicycle for a substantial portion of the travel” between home and work and the commuter doesn’t receive a parking or mass transit benefit. That means the annual max is $240. Assuming I want to take transit when it’s snowy and cold (Dec.-Feb.), I’m down to $180. I think you’d be hard pressed to get a decent bike, a lock, and a helmet for that.
As written, it doesn’t seem like you could buy a more expensive bike and then recover the cost over a period of years because the expense has to be incurred during the calendar year to be reimbursed. Maybe some enterprising bike shop will lease me a nicer bike for $180 per year or agree to bill me in annual installments for my bike.
The maximum for parking is $215/mo. or $2,580/yr.
The maximum for transit is $115/mo. or $1,320./yr.
Overall, it seems like a nice perk for those already biking on a regular basis, but unlikely to convince people to switch.
October 8th, 2008 at 4:57 pm
There’s a huge moral hazard issue with the bicycle tax credit. I have received the parking credit, and the mass transit credit in various years by presenting receipts that showed I actually paid for subway or parking. My bicycle doesn’t issue receipts. Presumably this tax credit will be available on the honor system.
October 8th, 2008 at 5:47 pm
I received the mass transit payment by direct withdrawal, then applied to my electronic Chicago Card (CC Plus) for use on the CTA.
October 8th, 2008 at 6:31 pm
My very first office type job was as an intern in Rosslyn in ‘93 at a govt contractor. The people in the office got either a parking space or $75 cash (not a voucher) to use the metro. So the bicylists (or people who got dropped of by their mom) took the cash. But this was before smarttrip and the like. Does the programs only give vouchers or farecards nowadays?
October 8th, 2008 at 7:55 pm
That’s somewhat funny as my Rep. Bluemenauer did not vote for the bill even though his Act was attached.
And Portland is the bike commuting capital of the US. Sorry, Boulder.
October 8th, 2008 at 9:20 pm
Incidentally, I went to a meeting in Portland some years back (I’m not from there), which Blumenauer organized. He showed up on his bike.
October 8th, 2008 at 11:45 pm
A Jamis Commuter? Hey, that’s my bike!
October 8th, 2008 at 11:56 pm
I agree that tax breaks and loopholes should be elmininated, but I disagree with the stated reason–because it “discriminate(s) against pedestrians? Against self-employed people? Against people staying home to take care of their kids?”
The problem with using this logic is that you can apply those exact same issues to any public funding of bike infrastructure or public transport. When the government supplies or subsidizes public goods, almost always there is some group of people who would be better off if the government had not (often they are not directly harmed–it is just a matter of paying higher taxes to no personal benefit).
For example–let’s talk about welfare. One could say that welfare payment to poor mothers discriminates against those who will never receive welfare. And while some certainly hold this view, as a society we have decided that this is a sacrifice that they will be forced to make.
October 9th, 2008 at 9:12 am
Intersting, then, that Congressman Blumenhauer voted against the bailout plan
October 9th, 2008 at 2:47 pm
Van,
I agree with your statements.
Another example: childless people who pay for public school education though they will never use it. But we all are paying for a (minimally) educated citizenry – the basis of a sound democracy – from which we all benefit.
In the case of the bike credits, we all gain when air pollution is decreased, and (some members of) the public become more fit, reducing the load on our healthcare system. If enough people choose alternative transportation, pressures to increase the capacity of the roadways is reduced and we can use the funds elsewhere.
Cheers!
October 9th, 2008 at 4:32 pm
this is a step forward on the journey for more rational tax, transportation, and energy policies. in the long run, i suspect we should have a uniform “commuter benefit” and let the taxpayer decide how to allocate their dollars. In the meantime, it makes no sense to discriminate against people who burn calories instead of fossil fuel. In 102 days, we will have a new administration and a stronger congress where policy reform wont’s be such tortured process. (I hope).
December 4th, 2008 at 1:58 am
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April 16th, 2009 at 10:07 pm
Good Day. We should be eternally vigilant against attempts to check the expression of opinions that we loathe.
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