Bike Commuter Subsidy

[dasgeh]

@mstone 65763 wrote:

And if you drove, you’d buy a monthly parking pass and the subsidy would cover it outright (which is the most common option, and the reason this is basically a giveaway with overhead). Adding transit and cycling is a fig leaf to cover the fact that they’re giving away free money to SOVs. Since employers decide what to implement, it’s relatively common to find them only providing parking benefits and not transit or cycling. (I’ve never worked anywhere that didn’t provide some sort of parking subsidy, or that did provide transit & biking subsidies. Part of the reason for this is exactly because of the overhead of managing such programs.) So you can tinker with the margins, and it’s certainly better to screw cyclists less in this deal, but it’s fundamentally bad policy.

I agree with you on the substance, but I don’t want the perfect to be the enemy of the good. Some Members of Congress are willing to do X. It would be better if they did X’ and best if they did Y. They’re not willing to do Y. They might consider X’. Why not ask them to do X’? If you want, you can make your argument about Y in the letter advocating for X’. But note we may end up with just X, or worse yet, status quo.

[lordofthemark]

@mstone 65760 wrote:

You misunderstand, this isn’t about non-car commuters: the same subsidy applies to parking. That’s why I suggested simply raising the standard deduction–the only people who can’t claim anything are those who don’t work or who walk to work. It’s just a giveaway, not a way to incentivize certain behavior (except that cycling or walking, and especially telework, are disincentivized). So, make it a general “getting to work” subsidy (which will still disproportionately benefit SOVs,) or give everybody free money without making them find some way to justify it as related to getting to work, or just scrap the idea because it’s just a stupid regressive giveaway with a lot of overhead (a tax benefit is most useful to those in the upper income brackets).

In addition to teleworkers and walkers there is another effectively unsubsidized group – those who drive to work in places where the market clearing price for a spot is zero, or trivially different from zero. The complete exclusion of free parking from taxable benefits is a way to avoid placing the burden on individuals, firms, and/or the IRS of evaluating the actual value the free parking spot. It also makes it easier for firms in places where charging for a garage spot would add administrative costs out of proportion to the value of the spot. But that ended up being effectively a subsidy to driving/parking in those locations where the value of the parking spot is particularly high. The transit subsidy was added, IIUC, to balance that. And yes, the bike subsidy goes further for balance.

Eliminating the exclusion of the parking benefit (and transit benefits) from taxable income, while increasing the standard deduction by roughly the same amount as the value of parking in places like downtown DC or Chicago (please lets not even think about Manhattan) would be a net loss of tax revenue to the govt, and a windfall to the folks who drive to work in places from small towns in North Dakota, to exurbs of major metros. The advantage of that would be that it would simplify some things (though it would mean folks who drive and park for free in places where parking has value would now have to estimate that value, or their employers would have to, and IRS would need some way to verify/audit that) but the revenue would have to be made up. If you set the increase in the std deduction at something lower than the price of parking in downtown DC – say at the price of parking in downtown Omaha, or in Tysons Corner – you would lose less revenue, but you’d also piss off the folks who do park for free in places like downtown DC, because they would be net losers.

In short, MStone’s analysis is well reasoned, insightful, and completely correct – EXCEPT that it implicitly assumes the value of a parking space is the same in all locations. When you relax that assumption, things get rather more complicated.

[Mikey]

I like the idea, and have to admit I shifted to my current multi-modal commute becuase it allowed me to cover nearly all of my upfront commuting costs with the transportation subsidy. I would applaud using my benefit for bike-commuting related purchases as well, if only my LBS took SMARTRIP benfits as a form of currency.

[mstone]

@lordofthemark 65776 wrote:

In short, MStone’s analysis is well reasoned, insightful, and completely correct – EXCEPT that it implicitly assumes the value of a parking space is the same in all locations. When you relax that assumption, things get rather more complicated.

Don’t get me wrong: I think the idea of a standard deduction is just as stupid as the current system, it just has the benefit of requiring people to jump through fewer hoops, and spreads the free money around to more people and is more honest about what’s going on (vote buying). I’d much rather see no direct subsidies at all. If we like transit & biking, the government should just pay directly for some infrastructure rather than all this farce for (as much as!) [tax rate]*$30/month for bicycling and a much more significant tax break for upper income folks who drive.

[DismalScientist]

You are always going to have these issues when you tax income. If income is taxed and benefits are not, there will always be the incentive to have employers pay benefits in lieu of cash income. Because of this, the government will need to regulate what are legitimate employer provided benefits. Is free parking too much? How about a large office? An attractive assistant? Why should the employer pay for heat in the office? All this leads to government micromanagement of employment relations.

Non-taxable health care benefits and the government regulation thereof is the principle source of the distortions we see in the health care industry. Is it any wonder that it can screw up other sectors of the economy?

[Author]

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