Saturday, December 20, 2008

Bogus Bicycle Commuter Act

Ray LaHood - uncle of one of my Wife's Sorority Sisters back at the the good old University of Illinois is the nominee for Secretary of Transportation.

Wow. Peoria. Not exactly what I considered the hub of the Transport world. There is a train from Chicago to St Louis, that I even tried to take once. It was sold out, strangely enough, apparently it's gotten quite popular. Despite the fact it basically goes through a bunch of cornfields, LaHood stated that people from Central Illinois don't want trains going through at those speeds. I dunno, as a kid visiting the metropolis of Gardner Illinois I would have probably been thrilled to see those trains come whizzing through. Of course, we'd need to figure out how to keep people from getting hit by them, but plenty of people manage to figure out how to get killed by Caltrains going at much lower speed. As for cutting through people's fields - my father-in-law is already being approached by Wind Farmers who are trying to put windmills on farmland down there, why not some better train tracks?

One plus for LaHood - he co-sponsored the Bicycle Commuter Act. Of course, so did 64 other representatives, so it's not like he really stuck his neck out on that one. It did get snuck into the bailout bill, but I find it very humdrum. $20/month subsidy for people who bike to work. Great! Except that if you already participate in a pre-tax transit benefit, you can't take advantage. People who bike often are people who take transit, even if they aren't multi-modal commuters like the Caltrain bike cohort. For example, I know people in SF who bike to work, don't own a car, and also have a MUNI pass. A MUNI pass is $45. In order to get the bike benefit, they'd have to forfeit their much larger transit benefit.

The transit benefit itself is a pretty good deal, but I find it a bit annoying as well. The current monthly limit for pre-tax contributions is $115. My monthly Caltrain pass is $198. So I certainly think the limit is too low, especially since I also use BART and MUNI to get around, I could probably blow through $220 or so a month.

Of course, if I were so damn holy I could just move closer to work where my pass would be cheaper, you might say. Allow me to retort - the only reason I moved to SF in the first place was because there was a very viable transit option. More to the point - there is also a pre-tax commuter benefit for PARKING. Parking? What the hell. Why are we subsidizing the parking of someone who drives into work?

Don't answer that question. Answer this one instead. Why is the pre-tax maximum for transit $115, and the pre-tax maximum for parking $220! Especially since most places (SF, NY, Chicago) where parking near places of employment costs $220 a month have excellent transit options. And what really rubs me the wrong way - if I COULD get the bike benefit AND the transit benefit, it would still be substantially lower than the subsidy given to people for parking!

I have taken the matter into my own hands a tiny bit. There is a bit of a 2nd hand market for commuter checks on Craig's List. Some of this is the result of people getting the checks and then changing jobs and not needing the commuter checks. More likely? Some companies just give you the checks if you apply for them, rather than making you contribute money pre-tax. Some people have figured out that they can take the benefit and re-sell it. I figure the employee and I can split some money that otherwise would go to the feds, and I can funnel it to Caltrain.

I managed to finagle $290 of checks for $250 from someone. Most of the checks (greater than $115) had the same expiration date, the way I figure it she and her co-workers were collecting the benefit monthly and it was her turn to sell them. She definitely wasn't ditching ones she couldn't use - she didn't even know where the Caltrain station in Palo Alto was at, and some denominations were greater than a SamTrans or VTA monthly. Some day maybe I'll be buying "Biker Checks" from some 370 pound wheelchair bound "cyclist" who had some extras!


jimtitus said...

Note: You might want to ask a lawyer whether you are violating a federal statute (e.g. conspiracy to commit tax fraud). People reselling metrochecks in the DC area have been fired. Whoever sold you the passes is violating tax laws if they did not claim the income.

FYI: The subsidy for parking is greater than for transit because before the transit benefit even existed, many employers were simply providing free parking to their employees--usually on company owned land (e.g. shopping centers, military bases, factories, office buildings). Statute was intended to equalize the benefit by allowing some sort of cash payment to employees for transit. The limit is explained--in part--by people like you who advocate resale (in violation of the tax laws). THey set limit low enough so that most people use their entire benefit--otherwise, many more people would be tempted to misuse the passes.

murphstahoe said...

Interesting. The fraud is being perpetrated by the reseller, but you make a good point that by buying the commuter checks I would be guilty of helping them - thus conspiracy.

I don't quite parse your syntax, was the parking subsidy put into place in order to help commuters who were not so fortunate to get free parking?

I don't advocate resale - I advocate a higher benefit. If the benefit were higher - that reduces the resale market because people like me don't have any incentive to buy more commuter checks because we get all the value we need from our own pre-tax benefit.

There would in theory still be a market for these things because some people don't have access to the pre-tax benefit and could save on their transit costs by participating in a resale scenario. The answer to that is to make the benefit more accessible. San Francisco has mandated that all employers with 20+ employees provide some transit benefit for their employees, the cheapest option being providing for pre-tax deduction for transit benefits.

Perhaps the best option is to remove the program entirely, and use general public funds to reduce fares for everyone.

djconnel said...

Really, I'm sick of these paperwork-laden "tax credits for things we want people to do" initiatives. I don't want to be bothered with filing this or that tax credit. I want to buy my ticket, get on the train, and forget about it.

If you want people to do less of something, make it more expensive. Want people to drive less or drive more fuel-efficient cars? Make gasoline more expensive. It's absurdly simple. Then they'll take the train, take the bus, walk, ride a bike, work from home, move closer to work, work closer to home, carpool, whatever it takes.

These piece-meal patchwork tax credits increase the demand for accountants more than decrease the demand for cars or fuel.

murphstahoe said...

Agreed Dan - it would be far more efficient to figure out the net tax cut all the recipients nationwide get, and instead of going through this byzantine process, don't give them the tax cut and give that money to transit agencies and have them lower fares for everyone.

And I absolutely agree it's better to just raise gas taxes.