Mixed Signals: Driving to Work as a Tax Break - New York Times

August 16, 2007
Mixed Signals: Driving to Work as a Tax Break
By WILLIAM NEUMAN

They have made it a priority at the United States Department of Transportation: Get people out of their cars.

This week, the department announced $848 million in grants to help cities discourage people from driving, in many cases by imposing new tolls or fees.

But at the same time, another arm of the federal government seems to be sending a very different message. Congress provides a tax break to many of those same drivers to help them shoulder the costs of taking their cars to work.

Close to 400,000 commuters nationwide - about half of them in the New York City area - take advantage of a provision in the federal tax code that allows them to use up to $215 a month in pre-tax wages to pay for their parking at work, according to executives at corporate benefits firms that specialize in administering the tax break.

While some drivers use it to pay for parking at commuter rail stations or bus stops, most take advantage of it to pay for parking near their workplace, mostly in city centers, the executives said.

The tax savings can equal about $1,000 a year for some drivers. And the effect makes driving to work more desirable.

"It is perverse," said Jeffrey M. Zupan, a senior fellow for transportation at the Regional Plan Association in New York. "If you're going to institute pricing measures that are intended to reduce the amount of driving, you don't want to keep in place other measures that encourage people to drive. What you want is a set of policies that work together."

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Mixed Signals: Driving to Work as a Tax Break - New York Times