Senator Charles E. Schumer

FOR IMMEDIATE RELEASE: August 2, 2012

SCHUMER PROVISION TO EXTEND COMMUTER MASS TRANSIT BENEFIT PASSES SENATE FINANCE COMMITTEE; BENEFIT WOULD BE RETROACTIVE TO JANUARY 1, 2012 AND EXTEND THROUGH 2013

Benefit Covers $240 of Monthly Commuting Costs for Subway, Bus, LIRR, and Metro North Riders; Schumer Successfully Include Tax Benefit in Tax Extenders Bill

Commuter Tax Benefit is Part of Tax Extenders Bill With Bipartisan Senate Support; Schumer-Authorized Provision Was Allowed to Expire Last Year When House Failed to Act on Extension

Schumer: Giving Greater Tax Breaks to Commuters Who Drive to Work Than to Commuters Who Use Mass Transit it Absurd and Needs to Be Fixed

U.S. Senator Charles E. Schumer announced today that an extension of the federal mass transit commuter tax benefit has passed the Senate Finance Committee as part of a bipartisan tax extenders bill. The Schumer provision would retroactively enact the mass transit benefit to January 2012 and would continue through December 21, 2013, allowing commuters to pay for their commuting costs with tax-free dollars and bringing parity with the already existing benefit for those who drive to work.

“As I have made it abundantly clear, I have no intention of letting this vital tax benefit for middle-class families go gently into the night,” said Schumer. “It makes absolutely no sense to provide those who drive to work with a tax break and make commuters who use mass transit pay more. It’s an unwise and unfair disparity in the tax code and I intend to fix this inequity.”

Earlier this year, Schumer successfully included an extension of the benefit in the bipartisan Senate Transportation Bill, after the benefit was allowed to expire in December of last year. During conference negotiations on a final bill, House negotiators stripped the provision from the final Transportation Reauthorization bill.

Until it expired, the commuter benefit covered up to $230 per month from a person’s gross income to pay for their mass transit commutes and provided parity with a permanent benefit extended to drivers’ parking costs. Schumer’s legislation extends the commuter tax benefit through 2013 and raises the benefit to $240 a month to match the benefit currently offered by the IRS to drivers. It also retroactively will be applied to January 01, 2012. Schumer praised the bill’s passage in the Finance Committee, a huge hurdle that will bring the bill to the floor of the Senate and is urging its support in the House.

Last year, employees whose monthly mass transit fees were less than $230 were able to deduct the full amount of their commuting costs from their paychecks, tax free, through an employer benefit program. The cost is pegged to the IRS tax benefit that covers parking for drivers and would be increased to $240 with the extension offered by Schumer. Until 2009, commuters who drove to work received a greater tax break than those who took mass transit. In 2009 the mass transit benefit was almost doubled from $120 per month to $230 per month, creating a savings of over $1000 per year for commuters. Currently, 500,000 commuters in the Greater New York Metropolitan Area, and 2.7 million commuters nationwide take advantage of the benefit. Schumer was able to have the benefit extended in 2011, but in year-end negotiations, Congressional Republicans failed to include tax extenders in a year-end payroll tax cut deal.

Schumer authored the original legislation that passed as part of the economic stimulus package in 2009. The transit benefit reduces a commuter’s transportation costs by a third or more. With the benefits expiration there is now a greater incentive for people to drive to work rather than take mass transit. If renewed, a $240 per month mass transit benefit will fully cover the monthly cost of riding all major mass transit systems in New York City, including subway, bus, and express bus, and will cover most of Metro North and Long Island Railroad commuting costs.

"The LIRRCC strongly applauds the efforts of Senator Schumer in trying to restore parity between those that use mass transportation and those that drive to work. This is a wrong which must be righted. It is crucial that the US Senate and the US House of Representatives immediately pass this extension, make it retroactive and permanent. Restoring the previous transit commuter benefit formula is critical to millions of working men and women who need to make every commuting dollar count." Mark J. Epstein, Chair Long Island Rail Road Commuters Council

David Buchwald, Chairman of the Metro-North Railroad Commuter Council, said, “Commuters and local businesses need all the help they can get in these tough economic times, and this tax benefit is a smart way to create jobs, encourage mass transit use, and lower the cost of living for area residents. Bringing the transit tax benefit in line with the tax benefit for drivers will provide Metro-North riders and the businesses who employ them much needed relief. We and Senator Schumer have been fighting to make this vital expansion a reality for months and I applaud him for building a bipartisan coalition in the Senate that supports its passage.”

“We are encouraged by the Senate’s bipartisan support of returning the commuter benefit cap on transit to the level it was at in 2011 and reestablishing parity between the parking and transit benefit caps through 2013. We remain hopeful that the House will support this important benefit in a similar manner,” said Dan Neuburger, President of WageWorks Commuter Services.

“On behalf of the more than 2.7 million users of the transit commuter benefit nationwide, TransitCenter applauds Senator Schumer for his continued efforts to restore parity between the parking and transit benefits. We hope that this bipartisan legislative provision will be enacted into law in the coming days, so that the US tax policy will provide an equal incentive for commuters to use public transportation to help reduce congestion, preserve the environment and reduce our country’s reliance on foreign fuel imports,” said Paul Dean, Vice President of Transit Center.

According to Transit Center, in the New York metro area, commuters saved over $200 million last year because of the transit benefit and employers have saved over $45 million since the benefit went into effect in the New York area. Approximately 15,000 companies in New York offer the transit benefit covering more than a half a million employees. And in 2010, employers nationwide saved about $300 million in payroll taxes, money that can be reinvested to create jobs.

###

Resource Center