Lawmakers urged to follow Federal lead on public transit tax incentive
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Richard Fries, executive director of MassBike; Jeff Bennett, program manager for Charles River Transportation Management; Melissa Zampitella, director of transportation at ABC TMA and Mass Commute; Charlie Ticotsky, policy director for Transportation for MA; and Randy Johnson, senior vice president for Edenred Commuter Benefits Solutions testified Tuesday in support of a bill that would expand commuter benefits.
Transportation advocates on Tuesday pressed lawmakers to adopt a change in state law to make the tax benefits available to workers who drive to work and those who take public transportation more equitable.
The groups testified before the Committee on Revenue in support of a bill (S 2217) filed by Sen. John Keenan to adjust the way federal code on pre-tax commuter benefits is incorporated into state law.
U.S. Rep. James McGovern earlier this year touted his successful effort in Congress to raise the amount of pre-tax money public transit commuters can pull from their paychecks -- from $130 to $255. Massachusetts law, however, makes specific reference to the 2005 Internal Revenue Code, which means the state deduction remains at $130.
That discrepancy, supporters said, makes it more worthwhile for someone who commutes to work to do so by driving their car and parking, rather than taking public transportation or joining a vanpool.
"The difference between the two caps of $130 a month for the state and $255 for the federal taxes means that transit and vanpool riders will pay additional state taxes in comparison to those who drive to work," Randy Johnson, senior vice president for Newton-based Edenred Commuter Benefits Solutions, said. "The scenario creates a financial incentive for commuters to drive to work, rather than use public transportation or vanpool."
The difference between the two caps also causes headaches for human resources departments, which have to reconcile the two limits, supporters said.
"It's a difficult administrative burden for employers to implement the pre-tax benefit because they have to have a different cap for Massachusetts tax and the federal tax," Melissa Zampitella, director of transportation at A Better City, said. "So it does act as a disincentive for employers to offer this to employees and it is a wonderful benefit for employees and it does drive behavioral change in how folks get to work."
Keenan's bill would also establish a pre-tax bicycle commuter benefit of $25 per month.
"By making the update to incorporate federal code on this particular subject," Keenan's office said in a statement, "we would expand the available credit for commuters using public transit, and also adopt a benefit for people commuting by bicycle which did not exist at all in 2005."
Charlie Ticotsky, policy director for Transportation for Massachusetts, said a comprehensive financial impact analysis has not been conducted, but back-of-the-envelope math pegs the cost "in the realm of $5 million."
Sen. Michael Rodrigues, who co-chairs the Revenue Committee, said he thought Tuesday's testimony sufficiently outlined the problems with having two varied caps and said he's inclined to advance the bill.
"State employers and employees are missing out on a good opportunity relative to providing additional employer-sponsored benefits for commuting using mass transit, and that's something we want to promote and help," Rodrigues said. "My recommendation to the chairman is that we poll this bill out with a recommendation that it go out favorably."
Rodrigues said he would expect the committee to vote on the bill at some point this week.
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