US tax break on parking puts 820,000 extra cars on the road, costs $ 7.3 billion

New York City gridlock
CC BY 2.0 Wikipedia/ New York City Gridlock

In America, free parking is the expected thing, almost a right. So back in 1984 Congress ensured it stayed a right, by exempting any benefit that an employee receives to cover the cost of parking from taxable income, up to $250 per month.

Now a new study from Transit Center, an " independent, civic philanthropy that sparks innovations and supports policies to improve public transportation" has determined that this subsidy has cost the government $ 7.3 billion in tax revenue. But what is worse, it creates congestion that the government is spending more billions to try and fix.

subsidizing congestion coverTransitCenter/Screen capture
According to the study,

The parking tax benefit adds approximately 820,000 automobile commuters to the roads, traveling more than 4.6 billion additional miles per year. Because the parking tax benefit delivers the biggest savings to those working in dense employment centers such as downtowns, and because commuting tends to disproportionately occur during the most congested times of day, the parking tax benefit has the effect of increasing the number of cars on the road at the times and places of maximum congestion.

parking subsidyTransitCenter/Screen capture

There is also a transit subsidy, introduced “to encourage mass commuting, which would in turn reduce traffic congestion and pollution" but guess what: It's about half of the parking subsidy. And what's worse, it used to rise in parity with the parking subsidy; in January the law guaranteeing parity expired and the transit subsidy actually fell.

So here is a benefit that costs billions, accrues to those who park in the most expensive places, and is subsidized by all the others who don't work downtown or don't drive a car. "These commuters are net losers under the nation’s current parking tax benefit policy, as they must endure higher taxes or reduced government services to subsidize parking for a minority of commuters in other areas and often must endure increased congestion as a result."

We're shocked, shocked that politicians would draft a tax policy that gives $ 7.3 billion to people who can afford to drive downtown in cities with expensive parking, and then complain bitterly about a $ 1.4 billion subsidy to Amtrak. Really.

Read the whole study at TransitCenter

US tax break on parking puts 820,000 extra cars on the road, costs $ 7.3 billion
And guess who it benefits most? The highest income earners who drive to work in urban centers

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