Counterproductive effects of the commuter parking tax benefit
bloomberg.com
bloomberg.com
As an example San Francisco spends about $1 billion of its $9 billion city budget funding Muni - more than 10% of the entire city budget.
Is the government subsidizing something run by the government really "subsidization?" It may be federal vs state/city, sure, but I don't see this as being a problem, especially since public transportation is beneficial in so many ways (costs people less money than car ownership, less harmful on the environment, less harmful to health, etc.). I do, however, see it as a problem when the federal government subsidizes private transportation, which is objectively harmful to cities (and most things in general, really).
> rider's fares typically pay for less than half the cost of running the bus/subway/light rail system
Let's not forget that drivers also only pay for half of the cost of roads[1]. If we're only going to pay for a portion of something, I think it should be public transportation. In my mind, the whole point of the government is to provide us with services. Providing us with transit makes sense. Providing us with spaces that we can only use if we pay a bunch of money to private corporations (car manufacturer + oil companies mainly) to buy large, dangerous, private, pollution-creating machines? I'm opposed to that.
[1] http://usa.streetsblog.org/2013/01/23/drivers-cover-just-51-...
Yes. Having the government do anything with public money is subsidization.
But it often makes sense to do things like that, especially in areas where there is a large up front cost to build something and thereafter the cost per use is negligible.
It makes sense for the government to build subways in cities and then charge zero dollars to riders, because everyone benefits from their existence (even non-riders, like stores whose customers arrive on the subway) and once the construction cost is paid it makes no sense to discourage use of the sunk-cost infrastructure by charging fares. And fare collection is inefficient because a nontrivial proportion of the fares are spent collecting them.
But it also makes sense to do the same thing for roads for the same reasons.
The real question is where and when to subsidize each. It makes no sense to build subways in rural Kansas that no one would ride, or new roads in Manhattan.
When you see traffic congestion, the question is how to most effectively eliminate it. Sometimes that means improving mass transit so less people have to drive. Sometimes it's more cost effective to just add a lane to the road.
Sometimes the underlying problem is that real estate prices are too high causing people to have to commute too far and the only real answer is to build new housing.
I can agree with this to some extent, but the question is, "how can we do this without encouraging unnecessary sprawl?" I can understand the want for space, seclusion, etc., but at what cost? How do we build roads in rural areas that don't kill the environment while also not creating a ginormous network of roads throughout our entire country which allow tons of people to own cars and rely solely on them for all travel? I am not necessarily opposed to people living in rural areas, particularly because some of it is necessary (e.g. for farming), but for the most part, I think we'd be better off if most people lived in higher density areas. Not Manhattan-dense, but would it kill people to live somewhere with a population density of 10k/sqmi? I grew up in a town with 15k/sqmi and lived in a big house with a big backyard (and even a driveway!). We had good public transit.
> Sometimes it's more cost effective to just add a lane to the road.
I replied to this in another comment of yours, but this actually doesn't work.
>Sometimes the underlying problem is that real estate prices are too high causing people to have to commute too far and the only real answer is to build new housing.
A large part of the reason that real estate prices are high is because of cars. I live in Downtown LA, and within a 2-block radius of me, there are probably at least ten parking lots that could easily fit large apartment buildings with ground retail. To add insult to injury, they're all single-level lots, rather than multi-level structures. When you take into account the minimum parking requirements that are imposed on developers, the amount of space that freeways take up, how wide the roads are, and all the free parking on the streets, it's no wonder that housing costs a lot! In essence, the same thing that allows people to commute long distances in cars is what makes it necessary to do so.
Nobody is actually proposing to build a bunch of new highways in rural areas. The real problem is congestion in cities.
> I replied to this in another comment of yours, but this actually doesn't work.
It does work, it just doesn't work linearly. You can add a lane and discover that there was already a lane's worth of unsatisfied demand. And maybe there were even two. But there most certainly were not 1,000,000 lanes worth of unsatisfied demand, and in most places there probably weren't even two.
> A large part of the reason that real estate prices are high is because of cars.
A two bedroom apartment is at least five times the size of a parking space, so the area allocated to parking is less than 20%. That is not the main source of the cost.
Of course, minimum parking requirements are still ridiculous, because if landlords can attract tenants to a less expensive building without parking, why stop them?
And is is requirements like that which combine with each other to cause high housing costs.
If it's cheaper too, that'd be great.
Also, a major reason costs of construction and maintenance on public transportation are so high is that they have to do it in a way that minimizes the disruption to car traffic. Yes roads are cheaper to build than subways, but if they could shut down a whole street and build light rail at surface grade it would be a lot cheaper (which is why streetcars and cablecars were ubiquitous a century ago). Or if they could shut down 4th street for a year, the Central Subway would be done already.
Roads that go through rural areas don't pay for themselves because they have little traffic. But those are also not the areas where anybody is talking about adding lanes to the roads. And in the areas with actual congestion, tax on the gas burned driving on those roads more than pays for them.
Also, for the record, adding lanes doesn't reduce traffic congestion[1]. Not sure if you were saying that. Even if we did "profit" from building more lanes/roads, it's only because we're externalizing other costs (environmental damage, the cost of space/real estate, etc.). I don't think this is a good strategy.
[1] https://www.wired.com/2014/06/wuwt-traffic-induced-demand
The majority of road maintenance costs are caused by the elements rather than cars.
> Also, for the record, adding lanes doesn't reduce traffic congestion
They found that if you add road capacity, people use it. But nobody (except China) spends the money to add road capacity unless they expect it to be used. They just hand wave that away.
It's obviously true that if you add roads people will drive more, but the idea that it's physically impossible to build enough road capacity is ridiculous. As if you could build a twelve lane superhighway at the South Pole and cars would appear out of nowhere to fill it with traffic congestion.
Transit systems do not impose such high externalized costs per commuter moved, but no doubt they are less convenient for individuals.
It depends; in New York, it would be incredibly inconvenient for me to own a car to go from our apartment in upper manhattan to my job in midtown.
people like you have gotten use to enjoying all the tax and revenues from people who do not think like you, like use a car, but become unaware its subsidizing your amenities (such as mass transit).
Cities quite rationally want people to walk and use transit more, because those modes fit the fabric of a city better. Of course you'll still need car trips for some things, but a blanket subsidy like this for something you want less of is nonsense.
"True, there’s also a tax benefit for mass-transit commuters that costs the government about $1.3 billion a year. TransitCenter says that while it’s good as far as it goes, “it is overshadowed by the parking tax benefit’s much larger adverse impact.”"
To be clear I'm not arguing for or against parking or public transportation. But I do think we should be forming policies with more data and less opinion.
What mgreg refers to is the direct money that is used to fund/subsidize the cost of operating bus/train networks in urban areas. The cost of those tickets are less than they would be without the subsidies.
These are two totally separate things.
as drivers pay for none of the cost of maintaining the roads.
If it takes me 40+ minutes longer to ride a subway than drive in (currently true) then it's both me and my employer's interest to reduce cost barriers and pay for the downtown parking.
Tragedy of the commons with a touch of government inertia
Further, I would argue that the time for your commute is to a large part determined by the available infrastructure (roads vs subway lines vs busses, for example), which is something the public has chosen to allocate funds for. There are certainly more and less efficient ways to move people around, and I'm not saying that cars are better or worse, just that the efficiency is partly a choice the public has made.
Or it's in both your interests to decrease the time it takes to use public transport.
Thus if it's in their interest to lobby for a tax code with distortative effects, they will.
On a more serious note, this just sounds awesome and could work towards workforce mobility as well. Unfortunately, people commuting in RVs will probably make traffic a lot worse.
Ever wonder why Uber has a higher valuation than General Motors? This is why.
Not yet.
Disagree? Explain Uber.
Are you even arguing the same point that I am?
Free parking should be reported as income, as should mass transit discounts/subsidies, such as healthcare subsidies, etc.
I'm trying to figure out the mental somersaults it has to take for this to seem reasonable to you.
The natural state, empty field, nothing there. I can park there. For Free.
Unnatural state, roads and buildings. My ability to park has been taken. I've had value taken from me. I'm at a negative.
Government / businesses grant the right to park in some places. I'm at less of a negative but still negative of the natural state. I don't see how that's possibly putting me at a positive "income"?
The mastodons and giant sloths did not claim property rights over the land.
That's not the "default" state.
If your business is located next to a parking garage that costs $400 a month to park in, and it pays the $400 each month so you can park for free, that's income to you.
Imagine your CEO makes $1M a year. But he tires of his high marginal tax rates, so instead negotiates with the board of directors to only take a $500k salary while the company pays a $5,000 a month lease on his $200k car, a $20,000 a month rent on his $2M condo, and $200,000 a year for his parking, premium healthcare, meals, groceries and personal travel expenses.
Should he only pay taxes on his $500k in cash compensation now?
I could never quite figure this out. It seems to be actually more hassle, in terms of paperwork and reporting, to pay for your employee to park a work vehicle during work hours while on a job made at your request (which is entirely a business expense) than it is to pay for them to have a reserved city centre parking space (which could easily have a significant personal benefit component).
The other weird thing is: I don't even think the employee has to use it! Would their SO find such an arrangement useful? Well, there you go: they could use it instead! There really don't appear to be any restrictions on this stuff. It's extraordinary.
On the flip side: this does mean, if you're negotiating a new job, maybe you could think about trying to get them to pay for a parking space for you, if that would be useful. Because it's entirely a business expense and so cheaper than raising the salary.
It seems to me if I have to drive to a specific location to perform a job-task, the expense of getting there and parking there is a deductible business expense. This is true as long as you are not regularly commuting to a place of business.
Once you start regularly commuting, the cost of the commute is no longer a deductible business expense. And if you are being given a place to park worth more than ~$10/day you're supposed to pay full load of taxes on that "income".
So, if for example, you regularly work from home, you can deduct the cost of going into the office.
That's a huge subsidy for working from home at least 50% of the time which this report totally ignores.
To claim that not taxing as income the first $10/day in parking value provided as a fringe benefit is a $7b tax subsidy seems a bit of a stretch. The company also likely provides air conditioning in the office, do we tax that as income too? To say nothing of food catering, onsite gym, etc.
I read the actual report linked in the article and IMO it comes off as somewhere between "progressive money-grab" to "bat-shit crazy."
The reality is the IRS has a long-standing "don't ask don't tell" policy around all kinds of benefits that companies provide employees which are "technically gross income" but in practice are never actuallly counted as such. A common example is the value of frequent flier miles. Here's a paper on the subject: http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=...
Referenced in that is another paper called "Defining Income" which seems to be the definitive paper on this topic? https://poseidon01.ssrn.com/delivery.php?ID=0370821220680890...
"Gross income is all accessions to wealth, clearly realized, over which the taxpayer has dominion unless excluded by statute, or by the IRS's never having attempted to tax them, or by the IRS's having announced an administratively created exclusion pursuant to no specific authority whatsoever."
The paper explains the historical definition of income as meaning, "the realized product of labor or capital." That definition was challenged before the Supreme Court back in 1955 Glenshaw Glass when the IRS claimed punitive damages were taxable as income. Before Glenshaw, punitive damages were considered a windfall, and as neither a product of labor or capital, not income and therefore not taxable.
Some specific examples of accessions to wealth, clearly realized, which are not taxed by the IRS for no reason other than administrative fiat are; child support payments, welfare payments such as TANF, and Medicaid.
I supposed you could add "parking at the office" to that list.
Another great example in that paper -- the cost of traveling to a job interview in another state. The reimbursement of that cost is clearly income under statute, but not taxed. Thankfully so!
Are fish income when you catch them from the sea? Are minerals income when you pull them from the ground? Are Bitcoin income when you mine them? No, No, and YES!
"Two final examples suffice to show the array of situations in which the administrative application of the positive definition of income seems confused. The first involves the iconic American game of baseball. When contemporary players began to threaten long established home run records, it was clear that any ball that broke such a record would become a collector's item worth substantial amounts of money. When the records began to be broken and a fan caught the record-breaking ball, the tax controversy erupted. Practitioners, academics, and former IRS Commissioners all agreed that catching the ball, like finding old currency in a used piano, which was held to be income in a case known to virtually every student of taxation, resulted in the realization of income. But the public and Congressional outcry at such a prospect was fierce. How could the joy of catching the record breaking-ball be marred by the prospect of the rapacious IRS pursuing the fan for a cut of the food fortune? Legislation to ensure non-taxation was introduced. One IRS Commissioner, not a lawyer, dissembled. Years later, the Chief Counsel of the IRS, not only a lawyer but a tax lawyer, reportedly covered his head with his hands and captured the difficult position the agency was in when he responded to the question of whether the fan who caught and kept the ball had income by saying, "Please don't ask me that!"
Here: coffee/soda/lunch/dinner that companies provide to its workers are income and workers should pay taxes on it. It should be presumed that the value of a "coffee" benefit is the price of similar coffee at Starbucks, "Soda" benefit a price of similar soda at a ball park, etc.
I would imagine in the majority of scenarios this is a false choice. There simply is no reasonable alternative. Our city planning was piss poor and thought it was a good idea to emulate Atlanta when it comes to road building (i.e. build them wherever the hell, with no rhyme or reason). Biking: not an option. Working from home? If I were to be so lucky.
Second, not much thought was given to the economic impact of those commuters.
The irony, most ads show a car in an empty highway.
You realize that a small minority of the people seeing those ads actually live in SF, right? The TV stations showing those ads cover at least 9 counties, many of which have a higher population that the ~900k people living in San Francisco.
Could net you a few hundred bucks a month if you don't use parking at work.
People, Americans especially, want the liberty to come and go as they please, at the speeds they choose, by the path that they choose.
I'm not sure every Bloomberg writer would understand that.
EDIT: wording
Perhaps you can understand why those of us who put liberty above almost everything on the scale of desirables get squeamish when we hear the about more taxes being needed.
For the rest of the country, Google Maps is generally glowing green.
Another example, which many people find very strange: taxing homeowners for their implicit rental income:
Imagine Person A owns a house and lives in it. Person B owns one house, which he rents to someone else, and lives in a rented apartment. Person B has rental income and pays tax on it. Person A does not receive rental income (from himself) and therefore pays no equivalent tax (and also receives other tax preferences). In some ways, this appears to be inequitable. But to many people, it would be odd to tax a transaction that never explicitly happened (A only "paid himself rent" implicitly).
So a case can be made for taxing all sorts of things, some of which seem very odd to many/most people. Employer-provided parking will probably remain untaxed, just like employer-provided food often is.
And the homeowner pays income tax on the money used to buy the house.
The benefit is to the employer, not the employee.
Proposing to tax this as an employee benefit will likely sidetrack this and raise emotions due to the unfairness.
That's too bad because there is a real problem and a tax may very well be the best way to solve it.
My life improved dramatically when I decided to reject the automobile as a way of life.
EDIT: I am of course referring to personal automobiles.
You'll have to take my car from my cold, dead, broke hands :p
Problem solved :p
Your entire diet would be different if cars werent around.
I come from a bias being from Silicon Valley, but when I moved to the south, it is IMPOSSIBLE to work without a car. I mean, as a developer, I can work from home, but our corporate overlords would like me in an office.
Are you aware that there are cities which have no feasible public transportation?
To get rid of "personal transport cars", you would also require a massive paradigm shift. Not just in city planning, or introduction of public transport, but with how people live as well.
A massive "unrooting" of our current structures would need to take place, with a rapid replacement of more sustainable transit options. I actually find it valuable, in the longterm, but no one will agree with me.
> More important for the nation’s bottom line, the country’s preference for the bicycle could save its economy $23 billion each year, according to a recent study done at Utrecht University and published in the American Journal of Public Health. The study suggested that the Netherlands’ vigorous cycling habits prevented 6,500 premature deaths each year.
[1]: https://en.wikipedia.org/wiki/Cycling_in_the_Netherlands
[2]: https://www.nytimes.com/2017/09/06/world/europe/bicycling-ut...
You should try to be more specific. Otherwise folks will ignore the bits of truth mixed into the hyperbole.
The fact that Americans have substantial increased their average living space and comforts is directly correlated with the spread of automobiles. The massive increase in food production is entirely caused by automation from the invention of farming equipment running off internal combustion engines.
The parent seems to be actually talking about AUTOMOBILES in more than just the modern scope. There is a bit of a bigger paradigm shift at play here if you were to consider a world without automobiles.
No car: walk/bike to the store/work; get aerobic exercise
Car: sit on your ass and pump harmful fumes and CO2 into the atmosphere and let your muscles and bones atrophy away
Before the invention of the automobile we were an impoverished agricultural nation where huge numbers were forced to work brutal farm jobs to feed themselves and the rest.