Tax Breaks in the USA Causing Traffic Jams

November 19, 2014 Taxation in USA

Traffic in the USAWASHINGTON D.C. – New research shows that a portion of America’s traffic congestion can be attributed to tax breaks, which almost exclusively benefit only the wealthy.

The tax benefits currently offered to taxpayers in the USA who are provided a carpark by their employer are significantly attributing to traffic congestion in the country, while the tax breaks offered for the use of public transport and bicycles are not doing enough to convince people to stop driving their cars, according to the information provided in a new report released by the US based non-government organization TransitCentre.

Currently, parking benefits of up to USD 250 per month provided by an employer to their employee will be exempt from the calculation of the employee’s personal income tax obligations, while similar tax benefits for public transit or cycling expenses are capped at USD 130 per month and USD per month respectively.

According to the experts of the TransitCentre, the current balance of the commuting tax benefits is more favorable for high-income earners, as they are more likely to be employed at a workplace which provides benefits such as parking, which are not often offered to middle- or working-class employees.

Cumulatively the parking tax subsidy results in a USD 7.3 billion loss in tax revenues every year, and leads to at least 830 000 more cars being on the roads during peak-traffic times.

In its report the TransitCentre recommended that the maximum benefit for bike expenses and public transport should be lifted in order to remove the unbalanced disparity between driving and other commuting options, and, also, the tax benefit system should be expanded to allow employees to “cash out” their parking benefits while still enjoying the tax breaks.