Today’s Solutions: December 06, 2022

A key goal of public transportation is to reduce the number of cars on the road and therefore improve air quality and reduce emissions, especially in urban areas, but a small detail in the US federal tax code is actually working against this goal. The federal tax code has an exemption for employer-paid parking which subsidizes personal vehicle transportation. Repealing this tax exemption, or at least working around it, could be an easy solution for less crowded roads and cleaner skies.

Employers are quick to invest in tax-free subsidized parking for employees, but this not only increases the number of vehicles on the road but does so during peak commute hours. Furthermore, it rewards private vehicle drivers, while failing to reward those who choose to take public transportation.

Although it’s unlikely that this federal exemption will be repealed, auxiliary policies at the state and city level can help counteract its effects. For example, the District of Columbia enacted an amendment that requires companies with 20 or more employees who subsidize parking at work to offer an equal corresponding benefit to those employees who choose not to drive. This could be a credit to help pay for public transportation passes or financial compensation for those who bike or walk to work.

California has a similar policy in place and found that when all employees of eight companies were offered a benefit equal to free parking, private vehicle commuting dropped by 17 percent, carpooling increased 64 percent, and transit ridership increased 50 percent. The companies themselves reported that the change was easy and affordable to implement and helped them recruit and retain employees.

Although the equal parking benefit mandate slightly increases a company’s federal and state taxes, it has proven to be highly effective in incentivizing green methods of transportation for healthier communities and less congested roads. Anyone who lives in an urban area knows how tempting the reward of free parking can be. If we create equal incentives for greener methods of transportation, employees can continue to reap the maximum number of personal benefits while cutting down their personal footprint.

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