Monday, January 19, 2009

Message from the United Stats of America: Offset Incentives for Auto Use:

Offset Incentives for Auto Use

Transit works better in other countries than in America. Good vehicles, infrastructure, etc., don’t offset land use patterns making transit a tough sell in most markets. What planners see as land use economists call subsidies for auto use. Highways and free parking are obvious examples, air pollution and congestion are less obvious, and added resources needed for policing highways and even the military also reflect the auto culture.

America can learn to subsidize auto use less, but the most practical and next best thing is easier. User incentives are needed to offset the built-in incentives for auto use. The US has the tool at hand for offsetting auto incentives: the “tax-free transit benefit” and Internal Revenue Code Section 132(f). It’s gained increasing use in many cities, and since 2008 San Francisco employers are required to offer it.

So, the US can learn from the world that reduced auto use incentives are needed, and can get there with its home-grown tool. Federal policy should require employers with more than 20 employees in medium and larger cities to use Section 132(f), i.e., allow employees to pay transit fares using pre-tax salary. This would go far in offsetting free parking and other auto incentives that are widespread in the US. This solution requires no invention or draconian policy. The San Francisco experience shows employers won’t oppose this idea, because there is no cost to them (in fact, small tax savings) and considerable benefit to employees.

Richard L. Oram –
Fund for the Environment and Urban Life
New York, USA

Print this article