New Report: Feds Subsidizing Parking Six Times as Much as Transit

"Subsidy" is a word used quite often in transportation policy-making circles, whether by road acolytes who claim (falsely) that highways are not federally subsidized because of the gas tax or by transit boosters who lament Washington’s unceasing focus on paying for more local asphalt.

But the subsidy debate often overlooks the government tax exemption for workers’ parking expenses. And federal parking subsidies are skyrocketing, as Subsidyscope revealed yesterday in its data-packed report on U.S. transport spending: the value of tax-free parking will reach $3 billion this year, compared with $500 million in subsidies for transit use.

The imbalance might be corrected if the government had always treated
parking and transit equally when it came to tax benefits. Until Sen.
Charles Schumer (D-NY) added a provision to this year’s economic
stimulus law that set a monthly maximum of $230 for both transit and
parking benefits, workers could write off a maximum of slightly more
than $200 in parking, while the maximum tax-free value of transit
passes was about $100 less.

Subsidyscope, a joint project of the Pew Charitable Trusts and the Sunlight Foundation, pored over federal records to produce a searchable database of transportation spending dating back to the year 2000. Their researchers’ conclusions found that highways received $30 billion in federal support last year — more than three times as much as transit, which got $9 billion.

How much of that $30 billion was a subsidy? It’s tough to say, according to Subsidyscope, since state DOTs are not required to report the details of how federal road aid is distributed. Still, the overwhelming majority of federal transport programs contain subsidies (see the chart after the jump for more details).

A more classic example of federal subsidy is programs that transfer the risk of new projects onto the federal government. The Transportation Infrastructure Finance and Innovation Act (TIFIA), which offers loans to states and localities at a low interest rate, is the transport sector’s major source of credit subsidies from Washington — and the majority of TIFIA loans go to highway projects.

(ed. note. This post was updated from an earlier version that neglected to note Schumer’s addition to the economic stimulus law.)

  • drosejr

    I believe that the allowable pre-tax deductions for transit and parking “cafeteria” plans were equalized earlier this year in the ARRA bill, with the provision put in there by Chuck Schumer. One can now set aside up to $220 pre-tax for both parking and transit, vs the inequities spoke of above.

  • Right you are, drosejr – my summary of monthly benefits didn’t reflect that change. Post has been updated.

  • The IRS, in a 91-page (310KB) PDF file, puts the current amount of Qualified Transportation Fringe Benefits at $230 per month in parking, $120 per month in transit, and $20 per month for cycling.

    I have an issue with your presentation, however. The QTFB is not a tax credit, so it doesn’t count 100% as a Federal subsidy. Assuming I have a marginal federal tax rate of 20%, the fact that my $89 monthly metrocard is paid for as a pretax QTFB means that I am foregoing the payment of $213.60 in federal taxes annually. This is not a subsidy of $1,068 like you’re making it out to be.

    In addition, as the report says, “One problem with taxing directly supplied fringe benefits, such as free or reduced price parking, is the administrative difficulty in determining fair market value.” So if the cost of free or reduced-price parking is too wishy-washy for the IRS to determine, how can you, Elana, take Pew’s numbers at face value?

  • Jonathan: They’re not Pew’s numbers, they’re the White House budget office’s; all Pew did was formulate the chart. That IRS document was the same one I looked at, and it has not been updated to reflect the stimulus law’s change. Additionally, the IRS’ perspective on the difficulty of determining market value may well be correct – still, five times more money is getting exempted for parking than transit.

  • Elana, my point is that the multiplier of five of which you speak is derived from numbers that the IRS doesn’t think are reliable, because there is no way to discern fair market value for parking on business premises. So is it 5x, or 3x, or what? Pew/WHBO can’t support this assumption, and neither should you.

  • drosejr


    Those amounts were updated for the stimulus bill, with the new $230 deductions available from March:,,id=205664,00.html

  • Ian Turner

    Jonathan, could just as easily be 10X or 20X, right? The fact that something is difficult to measure accurately doesn’t mean that we shouldn’t try.

  • Elana,

    Thank you for posting these numbers. I did my graduate thesis work in ’07/’08 on Transportation Fringe Benefits, and that $3bn in foregone tax revenue was an impossible number to suss out at the time. The data was simply not available, and I was told in no uncertain terms that it would have taken a congressional request to get it. Thank goodness times have changed and parking is now a major focus of transportation and economic debate.

    I was able to make a very broad estimation of the value of the foregone tax revenue, however, and found it to be somewhere between $2b and $6b annually. Glad to see I at least captured it in my range. Unsurprisingly, I came up with a recommendation that the parking subsidy should be phased out in order to best situate the costs of driving upon the user, but I was encouraged to add a proviso about the political difficulty of such a change. Now that a more official dollar figure is attached to it, perhaps it will be on the table.