Skip to Content
Streetsblog New York City home
Log In
Commuting

America Spends $7.3 Billion a Year Paying Affluent People to Drive to Work

3:09 PM EDT on September 14, 2017

Every day, the streets of American cities are more clogged and polluted at rush hour because the federal government pays people to drive to work.

The culprit is the commuter tax benefit, a $7.3 billion annual subsidy that mainly offsets parking costs for people who drive to work. The people who benefit the most are high earners who drive into the U.S.'s biggest, most congested cities and can write off the maximum $255 per month in tax-free income.

The tax break for car commuters is not only regressive, it also generates traffic at exactly the worst time -- rush hour -- and in exactly the worst places -- the central areas of major cities, according to a new study from TransitCenter and the Frontier Group [PDF].

Transit center graph
A model developed by Andrea Hamre at Virginia Tech shows the massive effect of commuter subsidies on mode choice in major American cities. Graphic: TransitCenter

Placing a finger on the scale of people's commute decisions can have a profound influence on behavior. A model developed by Virginia Tech researcher Andrea Hamre estimates that in five cities -- Washington, DC, Baltimore, Philadelphia, Newark, NJ, and New York City -- a subsidy solely for parking at work would reduce transit's share of the commuting pie 25 percent, compared to scenario with no commuter subsidy.

The federal government does allow transit commuters up to $255 a month in pre-tax income to offset the cost of fares. But people can claim it only if their employer offers the benefit. The parking subsidy is much more widely used -- the government spends $7.3 billion a year on it, compared to $1.3 billion for transit.

Cities would be better off if both subsidies were eliminated. TransitCenter estimates that without the commuter tax benefit, 66,000 fewer people would drive to work in the 25 largest U.S. cities.

As long as the commuter benefit persists, local governments can at least help even the playing field. A number of cities, including New York, DC, and San Francisco, have ordinances requiring most employers to offer the transit benefit to their workers.

Stay in touch

Sign up for our free newsletter

More from Streetsblog New York City

Popular Fort Greene Open Street Fizzles After City Pulls Support

DOT reassigned its contractor, and this open street — which once hosted rollicking dance parties — is history.

October 2, 2023

Monday’s Headlines: Thin-Skinned, Anti-Restler Mayor Edition

Under fire for how he handled the storm, the mayor found a familiar target: Brooklyn Council Member Lincoln Restler. Plus other news.

October 2, 2023

Two Paths Forward: Broadway Shows What Could Be on Fifth Avenue

It's time to widen Fifth Avenue's sidewalks and add a protected bike lane. Delays hurt everyone.

CYCLE OF RAGE: Even Cheap Souvenir Plates Fool NYC Speed Cameras — And Piss Off an Out-of-Town Man

You don't have to be SEXY to fool New York City speed cameras. You just have to pretend to be.

October 2, 2023

We Have the ‘End of Days’ Flooding Pics You Need Right Now

It's bad out there. How bad? Here is a citywide roundup from our staff ... and our friends on social media.

September 29, 2023
See all posts