Senators make case for mass transit tax credit

By Bernie Becker - 12/12/11 02:39 PM ET

A group of more than 20 senators is pushing to extend a tax break that helps commuters who use mass transit.

With the tax benefit set to drop steeply in 2012, the senators are pressing the top lawmakers on the Senate Finance Committee to extend the current mass transit tax credit in any year-end tax deal.

“Eliminating the mass-transit credit would take a cut out of the paychecks of hardworking middle-class families trying to get by in an already tough economy,” said Sen. Ben Cardin (D-Md.), a Finance Committee member and a signer of the Friday letter. “Promoting the use of mass transit helps our workers but it also helps reduce traffic congestion on our region’s highways and improve air quality by taking thousands of cars off the road.”

As it stands, workers who use mass transit currently can write off up to $230 a month in commuting costs, the same amount as the tax break for parking benefits. But unless Congress acts, the mass transit benefit will drop to $125 a month at year’s end, according to the senators' letter.

In all, the senators on the Friday letter — 21 Democrats and Sen. Scott Brown (R-Mass.) — said more than 2.5 million people now use the mass transit credit, and that some of those could see commuting costs jump by more than 20 percent next year if the current benefit is not extended.

The lawmakers, many of whom come from states with well-trafficked mass transit systems, also said they believed the mass transit tax credit could be extended at little to no cost to the taxpayer and that this tax break, unlike others, could not be extended retroactively.

“Given the context of the underlying tax debate, we stress the importance of extending this benefit in the most fiscally responsible way possible,” the lawmakers wrote to Sens. Max Baucus (D-Mont.), the Finance chairman, and Orrin Hatch (R-Utah), the panel’s ranking member. “There are a number of different permutations by which this policy could be extended.”

The senators’ letter came as lawmakers in both chambers were pressing to finish up their 2011 work, with the back-and-forth over extending the current payroll tax cut taking center stage on Capitol Hill.

Lawmakers also have to deal with a number of other expiring tax provisions, like the credit for research and development. But the final action on those measures could be pushed off until after the new year.

The National Treasury Employees Union also called on Congress last week to preserve the current mass transit tax credit. Legislation to make the current tax benefit permanent have yet to clear the committee level in either the House or the Senate.