May 17, 2022

Commonwealth Magazine

EXPLORING legislation to extend the benefits of public transit, we sought to save Massachusetts residents money and improve our environment. Then a global pandemic changed the entire transportation landscape.

Currently, use of MBTA services and regional transportation authorities across the state is still only a fraction of what it was pre-COVID. Commuter rail and metro ridership is only 40% of pre-pandemic levels, while bus service is around 60%. In comparison, road traffic rebounded much faster and could exceed previous high waters.

Reducing transport costs and protecting the environment should always be a priority, but so must combating the aftermath of the pandemic.

Legislation expanding access to employer-sponsored transit benefits would require Massachusetts employers with 50 or more employees to offer an optional transit benefits program through which employees could use payroll dollars pre-tax to cover eligible transportation costs, including transit passes, commuter road vehicles. , and bicycles. Once implemented, employees would no longer have to pay taxes on transit expenses associated with commuting, up to the authorized federal amount.

Thanks to states that have already implemented similar programs, we have a good idea of ​​the savings this will provide to Massachusetts residents. After a similar law was passed in New Jersey in 2019, commuters who earned $45,000 a year and took advantage of the pretax benefit for monthly transit passes are expected to save $456 in commuter payments. ‘income tax.

If this legislation is successful in encouraging public transport, it could also have a significant impact in terms of improving travel for those who continue to drive to work.

According to a 2021 Texas A&M study, Boston-area commuters lost more hours in traffic than their counterparts in all but one other city; and Massachusetts drivers burned an estimated 50 million gallons of fuel while stuck in traffic in 2020. Getting more people on buses and trains means fewer cars on the road, less reliance on fuels pollutants and shorter journey times for many. Outside of Greater Boston, tax benefits for commuters could also help attract new riders to regional transit authority networks, many of which have struggled for years with low ridership and dwindling fare revenue.

This legislation will also benefit employers financially. The implementation of this benefits program may be carried out in-house or outsourced to third-party providers. These repairers typically charge a 4% administrative fee, which is well below the 7.6% FICA tax that employers would not have to pay on withheld wages. Pre-tax transit benefits can also reduce the need for employers to provide parking spaces and can help employers recruit and retain employees.

Even better, these transit benefits would save Massachusetts residents and employers money at a relatively low cost to the Commonwealth. The Department of Revenue estimated that implementing S.1218/H.2036 would result in an annual loss of $20 million in tax revenue if employers with 20 or more employees were required to offer this benefit. Since then, the Joint Committee on Labor and Workforce Development has revised legislation to require companies with 50 or more employees to participate, meaning the estimated loss of tax revenue will be even lower than initial estimates from the Department of Revenue. Any loss to the Commonwealth would be more than offset by the projected $3.1 billion increase in tax revenue the Commonwealth would collect this year and the long-term cost savings associated with improved air quality.

Meet the author

State representative, Watertown

Passing this law is more important than ever. Not only will this help the Commonwealth and its long-term residents, but it will also speed up our post-pandemic recovery. We can make shipping cheaper, easier and less harmful to the environment. In other words, we can improve transportation, and this bill would go a long way to making that possible.

John Keenan is a Quincy State Senator and Steven Owens is a Watertown State Representative.

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