
Counterproductive effects of the commuter parking tax benefit - jseliger
https://www.bloomberg.com/news/articles/2017-09-15/we-are-subsidizing-rich-suburbanites-to-clog-cities-with-their-cars?cmpid=socialflow-twitter-business
======
mgreg
Interesting dive into the tax code. I wonder how the article would have read
if the author researched the amount of subsidies that go into public
transportation. Public transport subsidies are a very material portion of most
city budgets as rider's fares typically pay for less than half the cost of
running the bus/subway/light rail system.

As an example San Francisco spends about $1 billion of its $9 billion city
budget funding Muni - more than 10% of the entire city budget.

~~~
grardb
I feel like this is almost an apples-to-oranges comparison. Yes, public
transit "competes" with cars, but...

Is the government subsidizing something run by the government really
"subsidization?" It may be federal vs state/city, sure, but I don't see this
as being a problem, especially since public transportation is beneficial in so
many ways (costs people less money than car ownership, less harmful on the
environment, less harmful to health, etc.). I do, however, see it as a problem
when the federal government subsidizes _private_ transportation, which is
objectively harmful to cities (and most things in general, really).

> rider's fares typically pay for less than half the cost of running the
> bus/subway/light rail system

Let's not forget that drivers also only pay for half of the cost of roads[1].
If we're only going to pay for a portion of _something_ , I think it should be
public transportation. In my mind, the whole point of the government is to
provide us with services. Providing us with transit makes sense. Providing us
with spaces that we can only use if we pay a bunch of money to private
corporations (car manufacturer + oil companies mainly) to buy large,
dangerous, private, pollution-creating machines? I'm opposed to that.

[1] [http://usa.streetsblog.org/2013/01/23/drivers-cover-
just-51-...](http://usa.streetsblog.org/2013/01/23/drivers-cover-
just-51-percent-of-u-s-road-spending/)

~~~
AnthonyMouse
> Is the government subsidizing something run by the government really
> "subsidization?"

Yes. Having the government do _anything_ with public money is subsidization.

But it often makes sense to do things like that, especially in areas where
there is a large up front cost to build something and thereafter the cost per
use is negligible.

It makes sense for the government to build subways in cities and then charge
zero dollars to riders, because everyone benefits from their existence (even
non-riders, like stores whose customers arrive on the subway) and once the
construction cost is paid it makes no sense to discourage use of the sunk-cost
infrastructure by charging fares. And fare collection is inefficient because a
nontrivial proportion of the fares are spent collecting them.

But it also makes sense to do the same thing for roads for the same reasons.

The real question is where and when to subsidize each. It makes no sense to
build subways in rural Kansas that no one would ride, or new roads in
Manhattan.

When you see traffic congestion, the question is how to most effectively
eliminate it. Sometimes that means improving mass transit so less people have
to drive. Sometimes it's more cost effective to just add a lane to the road.

Sometimes the underlying problem is that real estate prices are too high
causing people to have to commute too far and the only real answer is to build
new housing.

~~~
grardb
>The real question where and when to subsidize each. It makes no sense to
build subways in rural Kansas that no one would ride, or new roads in
Manhattan.

I can agree with this to some extent, but the question is, "how can we do this
without encouraging unnecessary sprawl?" I can understand the want for space,
seclusion, etc., but at what cost? How do we build roads in rural areas that
don't kill the environment while also not creating a ginormous network of
roads throughout our entire country which allow tons of people to own cars and
rely solely on them for all travel? I am not necessarily opposed to people
living in rural areas, particularly because some of it is necessary (e.g. for
farming), but for the most part, I think we'd be better off if most people
lived in higher density areas. Not Manhattan-dense, but would it kill people
to live somewhere with a population density of 10k/sqmi? I grew up in a town
with 15k/sqmi and lived in a big house with a big backyard (and even a
driveway!). We had good public transit.

> Sometimes it's more cost effective to just add a lane to the road.

I replied to this in another comment of yours, but this actually doesn't work.

>Sometimes the underlying problem is that real estate prices are too high
causing people to have to commute too far and the only real answer is to build
new housing.

A large part of the reason that real estate prices are high is because of
cars. I live in Downtown LA, and within a 2-block radius of me, there are
probably at least ten parking lots that could easily fit large apartment
buildings with ground retail. To add insult to injury, they're all single-
level lots, rather than multi-level structures. When you take into account the
minimum parking requirements that are imposed on developers, the amount of
space that freeways take up, how wide the roads are, and all the free parking
on the streets, it's no wonder that housing costs a lot! In essence, the same
thing that allows people to commute long distances in cars is what makes it
_necessary_ to do so.

~~~
AnthonyMouse
> How do we build roads in rural areas that don't kill the environment while
> also not creating a ginormous network of roads throughout our entire country
> which allow tons of people to own cars and rely solely on them for all
> travel?

Nobody is actually proposing to build a bunch of new highways in rural areas.
The real problem is congestion in cities.

> I replied to this in another comment of yours, but this actually doesn't
> work.

It does work, it just doesn't work linearly. You can add a lane and discover
that there was already a lane's worth of unsatisfied demand. And maybe there
were even two. But there most certainly were not 1,000,000 lanes worth of
unsatisfied demand, and in most places there probably weren't even two.

> A large part of the reason that real estate prices are high is because of
> cars.

A two bedroom apartment is at least five times the size of a parking space, so
the area allocated to parking is less than 20%. That is not the main source of
the cost.

Of course, minimum parking requirements are still ridiculous, because if
landlords can attract tenants to a less expensive building without parking,
why stop them?

And is _is_ requirements _like_ that which combine with each other to cause
high housing costs.

------
pweissbrod
Businesses choose in their own self interest.

If it takes me 40+ minutes longer to ride a subway than drive in (currently
true) then it's both me and my employer's interest to reduce cost barriers and
pay for the downtown parking.

Tragedy of the commons with a touch of government inertia

~~~
ropeladder
The article is arguing against government subsidies, not business choices.
Businesses are providing a benefit, parking, that is not taxed as income. If
that benefit was taxed in the same way income was, it would be more expensive
for both businesses and consumers and therefore businesses and consumers might
make other choices about transit (or location).

Further, I would argue that the time for your commute is to a large part
determined by the available infrastructure (roads vs subway lines vs busses,
for example), which is something the public has chosen to allocate funds for.
There are certainly more and less efficient ways to move people around, and
I'm not saying that cars are better or worse, just that the efficiency is
partly a choice the public has made.

------
afinlayson
And self driving cars, could make this worse. If your car has shocks for stop
and go traffic as well as for bumps, you might not mind a 3 hour commute if
you can instagram, and even do work from it. Meaning more people will live
further away so they can get their half acre of land.

~~~
payne92
But self-driving cars never need to circle looking for a parking spot, and can
head off to the dense "autopark" to hang out until you need a ride home. That
will alleviate congestion.

~~~
afinlayson
I would argue it just displaces it. Instead of you needing to walk to the
parking lot and get jammed in after a high traffic event (Sports, or Concert),
the auto parked cars will have issues getting out, and lining up in the street
to pick everyone up.

~~~
weberc2
How is that worse than the same thing with human drivers? All of that parking
lot space could be repurposed as loading space for humans, and more humans
would probably be happy to use a cheaper ride-share service in which they can
take the first available car instead of waiting for their personal vehicle to
get through the line. (Note that ride-share isn't going to be "register with a
particular car and wait for them to find you", but rather "get in the nearest
available car"\--automated taxis instead of automated Uber).

------
valuearb
We use the tax code to subsidize lots of stupid stuff and shouldn't do any of
it if you want a fair, progressive tax system. Especially when running
enormous deficits.

Free parking should be reported as income, as should mass transit
discounts/subsidies, such as healthcare subsidies, etc.

~~~
donatj
> Free parking should be reported as income

I'm trying to figure out the mental somersaults it has to take for this to
seem reasonable to you.

The natural state, empty field, nothing there. I can park there. For Free.

Unnatural state, roads and buildings. My ability to park has been taken. I've
had value taken from me. I'm at a negative.

Government / businesses grant the right to park in _some_ places. I'm at less
of a negative but still negative of the natural state. I don't see how that's
possibly putting me at a positive "income"?

~~~
rayiner
If your employer owns a house, and let's you stay in it for free, that's
definitely compensation to you. A parking space is no different. The base
state is not that you're a allowed to park wherever you want, but rather that
it's private property and you're not allowed to park unless someone permits
you to.

~~~
donatj
False. When no one lived here, everything was not private property.

The mastodons and giant sloths did not claim property rights over the land.

That's not the "default" state.

------
zaroth
The IRS says companies must place a fair market value on free parking they
provide, and must report as income any value of free parking in excess of
$255/month. Compliance with this reg is likely minimal.

It seems to me if I have to drive to a specific location to perform a job-
task, the expense of getting there and parking there is a deductible business
expense. This is true as long as you are not regularly commuting to a place of
business.

Once you start regularly commuting, the cost of the commute is no longer a
deductible business expense. And if you are being given a place to park worth
more than ~$10/day you're supposed to pay full load of taxes on that "income".

So, if for example, you regularly work from home, you can deduct the cost of
going into the office.

That's a _huge_ subsidy for working from home at least 50% of the time which
this report totally ignores.

To claim that not taxing as income the first $10/day in parking value provided
as a fringe benefit is a $7b tax subsidy seems a _bit_ of a stretch. The
company also likely provides air conditioning in the office, do we tax that as
income too? To say nothing of food catering, onsite gym, etc.

I read the actual report linked in the article and IMO it comes off as
somewhere between "progressive money-grab" to "bat-shit crazy."

The reality is the IRS has a long-standing "don't ask don't tell" policy
around all kinds of benefits that companies provide employees which are
"technically gross income" but in practice are never actuallly counted as
such. A common example is the value of frequent flier miles. Here's a paper on
the subject:
[http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=...](http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=3373&context=dlj)

Referenced in that is another paper called "Defining Income" which seems to be
the definitive paper on this topic?
[https://poseidon01.ssrn.com/delivery.php?ID=0370821220680890...](https://poseidon01.ssrn.com/delivery.php?ID=037082122068089013077101079007096005123025053058021063112099086101084008024073089028096120057028116036040111020086004101004028039017049060086094125099080064098106032012081095073085089118110123007010084117075092084116118121093030081112112079116117103&EXT=pdf)

~~~
zaroth
That last link is a gem -- here's a great quote from it;

"Gross income is all accessions to wealth, clearly realized, over which the
taxpayer has dominion unless excluded by statute, or by the IRS's never having
attempted to tax them, or by the IRS's having announced an administratively
created exclusion pursuant to no specific authority whatsoever."

The paper explains the historical definition of income as meaning, "the
realized product of labor or capital." That definition was challenged before
the Supreme Court back in 1955 _Glenshaw Glass_ when the IRS claimed punitive
damages were taxable as income. Before Glenshaw, punitive damages were
considered a windfall, and as neither a product of labor or capital, not
income and therefore not taxable.

Some specific examples of accessions to wealth, clearly realized, which are
_not_ taxed by the IRS for no reason other than administrative fiat are; child
support payments, welfare payments such as TANF, and Medicaid.

I supposed you could add "parking at the office" to that list.

Another great example in that paper -- the cost of traveling to a job
interview in another state. The reimbursement of that cost is clearly income
under statute, but not taxed. Thankfully so!

Are fish income when you catch them from the sea? Are minerals income when you
pull them from the ground? Are Bitcoin income when you mine them? No, No, and
YES!

~~~
zaroth
Still reading that last paper -- just so damn amusing;

"Two final examples suffice to show the array of situations in which the
administrative application of the positive definition of income seems
confused. The first involves the iconic American game of baseball. When
contemporary players began to threaten long established home run records, it
was clear that any ball that broke such a record would become a collector's
item worth substantial amounts of money. When the records began to be broken
and a fan caught the record-breaking ball, the tax controversy erupted.
Practitioners, academics, and former IRS Commissioners all agreed that
catching the ball, like finding old currency in a used piano, which was held
to be income in a case known to virtually every student of taxation, resulted
in the realization of income. But the public and Congressional outcry at such
a prospect was fierce. How could the joy of catching the record breaking-ball
be marred by the prospect of the rapacious IRS pursuing the fan for a cut of
the food fortune? Legislation to ensure non-taxation was introduced. One IRS
Commissioner, not a lawyer, dissembled. Years later, the Chief Counsel of the
IRS, not only a lawyer but a tax lawyer, reportedly covered his head with his
hands and captured the difficult position the agency was in when he responded
to the question of whether the fan who caught and kept the ball had income by
saying, "Please don't ask me that!"

------
treehau5
> the government is subsidizing commuters to drive themselves to work instead
> of carpooling or taking mass transit or walking or biking or working from
> home.

I would imagine in the majority of scenarios this is a false choice. There
simply is no reasonable alternative. Our city planning was piss poor and
thought it was a good idea to emulate Atlanta when it comes to road building
(i.e. build them wherever the hell, with no rhyme or reason). Biking: not an
option. Working from home? If I were to be so lucky.

Second, not much thought was given to the economic impact of those commuters.

~~~
emodendroket
Well, yes, that, and also, lots of people are going to drive to the train or
bus station and park there, so we're not talking about two disjoint sets.

------
sogen
I see tons of car ads... in SF of all places. Traffic is awful and sometimes
it's way faster to just walk.

The irony, most ads show a car in an empty highway.

~~~
djrogers
>I see tons of car ads... in SF of all places.

You realize that a small minority of the people seeing those ads actually live
in SF, right? The TV stations showing those ads cover at least 9 counties,
many of which have a higher population that the ~900k people living in San
Francisco.

~~~
iraphael
They're probably referring to outdoors, posters, physical ads, physically
located in SF.

------
CalRobert
Relevant to some people here -
[https://www.arb.ca.gov/planning/tsaq/cashout/cashout.htm](https://www.arb.ca.gov/planning/tsaq/cashout/cashout.htm)

Could net you a few hundred bucks a month if you don't use parking at work.

------
frogpelt
This is a simple concept. It's about liberty.

People, Americans especially, want the liberty to come and go as they please,
at the speeds they choose, by the path that they choose.

I'm not sure every Bloomberg writer would understand that.

~~~
lutorm
Yet traffic means that you can, in practice, do none of these.

~~~
arise
...at some times of days in the most heavily populated urban centers.

For the rest of the country, Google Maps is generally glowing green.

------
gnicholas
It's true that we tax some sorts of "implicit income" but not others.

Another example, which many people find very strange: taxing homeowners for
their implicit rental income:

Imagine Person A owns a house and lives in it. Person B owns one house, which
he rents to someone else, and lives in a rented apartment. Person B has rental
income and pays tax on it. Person A does not receive rental income (from
himself) and therefore pays no equivalent tax (and also receives other tax
preferences). In some ways, this appears to be inequitable. But to many
people, it would be odd to tax a transaction that never explicitly happened (A
only "paid himself rent" implicitly).

So a case can be made for taxing all sorts of things, some of which seem very
odd to many/most people. Employer-provided parking will probably remain
untaxed, just like employer-provided food often is.

~~~
AnthonyMouse
The difference is that one is a business and the other isn't. A landlord can
deduct depreciation on the building and operating expenses that the homeowner
can't.

And the homeowner pays income tax on the money used to buy the house.

------
x3n0ph3n3
At my company, commuter parking perks only apply when driving to and parking
at a transit station, then taking public transit to work. That seems like a
net benefit for society vs driving the entire distance to work.

------
nickthemagicman
It's amazing the return on mass transit spending. The property values are
massively increased in cities with mass transit, the economy is massively
increased in cities where it's easy for employees to get to work, the
environment has less smog going into it from cars, citizen mobility is
increased which increases quality of life and their ability to spend the money
they make at their jobs....and on and on. There's just endless returns on mass
transit.

------
jmull
Characterizing employer-provided parking as a fringe benefit is a poor way to
frame this debate.

The benefit is to the employer, not the employee.

Proposing to tax this as an employee benefit will likely sidetrack this and
raise emotions due to the unfairness.

That's too bad because there _is_ a real problem and a tax may very well be
the best way to solve it.

------
brndnmtthws
Automobiles are quite possibly one of the most harmful things in societies.
Obesity, heart disease, diabetes, pollution, sprawl, time wasted going from A
to B.

My life improved dramatically when I decided to reject the automobile as a way
of life.

EDIT: I am of course referring to personal automobiles.

~~~
valuearb
Since they've invented the automobile life expectancies and living standards
have increased enormously worldwide, that is a real correlation.

~~~
CalRobert
The same could be said for nuclear bombs or silly putty.

~~~
valuearb
Neither nuclear bombs or silly putty enabled the mass delivery of food and
goods everywhere in the country, and for people to live outside of tiny
apartments in congested cities in smaller towns and rural areas offering clean
air, big yards, and more access to the outdoors.

The fact that Americans have substantial increased their average living space
and comforts is directly correlated with the spread of automobiles. The
massive increase in food production is entirely caused by automation from the
invention of farming equipment running off internal combustion engines.

~~~
CalRobert
This is a helpful, detailed, comment. Thanks. It contributes much more to the
discussion than gp.

------
marlokk
Yes let's tax anything that bothers anyone. I'm sure this will lead to a
bother-free utopia.

