Take a Hike

For politicians, giving away money is fun, but telling others to give away money is even better. That’s what the Washington, D.C., government is contemplating as it debates a new rule that would have employers subsidize people who neither take the Metro nor drive to and from work. They want to give a little something to the people who walk or bike to work.

Right now the federal government allows companies to provide up to $255 in parking benefits a month tax-free to employees; a similar amount can be provided tax-free to people who take mass transit. The proposal being considered would have companies give a similar sum to people who walk or bike to work. Since there’s no federal tax break for these activities, these incentives would, in effect, be cash payments to simply say “thank you for walking.”

Here’s a general rule: If we subsidize everything, we are effectively subsidizing nothing. It is of course true that the federal government should not be giving tax breaks for parking: In general, in-kind compensation should never be incentivized over cash compensation (look at the mess that the tax break for employer-provided health insurance created) but this is especially true for an activity that has no salutary benefit for society at all. Like driving to work.

Mass transit is already subsidized in the U.S., so additional tax subsidies don’t make a whole lot of sense either-unless we look at it in the context that we are already giving a tax break for parking.

A proposal by the D.C. city council to pay pedestrians who walk to work exposes the idiocy of subsidizing any kind of commuting.

Since walking to work doesn’t add to congestion on the streets or on our mass transit systems we should probably favorite it most of all, but there’s still no strong reason to subsidize it. Unless, that is, we consider the sad reality we’re already subsidizing all other forms of transit.

The obvious answer to this conundrum is that the federal government should scrap the tax break for employee parking and mass transit. Since the tax reform effort being contemplated by Congress and the White House will be looking for every single dime possible to pay for possible rate reductions, this is as good a time as any to end this benefit.

The Transit Center, a research institute devoted to transportation research, estimates that getting rid of the parking and mass transit subsidies would save over $100 billion over the next decade-enough to fund a portion of any Trump infrastructure plan to boot.

My first boss, a kind man by the name of John Kerrigan, was a terrible public speaker, and whenever he was obliged to give a talk he would utter two minutes of trite banalities before pausing to recognize one group of people in the audience and asking them to stand, then another, and another until he had everyone standing and clapping for themselves. He would then leave the stage.

The D.C. walking subsidy strikes me as something he’d appreciate.

Ike Brannon is a former economist in the White House Office of Management and Budget and fellow at the Cato Institute.