President Barack Obama signed into law a broad $41.6 billion program of tax breaks on Friday that will, among many other things, retroactively raise the monthly mass-transit subsidy to $250 per month for 2014, restoring it to the level of the unaffected monthly parking subsidy. The mass-transit tax break had fallen to $130 per month on Jan. 1, 2014.
The extension of these tax breaks, however, will only last until the end of 2014. Democrats and Republicans in the Senate fought for making some of the dozens of tax breaks permanent, but agreed to a one-year deal after negotiations with the White House fell through. Senators from both parties said they would have preferred a bill that kept the tax extenders through 2015, but considered passing the 11th hour bill better than passing none at all.
“It is quite literally the best we could do,” said Sen. Orrin Hatch (R-Utah), incoming chairman of the Senate Finance Committee.
In a floor speech before passage, Sen. Ron Wyden, current chairman of the Senate Finance Committee, said the Congress was essentially turning in its homework nearly a year late with the passage of this bill. He also showed his contempt for the fact that the extenders will only take effect for two weeks, and will go away in 2015.
“This package of incentives — which applies only to 2014 — will last two more weeks before families and businesses will be thrown back into the dark about what taxes they owe,” Wyden said. “This tax bill doesn’t have the shelf life of a carton of eggs.”
While the bill makes the mass transit subsidy retroactive to Jan. 1, it remains unclear whether agencies have the funding in place to honor subsidies from previous months of the year. The decision to retroactively grant the subsidies may be left up to individual agencies.
“Restoring transit parity would encourage more employees to use public transportation, easing traffic congestion, reducing pollution and conserving energy,” Colleen Kelley, president of the National Treasury Employees Union, said in an emailed statement.
The mass transit subsidy will lapse back to $130 per month starting Jan. 1, 2015.
“This on-again, off-again style of legislating on a temporary basis is a terrible way to make tax policy,” said Rep. Dave Camp (R-Mich.), chairman of the Ways and Means Committee.
Kelley said the union is working to make the commuter subsidy a sure thing year-to-year.
“We believe the bill would give NTEU time to work with the 114th Congress to make it permanent,” she said. “NTEU will work to ensure agencies pay employees retroactive subsidies.”
In October, Internal Revenue Service Commissioner John Koskinen urged Congress to decide quickly on whether it would pass the package of more than 50 temporary tax breaks.
The 54 tax extenders cover everything from rum producers in Puerto Rico and the U.S. Virgin Islands to racehorse owners. They also benefit struggling homeowners, businesses and people living in states without a state income tax.
The bill now goes to President Barack Obama, who is expected to sign it.