Sen. Chuck Schumer (D-NY) was able to get an amendment added to a package of tax breaks passed this week by the Senate Finance Committee that will allow people who use bike sharing to pay for it with the existing bike commuter benefit. The text of the amendment isn't available yet, but you can find a description of it at this link (click on Amendments to the EXPIRE Act).
This amendment would modify the qualified transportation benefit in Section 132(f) of the Internal Revenue Code to add expenses associated with the use of a bike sharing program to the list of qualifying expenses.
BTW, Virginia Sen. Mark Warner co-sponosored it.
A little history. The bike commuter benefit was the brainchild of Rep. Earl Blumenauer (D-OR) and was included in tax extenders legislation in 2008. Those extenders were passed into law in 2008 as part of the bailout bill (oddly enough, Blumenauer voted against the bill, because it was not paid for, and Republicans voted for it even thought it wasn't. Such is politics.) Anyway, this was before bikesharing was really a big deal - CaBi had launched only a few days beforehand - and so the bill didn't mention it. Now that bikesharing is, people who commute by bikeshare want to use their bike commuter benefit to pay for their membership and fees. Oddly, the IRS ruled that they couldn't. Here's how Schumer put it:
The Transportation Fringe Benefit in the Internal Revenue Code allows employers to provide compensation for the transportation costs of their employees on a tax-free basis. This incentive covers costs associated with parking, mass transit and, since 2008, costs associated with bike maintenance and storage if the employee regularly bikes to work.
Unfortunately, last summer, the IRS ruled that costs associated with bike share memberships were not eligible under the statute as currently drafted and indicated legislative action would be necessary to broaden the definition of qualifying expenses. This amendment would do just that. Specifically, it adds bike share costs to the list of recognized expenses eligible for the transportation fringe benefit under Section 132(f) of the Internal Revenue Code. Like the already-existing incentive for those who ride their own bike to work, employees using a bike share program to commute to work would now be eligible to receive $20 per month on a tax-free basis from their employer to subsidize their bike share membership.
And Schumer, as New York's Senator, has tied this back to Citibike and oversells it quite a bit when he says it "Could Be Major Boost for Financially Strapped Citi Bike Program." It will probably help a little bit, but I doubt it will be a "major boost" in the short run.
So, now conservatives have jumped on it as a "bailout" or "subsidy" or claiming that he's proposing tax breaks for Citi bike. None of which is true. The tax break is for bike commuters - specifically those who bike by bikeshare. It's not a bailout and it's not a subsidy. And it isn't even really a new tax break, it just updates a current tax break because the IRS took a narrow view of it. It's a tax break to certain types of bike commtuers to bring them into line with existing tax breaks for those who drive, take transit or bike now.
Update: Let me add a bit to this. When I say it will help a little bit, I mean that I think it will add no more than 1% extra revenue. The only way this helps Citibike, CaBi or other bike sharing systems is if it adds members AND those new customers are a net gain. By a net gain, I mean that I don't know about the intimate details of their ledgers but it is possible that some annual members cost the company more than their annual fee. If they're heavy users who make more rebalancing necessary they may be more of a burden than a benefit - especially if facilitating their bike commuter benefit has some extra overhead to it.
It's not clear how many people will use this benefit or how many of those users would not have joined bikesharing without it. In order to lead to new revenue a person would have to do all of the following.
1. Work someplace that offers the bike commuter benefit
2. Choose that benefit over transit or parking
3. Choose to use that benefit on bikesharing instead of their own bike
4. Use bikesharing only because of the benefit
And I just don't see that many people meeting all four. I don't even know that many people who meet #1. When I try to use my bike commuter checks, the people at the bikeshop often have to call a manager to tell them what to do with it because they have never seen one before.
So, this will far from a bailout.
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