Cashing Out Employer-Paid Parking

Abstract

In 1992, California enacted legislation that directly addresses the problems caused by employer-paid parking and that serves as a model of how the federal government could address the same problems. Later, after employers have been given sufficient advance notice to adjust to the emergence of a parking market where prices rather than subsidies allocate parking spaces, the cash-out requirement could be extended to all employer-paid parking. Cashing out an inefficient parking subsidy converts economic waste into increased tax revenue and increased employee welfare, at no extra cost to the employer. Tax exemptions are usually justified on grounds that they promote a public purpose, but the tax exemption for employer-paid parking increases traffic congestion, air pollution, and greenhouse gas emissions. Public transportation advocates have tried for years to end this tax bias because it reduces transit ridership, increases gasoline consumption, and aggravates traffic congestion and air pollution.

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